[2015] FWCFB 2575

The attached document replaces the document previously issued with the above code on 15 April 2015.

The references to Housing Industry Australia have been amended to the organisation’s correct name: Housing Industry Association.

Jimmy Li

Associate to Justice Boulton

Dated: 16 April 2015.

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

4 yearly review of modern awards - Common Issues - Transitional Provisions relating to accident pay and district allowances - applications for take home pay orders.

[1] This matter concerns claims by the Australian Council of Trade Unions (ACTU), Australian Municipal, Administrative, Clerical and Services Union, “Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union” known as the Australian Manufacturing Workers’ Union (AMWU), “Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union” known as the Australian Manufacturing Workers’ Union (AMWU) - Vehicle Division, Construction, Forestry, Mining and Energy Union - Forestry & Furnishing Products Division (CFMEU - FFPD), Construction, Forestry, Mining and Energy Union - Construction & General Division, Shop, Distributive and Allied Employees Association - Victorian Branch (SDA - Vic Branch), Shop, Distributive and Allied Employees Association - SA and NT Branch (SDA - SA & NT Branch), Textile, Clothing and Footwear Union of Australia (TCFUA) and The Australian Workers’ Union for the making of pre-emptive interim take home pay orders to avoid any reduction in pay when the transitional provisions in modern awards regarding Accident Pay and District Allowance cease to operate on 31 December 2014.

[2] The claims were pressed in the light of the Full Bench’s decision of 31 October 2014 1 not to grant an ACTU application to delete the sunset provisions in the transitional Accident Pay and District Allowance provisions in modern awards. Further reasons for that decision were issued by the Full Bench on 11 February 2015.2

[3] In its decision of 23 December 2014 3 the Full Bench declined to grant the ACTU/union claims for pre-emptive interim take home pay orders and undertook to publish full reasons for its decision in due course. We now provide those further reasons for our decision in relation to the ACTU/union claims.

Relevant award and statutory provisions

[4] It is important at the outset to set out the award and statutory provisions relating to take home pay orders. With regard to the statutory provisions, the key instruments are the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 (the Transitional Act), the Fair Work (Transitional Provisions and Consequential Amendments) Regulations 2009 (Transitional Regulations), and the Fair Work (Transitional Provisions and Consequential Amendments) Amendment Regulations 2010 (No.1) (the Amending Regulations) which amended both the relevant provisions of the Transitional Act by virtue of Item 8 of Part 2 of Schedule 2 of that Act and the Transitional Regulations. For reasons of clarity, we refer below to the Transitional Regulations as amended by the Amending Regulations.

Modern award provision

[5] The following provision contained in modern awards deals with take-home pay orders.

“2. Commencement and transitional

2.1 This award commences on 1 January 2010.

2.2 The monetary obligations imposed on employers by this award may be absorbed into overaward payments. Nothing in this award requires an employer to maintain or increase any overaward payment.

2.3 This award contains transitional arrangements which specify when particular parts of the award come into effect. Some of the transitional arrangements are in clauses in the main part of the award. There are also transitional arrangements in Schedule A. The arrangements in Schedule A deal with:

• minimum wages and piecework rates

• casual or part-time loadings

• Saturday, Sunday, public holiday, evening or other penalties

• shift allowances/penalties.

2.4 Neither the making of this award nor the operation of any transitional arrangements is intended to result in a reduction in the take-home pay of employees covered by the award. On application by or on behalf of an employee who suffers a reduction in take-home pay as a result of the making of this award or the operation of any transitional arrangements, the Fair Work Commission may make any order it considers appropriate to remedy the situation.

2.5 The Fair Work Commission may review the transitional arrangements in this award and make a determination varying the award.

2.6 The Fair Work Commission may review the transitional arrangements:

(a) on its own initiative; or

(b) on application by an employer, employee, organisation or outworker entity covered by the modern award; or

(c) on application by an organisation that is entitled to represent the industrial interests of one or more employers or employees that are covered by the modern award; or

(d) in relation to outworker arrangements, on application by an organisation that is entitled to represent the industrial interests of one or more outworkers to whom the arrangements relate.”

Statutory provisions

[6] Part 3A of the Transitional Regulations which deals with take-home pay orders provides as follows:

“Part 3A—Avoiding reductions in take-home pay from modern award or transitional arrangements

13A Modern award terms giving FWA power to make take-home pay orders

(1) A modern award may include terms that give FWA power to make an order (a take-home pay order) remedying a reduction in take-home pay suffered by an employee or outworker, or a class of employees or outworkers, as a result of the making of a modern award or the operation of any transitional arrangements in relation to the award (whether or not the reduction in take-home pay is a modernisation-related reduction in take-home pay).

(2) An employee’s or outworker’s take-home pay is the pay an employee or outworker actually receives:

(a) including wages and incentive-based payments, and additional amounts such as allowances and overtime; but
(b) disregarding the effect of any deductions that are made as permitted by section 324 of the FW Act.

Note: Deductions permitted by section 324 of the FW Act may (for example) include deductions under salary sacrificing arrangements.

(3) This Part applies to an employee or outworker, or a class of employees or outworkers, to whom a modern award applies if the employee, employees, outworker or outworkers are likely to suffer a reduction in take-home pay attributable to the making of a modern award or the operation of any transitional arrangements in relation to the award.

13B Orders remedying reductions in take-home pay

(1) If FWA makes a take-home pay order under the terms of a modern award it must do so in accordance with this Part.

(2) Without limiting the kind of take-home pay order that may be made under the terms of a modern award, one or more of the following orders may be made:

(a) an order compensating a reduction in take-home pay that has already been suffered;
(b) an order requiring the payment of an amount of take-home pay;
(c) an order preventing a reduction in take-home pay from occurring.

(3) FWA may make a take-home pay order only on application by:

(a) an employee or outworker who has suffered a reduction in take-home pay; or
(b) an organisation that is entitled to represent the industrial interests of such an employee or outworker; or
(c) a person acting on behalf of a class of such employees or outworkers.

(4) If FWA is satisfied that an application for a take-home pay order has already been made in relation to an employee or outworker, or a class of employees or outworkers, FWA may dismiss any later application that is made in relation to the same employee, employees, outworker or outworkers.

13C Ensuring that take-home pay orders are confined to the circumstances for which they are needed

(1) FWA must not make a take-home pay order in relation to an employee or outworker, or a class of employees or outworkers, if:

(a) FWA considers that the reduction in take-home pay is minor or insignificant; or
(b) FWA is satisfied that the employee, employees, outworker or outworkers have been adequately compensated in other ways for the reduction.

(2) FWA must ensure that a take-home pay order is expressed so that:

(a) it does not apply to an employee or outworker unless the employee or outworker has actually suffered a reduction in take-home pay; and
(b) if the take-home pay payable to the employee or outworker under the modern award increases after the order is made, there is a corresponding reduction in any amount payable to the employee or outworker under the order.

13D Take-home pay order continues to have effect so long as modern award continues to cover employee, employees, outworker or outworkers

A take-home pay order made in relation to an employee or outworker, or a class of employees or outworkers, to whom a particular modern award applies continues to have effect in relation to the employee, employees, outworker or outworkers (subject to the terms of the order) for so long as the modern award continues to cover the employee, employees, outworker or outworkers, even if it stops applying to the employee, employees, outworker or outworkers because an enterprise agreement starts to apply.

13E Describing classes of employees or outworkers

(1) Without limiting the way in which a class of employees or outworkers mentioned in items 13A to 13D may be described for the purposes of those items, the class may be described by reference to one or more of the following:

(a) a particular type of employment;
(b) a particular classification, job level or grade;
(c) a particular entitlement;
(d) a particular employer.

(2) To avoid doubt, the description of a class is not required to include the names of the employees or outworkers, or the number of employees or outworkers, included in the class.”

The ACTU/union claims and submissions

[7] The ACTU/union claims sought the making of pre-emptive interim take home pay orders regarding Accident Pay in respect of twenty five awards and regarding District Allowance in respect of eight awards. The awards are listed at Appendix A to this decision.

[8] In support of the claims, the ACTU submitted 4 that:

• award provisions concerning Accident Pay and District Allowance were transitional arrangements for the purposes of clause 2.4 of modern awards;



• the take home pay orders authorised by clause 2.4 of modern awards were broader than those provided for by the Transitional Act which were only concerned with reductions in take home pay suffered by persons who were employed under the terms of an award based instrument prior to the modern award taking effect;



• it was indisputable that an employee or outworker who ceased to receive Accident Pay or District Allowance as a consequence of the operation of the relevant award’s transitional provisions would be entitled to a take home pay order under clause 2.4 of the award;



• the position of workers who had yet to become entitled to either Accident Pay or District Allowance was less clear but could be remedied by the Full Bench varying clause 2.4 of the relevant awards in accordance with clause 2.5 of those awards;



• the Full Bench ought to review the transitional provisions by varying clause 2.4 of the relevant awards;



• the proposed variation to clause 2.4 meets the modern awards objective; and



• it was the unambiguous desire of the Award Modernisation Full Bench to ensure that the operation of the transitional provisions did not occasion reductions in take home pay.

[9] At the hearings on 21 November and 8 December 2014 the ACTU:

• acknowledged that there had never been any take home pay orders made in the form proposed;

• the pre-emptive interim take home pay orders sought were based on the Transitional Regulations, in particular Transitional Regulations 13A(3), 13B(2)(c) and 13C;

• consistent with Transitional Regulation 13E, the class of employees captured by the orders sought were defined by reference to the description of the entitlement and the sunset date contained in the relevant award provisions relating to Accident Pay and District Allowance;

• there was no need to amend clause 2.4 of the relevant awards to give effect to the orders sought, though it was desirable to do so to avoid parties having to sift through the Transitional Regulations which amended the Transitional Act;

• acknowledged that clause 2 in the relevant awards was potentially a mechanism to deal with any reductions in take home pay should the ACTU/unions’ claims for interim take home pay orders not be granted;

• with regard to the balance of convenience question, relied on the potential reductions in pay that some employees may suffer, particularly in respect of Accident Pay, as warranting the making of the orders sought; and

• disputed the key aspects of the employer submissions.

[10] The unions mentioned at paragraph [1] above all supported the ACTU’s submissions. A number of witness statements were filed by the unions. Witness statements by Ms Jane Calvert, Divisional President of the CFMEU - FFPD; 5 Ms Jennifer Kruschel, Assistant Secretary of the Victorian/Queensland Branch of the TCFUA;6 Ms Mandie Miller;7 Ms Donna Millsteed;8 Mr Nicholas Prince;9 Ms Natalie Raven;10 and Ms Janette Ann Park11 were tendered by the CFMEU - FFPD, TCFUA, SDA - SA & NT Branch and SDA - Vic Branch respectively. The witnesses were not required for cross examination. Beyond these witness statements no evidentiary material was led by the ACTU or unions.

Employer submissions

[11] The ACTU/union claims were opposed by the employer groups which participated in the proceedings. The main submissions were put on behalf of the Australian Chamber of Commerce and Industry (ACCI) and the Australian Industry Group (Ai Group).

[12] The ACCI submitted that the applications should not be granted because:

(a) the interim take home pay orders will create new entitlements that were not intended to be created for new employees after 31 December 2014;

(b) orders can only be made where there is an actual reduction in take-home pay;

(c) the take home pay provisions were not intended to allow the Commission to review entitlements in modern awards generally, meaning the ACTU’s proposal for the Commission to make ‘class based take home pay orders’ was an inappropriate exercise of the power; and

(d) the intention was to allow the Commission to deal with cases in which an employee actually suffers a reduction in their take-home pay, for working the same hours or performing the same quantity of work.

[13] At the hearing on 8 December 2014, the ACCI:

• described the interim take home pay orders sought by the ACTU/unions as a device to maintain transitional benefits relating to Accident Pay and District Allowance beyond 31 December 2014;

• drew on the Explanatory Statement for the Amending Regulations to argue that it was not intended that the Commission be able to make a pre-emptive take home pay order if there was no real prospect of an employee’s pay being reduced;

• characterised the ACTU/union claims as asking the Commission to make orders relating to a theoretical reduction in take home pay;

• submitted that there was nothing before the Commission which allows the Full Bench to make the findings that it must under Transitional Regulation 13C; and

• contended that it would be an erroneous exercise of discretion were the Full Bench to grant the orders sought.

[14] The Ai Group 12 strongly opposed the applications submitting that:

• the Commission does not have the jurisdiction to make the orders sought because there would be a lack of procedural fairness in granting a major new entitlement to employees who do not currently have it before unions have presented their case and employers have had the opportunity to respond;



• the Commission does not have the jurisdiction to make the orders sought because doing so would conflict with the take home pay order provisions of modern awards in several respects, including that they do not relate to an employee who has suffered a reduction in take home pay, to the operation of a transitional provision or remedy a reduction that an employee has suffered;



• it would not be appropriate or consistent with relevant Court and Commission authorities for the Full Bench to make the orders sought;



• the applications are in direct conflict with the principles set down in the 4 Yearly Review of Modern Awards: Preliminary Jurisdictional Issues decision; 13 and



• the balance of convenience does not favour the granting of the orders sought for a number of reasons, including that the unions are seeking interim orders for entitlements that do not exist or have never existed for all or even most of the employees covered by the proposed orders.

• if the orders sought were made, there would be a very large number of employees who would be covered by the orders that do not have existing transitional entitlements;

• there was nothing in the materials before the Commission to suggest that Accident Pay and District Allowance were what anyone had in mind when looking at clause 2 in awards or what the then Government had in mind in amending the Transitional Regulations in 2010;

• there was no power to make a take home pay order for either a class of employees or an individual employee if the order was about the expiry of a transitional arrangement as such an order was not about the operation of a transitional arrangement; and

• it was highly inappropriate to vary clause 2 in awards for a number of reasons, including procedural fairness.

[16] The Housing Industry Association (HIA) and the National Farmers’ Federation (NFF) also appeared in the proceedings and generally supported the submissions of the ACCI.

Decision and reasons for decision

[17] Having considered the submissions presented, we decided to reject the applications for interim take home pay orders. There were several reasons for doing so.

[18] First, we were concerned that any order would have the necessary degree of clarity to enable an employer to clearly understand their obligations and for an employee to be able to enforce the order. While noting Transitional Regulation 13E(2), the evidential material before the Commission lacked detail as to the number and location of employees who may be affected by, and the impact on take home pay of, the cessation of the operation of the Accident Pay and District Allowance provisions in modern awards on 31 December 2014. For instance, at the hearing the ACTU stated that it did not know how many employees may rely on an interim take home pay order, if granted, to remedy a reduction in take home pay. 14 The various witness statements tendered in the proceedings did not assist in bridging this evidentiary gap.

[19] Against that background, the Full Bench is also not satisfied in relation to the matters referred to in Transitional Regulation 13C(1). Those matters go to whether a reduction in take home pay is minor or insignificant and whether the employee(s)/outworker(s) have been adequately compensated in other ways for the reduction. Transitional Regulation 13C(1) provides that the Commission “must not make a take-home pay order” if it considers that the reduction in take home pay is minor or insignificant or if it is satisfied that the employees or outworkers have been adequately compensated in other ways for the reduction. In the present circumstances, we do not consider that there has been demonstrated a sufficient evidential base for the Commission to make the orders sought.

[20] Second, we noted that the relevant award provision states that the Commission may on application make any order it considers appropriate to remedy the situation in circumstances where an employee suffers a reduction in take-home pay as a result of the making of the award or the operation of any transitional arrangements. The use of the terms ‘suffers’ and ‘remedy’ suggests that any order would only be made in circumstances where the reduction has taken effect rather than pre-emptively as advocated by the ACTU and unions. This is consistent with Transitional Regulations 13B(3)(a) which states that the Commission may make a take home pay order on application by “an employee or outworker who has suffered a reduction in take-home pay” and 13C(2)(a) which provides that the Commission must ensure that a take-home pay order is expressed so that “it does not apply to an employee or outworker unless the employee or outworker has actually suffered a reduction in take-home pay” (underlining added).

[21] As to the ACTU’s submission that the Full Bench should vary clause 2.4 of award relying on clause 2.5, the Full Bench declines to do so as, consistent with our views expressed at paragraph [19] above, we were not satisfied that the evidentiary requirements for such a variation had been made out.

[22] Further, having regard to the potential impact on employees of the cessation of operation of the transitional provisions relating to Accident Pay and District Allowance, the evidentiary gap we have previously alluded to and the award provision relating to take home pay orders, we did not consider that the balance of convenience warranted the Commission exercising its discretion to make the orders sought.

[23] For all these reasons we declined to make the orders sought by the ACTU and unions.

[24] Finally, we take this opportunity to reiterate that our decision to reject the ACTU/union claims for interim take home pay orders in no way precludes an employee or group of employees who may be affected by the cessation of the Accident Pay and District Allowance provisions and/or their representative(s) from making an application for a take home pay order in accordance with the award provision and/or the relevant provisions of the Transitional Act. Dealing with any such applications on a case by case basis will ensure that any ensuing order has the requisite degree of clarity for all parties.

SENIOR DEPUTY PRESIDENT

Appearances:

T. Clarke for Australian Council of Trade Unions and Construction, Forestry, Mining and Energy Union - Forestry & Furnishing Products Division.

S. Maxwell for Construction, Forestry, Mining and Energy Union - Construction and General Division.

M. Moretta for Shop, Distributive and Allied Employees Association - Victorian Branch.

B. Cagney for Shop, Distributive and Allied Employees Association - SA and NT Branch.

V. Wiles for Textile, Clothing and Footwear Union of Australia.

M. Nguyen for “Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union” known as the Australian Manufacturing Workers’ Union (AMWU).

L. Webber for “Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union” known as the Australian Manufacturing Workers’ Union (AMWU) - Vehicle Division.

J. Knightly for Australian Municipal, Administrative, Clerical and Services Union.

I. Crawford for The Australian Workers’ Union.

N. Ward for Australian Chamber of Commerce and Industry, Australian Business Industrial, the NSW Business Chamber Ltd, Restaurant and Catering Australia, the Accommodation Association of Australia, Motor Inn Motels and Accommodation Association, Master Plumbers and Mechanical Services Association of Australia, Printing Industries Association of Australia, the Australian Federation of Employers and Industries, the Victorian Automotive Chamber of Commerce, Master Builders Australia.

M. Smith, N Street, R. Bhatt for The Australian Industry Group.

M. Adler for Housing Industry Association.

S. McKinnon for National Farmers’ Federation.

Hearing details:

2014

Sydney

21 November

8 December

APPENDIX A

AWARDS SUBJECT TO TAKE-HOME PAY APPLICATIONS

Accident Pay

Airline Operations—Ground Staff Award 2010

Building and Construction General On-site Award 2010

Concrete Products Award 2010

Dry Cleaning and Laundry Industry Award 2010

Fast Food Industry Award 2010

Fire Fighting Industry Award 2010

Food, Beverage and Tobacco Manufacturing Award 2010

Gardening and Landscaping Services Award 2010

General Retail Industry Award 2010

Graphic Arts, Printing and Publishing Award 2010

Hair and Beauty Industry Award 2010

Horticulture Award 2010

Hydrocarbons Industry (Upstream) Award 2010

Joinery and Building Trades Award 2010

Mannequins and Models Award 2010

Manufacturing and Associated Industries and Occupations Award 2010

Mobile Crane Hiring Award 2010

Nurses Award 2010

Oil Refining and Manufacturing Award 2010

Pharmacy Industry Award 2010

Storage Services and Wholesale Award 2010

Textile, Clothing, Footwear and Associated Industries Award 2010

Timber Industry Award 2010

Vehicle Manufacturing, Repair, Services and Retail Award 2010

Wine Industry Award 2010

District Allowance

Fast Food Industry Award 2010

General Retail Industry Award 2010

Hair and Beauty Industry Award 2010

Local Government Industry Award 2010

Nurses Award 2010

Pharmacy Industry Award 2010

Social, Community, Home Care and Disability Services Industry Award 2010

Vehicle Manufacturing, Repair, Services and Retail Award 2010

 1   [2014] FWCFB 7767.

 2   [2015] FWCFB 644.

 3   [2014] FWCFB 9429.

 4   Exhibit C1.

 5   Exhibit C2.

 6   Exhibit TCF2.

 7   Exhibit SDA1.

 8   Ibid.

 9   Ibid.

 10   Ibid.

 11   Exhibit SDA2.

 12   Exhibit AiG7.

 13   [2014] FWCFB 1788.

 14   Transcript at PN2680-2682.

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