PN1

DEPUTY PRESIDENT SAMS: We'll take the appearances.

PN2

MR S CRAWFORD: If it pleases the Commission, Crawford, initial S, for the Australian Workers' Union.

PN3

MR L IZZO: If it pleases, Izzo, initial L, for ABI NSWBC and with me today is also Ms Hamberger, initial H, on video link.

PN4

DEPUTY PRESIDENT SAMS: Thank you.

PN5

MR D HAMILTON: If the Commission pleases, Hamilton, initial D, for the Australian Entertainment Industry Association T/A as Live Performers Australia.

PN6

DEPUTY PRESIDENT SAMS: Yes, well, at the parties' request the Full Bench has convened to hear a short matter which hopefully will conclude as far as the substantive issues are concerned; the four-yearly review of this award. We note that there have been short submissions from the AWU and from ABI. Mr Hamilton, did you intend to put any submissions in the matter or say anything?

PN7

MR HAMILTON: No, your Honour; we probably weren't that concerned about it because my members are undertaking what they used to do in the old exhibition industry award, so we didn't really have that much interest until we saw the matters of listing for today.

PN8

DEPUTY PRESIDENT SAMS: All right, thank you. You wish to go first, Mr Crawford?

PN9

MR CRAWFORD: Yes, thank you, your Honour. Your Honour, I might initially draw your attention to an earlier submission that the AWU put in dated 10 August 2017. That was obviously before the matter got allocated to this Full Bench.

PN10

DEPUTY PRESIDENT SAMS: Do you have it there?

PN11

MR CRAWFORD: Sorry, your Honour, I've only got one copy with me.

PN12

DEPUTY PRESIDENT SAMS: Why did you think we would have a copy, going back two years?

PN13

MR CRAWFORD: I guess that's an oversight, your Honour. I should have brought additional ones. It is on the website; I can email it through if that assists.

PN14

DEPUTY PRESIDENT SAMS: Yes, all right.

PN15

MR CRAWFORD: It does have a draft determination attached to it.

PN16

DEPUTY PRESIDENT SAMS: Yes, we do have it; I'm sorry. 10 August '17?

PN17

MR CRAWFORD: Correct.

PN18

DEPUTY PRESIDENT SAMS: Yes.

PN19

MR CRAWFORD: Aside from that, I have a folder to hand up to the bench that I'd like to just quickly go through today.

PN20

DEPUTY PRESIDENT SAMS: Yes.

PN21

MR CRAWFORD: Does the bench have the folder?

PN22

DEPUTY PRESIDENT SAMS: Yes.

PN23

MR CRAWFORD: So behind tab 1 is a list of relevant pre-modern awards. That list is derived from the Fair Work Commission website. The address is cited at the bottom of the first document behind tab 1. What that document indicates is for all awards that have annual leave conditions in them, in relation to - this is for awards that the Fair Work Commission has identified as relevant to the history of the amusement, events and recreation award - so for all of the relevant awards that have leave conditions, they all have annual leave loading of 17.5 per cent in there. That included four federal awards made by the Australian Industrial Relations Commission, and also a Victorian federal award as well. There is an excerpt of the relevant awards, also in tab one.

PN24

Behind tab 2 are some relevant enterprise awards for the industry. They also all contain an annual leave loading of 17.5 per cent. You'll see there is an enterprise award for Warner Bros. Movie World, Adventure World, an MEAA award for Movie World, a Dreamworld award and a Village Nine Leisure AWU award. Behind tab 3 are draft awards that parties filed during the award modernisation proceedings and they also all include annual leave loading of 17.5 per cent. So there is twofold by relevant employers, one by Dreamworld and one by AEG Ogden Group and Moreton Hire Pty Ltd and also the MEAA draft award and the AWU supported the terms of the MEAA award. Behind tab 4 are the relevant statement and decision that were issued by the award modernisation Full Bench, accompanying - that were issued as part of the making of the modern award.

PN25

In relation to the statements, the amusement award is dealt with in paragraph 75 and 76. At paragraph 75 it's highlighted that the modern award is based, to a large extent, on the terms of the AWU theme park and amusement award 2001, which did have annual leave loading of 17.5 per cent. There is certainly no mention in those paragraphs 75 or 76 of the exclusion of annual leave loading. Next, we have the decision that was issued when the modern award was made. The amusement award is dealt with from paragraphs 91 to 93. Again, there is no reference to annual leave loading or the exclusion of it from the modern award. Finally, I've attached an excerpt from the four-yearly review of modern awards. This excerpt concerns the dredging industry award and a claim by the AWU to insert annual leave loading into that award.

PN26

From paragraph 67 to 69 the Full Bench refers to pre-modern awards for the dredging industry, in that none of them actually contained annual leave loading. On that basis they weren't prepared to accept that the exclusion of annual leave loading from that award was an error. So we say this case is quite different: there is clearly a history of annual leave loading in all the relevant pre-modern awards. Our position is that the exclusion of annual leave loading was simply an error. Unless there are any questions from the Full Bench, those are my submissions.

PN27

DEPUTY PRESIDENT SAMS: Thank you, Mr Crawford. Yes, Mr Izzo.

PN28

MR IZZO: Your Honour, thank you. There are really two points we wish to address today. Being only two points we will be quite brief as well. The first is to address the established principles that are applicable to making variations as part of the four-yearly review of modern awards and to also look at a couple of cases that have addressed those established principles by reference to annual leave loading in the amusements award, and the second is to briefly discuss the merit behind the rationale for introducing annual leave loading and why we have concerns about the case that is being put forward by the AWU. So if I can just start with the established principles, the starting point for the four-yearly review is the preliminary issues decision. That was issued in 2014. I'll just give you the reference, I won't hand a copy up because it's been addressed in the vast majority of award proceedings, so it is [2014] FWC FB 1788.

PN29

What I'd like to draw your attention to is two comments in paragraph 60 of that decision and those comments are effectively that the first thing is the Commission has adopted the approach of assuming that the awards as made meet the modern awards objective and the exact reference from paragraph 60 is:

PN30

Previous Full Bench decisions should generally be followed in the absence of cogent reasons for not doing so. The Commission will proceed on the basis that prima facie the modern award being reviewed to achieve a modern award objective at the time it was made.

PN31

MR IZZO: The other comment that I wish to draw your attention to from paragraph 60 is that the Bench said that:

PN32

Where a significant change is proposed it must be supported by submission which addresses the relevant legislative provisions and be accompanied by probative evidence, properly directed to demonstrating the facts supporting the proposed variation.

PN33

MR IZZO: That has been the approach that has, as I'm sure you're all aware, governed the four-yearly review over the past five years. The only other thing that I'd like to draw your attention to in terms of the authorities is how these principles have been applied to annual leave loading in relation to these type of awards. I'll hand up, for your reference, the decision pertaining to annual leave in 2013, which looked at this issue. If I could ask the Bench to please turn to paragraph 107 of that decision, which appears on page 42, the section actually commences a page earlier at 41. There is a reference to the leave loading provision and the AWU proposal and you'll see there is reference to the AWU's application to insert annual leave loading into three awards, one of which is the amusements award.

PN34

Overleaf at paragraph 107 the majority of the Full Bench said:

PN35

We are not persuaded we should make the variations sought by the AWU. They have not established that without the variations the modern awards are not achieving the modern awards objective. Further, the mere absence of a provision for annual leave loading in these modern awards in question and its inclusion in the vast majority of other modern awards is not sufficient to establish that modern awards are not operating effectively without anomalies or technical problems arising from the award modernisation process.

PN36

MR IZZO: On that basis, the claim by the AWU was rejected by the majority in 2013. The further decision that I wish to draw your attention to is actually the decision that was handed up by Mr Crawford and if we can - I'm happy to use his tab reference. It's tab 5 of the materials Mr Crawford handed up. This is the Full Bench decision for Group 3 awards and the consideration of annual leave loading in the dredging award starts at paragraph 62. Just bear with me while I get the reference myself. So the bench commences at paragraph 62 by addressing the claim which was for the insertion of 17.5 per cent. They do go on to talk about some of the historical considerations including the fact that this claim was unsuccessful in 2013, before getting to paragraph 69. At 69 the Bench finds:

PN37

The AWU previously submitted that the omission of annual leave loading was an inadvertent error because most other modern awards contain annual leave loading provisions. We do not agree. The inclusion of annual leave loading provisions in other modern awards does not create an automatic basis for introducing the entitlement in the dredging award. Any such claim must be merit-based.

PN38

MR IZZO: They then go on to say, as Mr Crawford has already pointed out, that a relevant consideration was the industry standard prior to 2010. At paragraph 74 they then say that in terms of the modern awards objective there was no evidence before the Bench that the annual leave provisions in the dredging award are not meeting the modern awards objective. It could be argued that the loading would be additional remuneration for employees who work unsociable hours but equally could be said the introduction of annual leave loading would be an increased cost. The Full Bench - the four-member Full Bench - rejected the claim for annual leave loading in the dredging industry. The reason I've taken you to those authorities is to say that there is a couple of propositions that appear to be quite apparent when it comes to annual leave loading in particular.

PN39

One is in both 2013 and again in 2017, the Bench has wanted to be satisfied that the modern awards in question were not meeting the modern awards objective. They wanted some evidence that demonstrated that the modern awards objective was not being satisfied and they also formed the view that the mere presence of annual leave loading across the modern award safety net more generally, the fact that it is most but not all awards, is not an automatic basis to include it in an award. You need a merit basis. They are conclusions that we adopt and that we urge that the Commission takes in the present case. So the consistent theme, we say, is variations should not automatically be made because of what's going on elsewhere, but you need evidence.

PN40

That brings us to the second element of our submissions, which is what is being sought here, in the present case? Obviously, we know it's the application to introduce annual leave loading. We have set out at our submissions at paragraphs 5.1 and 5.2 what we say is the traditional basis for annual leave loading. The traditional basis for annual leave loading was broadly associated with insuring that employees who were reliant on their wages and who were reliant on receiving overtime payments did not automatically experience a drop in their earnings when they went on annual leave. It was really designed to rectify what the Commission initially in the metal industry award - and it got extrapolated into other awards - was to address a concern that in some industries, the amount of money the employee regularly earned may well drop during a period of leave and that was not necessarily seen as being consistent with the minimum safety net.

PN41

The difficulty with that being the rationale for introducing annual leave loading is it's necessarily dependent on industry circumstances. In some industries there will be more overtime being worked, more shift patterns, more allowances paid; the types of money that people do not usually receive when they're on annual leave because as we know, annual leave under the Fair Work Act you're only ordinarily entitled to the base rate of pay. So the industry you're in will really determine the extent to which you're impacted by some departure in your earnings and the necessity for annual leave loading. So whilst it is widespread, we say it's an entitlement the importance of which varies industry to industry. So once you understand that as the rationale for annual leave loading, what really then becomes critical is understanding in this industry what is the merit-based consideration to support the granting of annual leave loading?

PN42

DEPUTY PRESIDENT SAMS: Do you say no overtime is worked in this industry?

PN43

MR IZZO: I don't say no overtime is worked, your Honour. But what I do say is these are the very questions that we need to consider: is overtime being worked? Are there shift patterns being worked regularly - night shift, afternoon shift - that might attract shift allowances or loadings? Are there lots of allowances that are paid in the industry? These are all questions that will help assist in ascertaining whether a reduction in wages - a material reduction in wages or there is going to be, at a material level, a number of employees experiencing reduction of wages. Our difficulty is there is no evidence of that and the reason there is no evidence is because the AWU has simply not filed any. Their submissions have not even sought to address these questions. So they don't even make the assertion that there's lots of overtime being worked, because they haven't turned their mind to these issues.

PN44

What is really being asked of this Commission is to speculate as to the merit of the claim. You're being asked to assume that employees may commonly be working overtime or that it's a common feature of the industry or that shift allowances or loadings are common features in the industry.

PN45

DEPUTY PRESIDENT SAMS: Well, what about all the pre-modern awards that have it in it?

PN46

MR IZZO: So in relation to - - -

PN47

DEPUTY PRESIDENT SAMS: You think the rationale, half a century ago, Mr Izzo - half a century ago - still applies, does it?

PN48

MR IZZO: In terms of the rationale for annual leave loading, I think the rationale for half a century ago is a compelling one. You might find that there are other merit-based - I mean, the question about why annual leave loading is paid does tend to give rise to different views these days. But at the end of the day you would need to have a merit basis for including it.

PN49

DEPUTY PRESIDENT SAMS: Back to my first question: what about all the pre-modern awards that have it in it? Why did it have it in it? Why did they have it in their awards if overtime wasn't worked and the premise upon your submission wasn't established?

PN50

MR IZZO: There is no doubt that it was in a large number of pre-modern awards. Not all the awards deal with annual leave, as Mr Crawford's document identifies. So it wasn't necessarily universal but I'm happy to acknowledge that a large number had annual leave loading. I'm not in a position to explain the rationale why those awards had it, but I think where we get to if we follow Mr Crawford's line of argument is you're really being encouraged to form a view that the award modernisation Full Bench made a mistake. That is that they intended to, they should have put annual leave loading in the award but didn't. The difficulty with that approach is there is nothing in the statements - and we acknowledge that the statements are extremely brief on each modern award - to indicate one way or the other what was actually being considered with respect to annual leave loading.

PN51

We know that they talked in the award modernisation process about using a particular pre-reform award. We know that was the basis of much of this award. But they don't expressly deal with annual leave loading and in the absence of any specific findings, which was common as part of that process, it's difficult to now turn around and say, 'Actually, it was a mistake.' What we're saying, your Honours, is - we're not saying that there shouldn't necessarily be annual leave loading in the award. What we're saying is that we simply don't know. There might be a material issue here and there might be a hole in the minimum safety net or there might not. But we'd need to have evidence to assess that. We'd need to have some type of merit-based case that addresses what people are usually earning and what happens to their earnings over annual leave. We haven't filed any - - -

PN52

DEPUTY PRESIDENT SAMS: Mr Izzo, these - as you well know - are not contested proceedings. If you wished to convince the Commission that there is no evidence of the extent of annual leave loading paid in your - by your members, why didn't you bring it?

PN53

MR IZZO: I wholeheartedly note we haven't filed any evidence either, Deputy President.

PN54

DEPUTY PRESIDENT SAMS: As I said, these are not contested proceedings. They are really an inquiry - to put it as general as that - into whether or not this award meets the modern award objectives.

PN55

MR IZZO: I accept that but the one point I would cavil with is that we're not the proponent of the claim here. We're not the ones saying the award is deficient and we're not the ones saying the award should be varied.

PN56

DEPUTY PRESIDENT SAMS: You were in plenty of other matters.

PN57

MR IZZO: That's right. That's right. There's an additional factor - and we don't want to start using floodgates arguments to defeat a claim where it has merit - but the reality is we don't just have an interest in this award. We have an interest in the stability of the safety net as a whole. It shouldn't be the case that parties can simply float a claim with nothing more and have the award varied. There really should be a merit-based argument with evidence behind it and all that the AWU is saying is, 'Well, we had it in the past. We lost it in 2010, therefore, we should have it again.' They haven't turned their attention to why they should have it. So in the absence of a merit-based argument, in the absence of evidence supporting it, we say that it shouldn't succeed.

PN58

The only basis upon which awards should be varied, in the absence of evidence, it has been said, is where the changes are self-evident or the need for them is self-evident. We accept that. But what I would say here is there are two reasons it's not self-evident. Firstly, there are 11 other modern awards that do not contain annual leave loading provisions. Secondly, as I've sought to address, the entitlement in this case has a very clear purpose. It relates to loss of earnings whilst on annual leave and this is a matter upon which findings would need to be made in order to then introduce the entitlement. So it's not a self-evident error or typing issue or something that can be said that it is so obvious it goes without saying and the variation can be made.

PN59

So if it's not self-evident, we fall back on saying that the AWU really should have advanced a merit case if it wanted the award varied. This does not preclude, though, the award being varied in the future and I would say that. If it is of sufficient importance to the AWU at any point in time, they can actually file a substantive case. It might not be part of this point of the review. It may be outside the four-yearly review. But they can do that, and they can have evidence to support it. We just say in the absence of any evidence or addressing why the entitlement is necessary in this industry, in those circumstances the claim should fail. They are our submissions, unless you have any further questions.

PN60

DEPUTY PRESIDENT SAMS: Yes, Mr Hamilton; do you wish to - - -

PN61

MR HAMILTON: Thank you, your Honour. Your Honour, if you note from the present modern award there are a number of sections within that award relating to the special provisions for exhibition industry members and they're our members - not all the exhibition companies, of course, but the majority are. We just sought to ensure that our position was kept as it is now, under the award.

PN62

DEPUTY PRESIDENT SAMS: Does that mean your members pay the 17.5 per cent loading?

PN63

MR HAMILTON: Yes, your Honour, they do and we're not here to argue against other sections of the industry that that award covers. But our exhibition industry members do pay the annual leave loading and they have done since I think the original orders; about 1992, the exhibition industry award, if the Commission pleases.

PN64

DEPUTY PRESIDENT SAMS: Thank you. Mr Crawford, do you wish to respond?

PN65

MR CRAWFORD: Just briefly, your Honour: we reject the suggestion that we need to run a big merit case here to restore a condition that clearly was widespread in this industry prior to the modern award being made. We've clearly demonstrated that based on the pre-modern awards. The award review Full Bench that dealt with the dredging award has already highlighted that the history is critical in these cases. We say what is lacking from ABI's case is any explanation for why this important condition was omitted from the modern award, aside from it being an error. Why would - during the award modernisation process - the Full Bench have omitted this important condition, a condition that was in virtually all of the pre-modern awards, and not provided any explanation in either their statement or decision for why they were doing that?

PN66

We say that cannot possibly have been the case. We say this is simply an error. It's an error the AWU has been trying to address for a number of years. We tried to address it during the transitional review. Admittedly, the award was not varied then, but you'll notice in the passage that Mr Izzo referred you to that the majority did indicate that the claim may be more appropriately dealt with in the four-yearly review, so we have raised it again here. We say it's simply an error and the Commission - it's the type of error that the Commission should address during the four-yearly review. Those are my submissions.

PN67

DEPUTY PRESIDENT SAMS: Thank you. We thank you for your submissions and the efficient conduct of the proceedings. We propose to reserve our decision in the matter and the parties will be advised in due course. We now adjourn.

ADJOURNED INDEFINITELY [10.35 AM]