Annualised Wage Arrangements [2018] FWCFB 154 | Case summary

[2018] FWCFB 154

Annualised Wage Arrangements [2018] FWCFB 154 | Case summary | Zoe

[201]

[30] The NFF relied on two statements of evidence, the makers of which were not required to attend for cross-examination. The first statement was made by Gracia Kusuma, the Industrial Relations Manager with the NSW Farmers Association. In her statement, Ms Kusuma said that one of the most frequent enquiries the Association received from members related to reviewing their proposed employment conditions from a compliance perspective and formalising them as employment contracts or Individual Flexibility Agreements. An estimated 50% of members who sought assistance with drafting or reviewing employment contracts wanted annualised salary arrangements with their employees. Such arrangements were preferred by members in certain circumstances because they provided consistency of pay for employees, incentivised employees to complete assigned tasks within normal hours, and took away the need for "clock watching".

[31] The second statement was made by Charles Armstrong, the Chair of the NFF's Workforce Productivity Committee, the Chair of Farmsafe Australia and the former President of the NSW Farmers' Association. Mr Armstrong has also been the operator of a large farm for 40 years. He said that the agricultural industry was dictated by seasonality, which caused peaks and troughs in workload during the year, with busy times occurring during operations such as sowing, harvesting, shearing, marking, lambing or calving. Farmers and their employees often worked long hours during these periods and took time off when the peak period had passed and there were routine management and maintenance operations to do. It was important to find ways to streamline paperwork and administrative tasks to ease the regulatory burden on farmers. Farmers and their employees were vulnerable to changes in seasonal conditions caused by weather and changes to market forces because of retailer demands. For farmers, such changes limited the ability to control work or plan ahead, and for employees it could cause fluctuations in their take-home pay depending on hours worked. One way of dealing with this was to adopt annualised salary arrangements for employees, so that farmers and employees could plan around to amount to be paid each week, and to reduce the paperwork burden on farmers. It was common practice in the industry for annualised salaries to be negotiated in employment contracts, but it was not always clear how such contracts interacted with award terms requiring payment for overtime and the like. In Mr Armstrong's opinion, an award provision that allowed annualised salary arrangements to be made was a practical step that could benefit both farmers and their employees by improving certainty and regularity of cash flow. The certainty provided to employees by an annualised salary would also benefit employees when negotiating with a bank or for other commercial arrangements.

[32] No other party adduced evidence in relation to the NFF claims.

[202]

[33] The NFF submitted that:

seasonal variability was more prevalent in the agricultural sector than in the mining industry covered by the Mining Industry Award 2010 which contained an annualised salaries provision as a result of decision of the Australian Industrial Relations Commission (AIRC) in 2009;

its proposed annualised salaries provision would be consistent with the modern awards objective in s 134(1)(a);

in respect of s 134(1)(a), the proposed provision would improve the living standards of the low paid, in that a dependable year-round income would give greater financial security and allow effective budgeting; in respect of s 134(1)(b) it was neutral; in respect of s 134(1)(c) and (d) it would promote social inclusion and flexible work practices by accommodating non-standard business hours; it was neutral in respect of s 134(1)(da) and (e); in respect of s 134(1)(f) it reduced the regulatory burden, had a lesser administrative burden than individual flexibility arrangements, and supported greater workplace certainty and flexibility which would give employers greater confidence to employ; in respect of s 134(1)(g) it allowed for greater clarity as to how to calculate an annual salary; and in respect of s 134(1)(h) it would promote employment;

the proposed provision contained a number of safeguards to ensure that the proposed term would not cause disadvantage to employees, including that the arrangement had to be in writing, employees had to receive at least what they would have received over the year if paid under the award, the annual salary was payable during all periods of paid leave, and did not apply to shearing operations in the pastoral industry.

[34] The AWU did not oppose the introduction of an annualised salary provision in the two awards provided that further safeguards were added. It proposed the following additional requirements as safeguards:

the employer was to keep records of the performance of work that fell into the category of work that was satisfied by the annual salary;

the employer was to conduct a review on termination of employment, or if the annualised salary arrangement ended, as well as annually;

any underpayment to be rectified within a certain time period following a review (including the annual review, review on termination of employment, or review upon ending an annualised salary arrangement); and

a termination clause allowing the employee to end an annual salary arrangement.

[35] The AWU submitted that similar record keeping requirements were inserted into the Rail Industry Award 2010 (Rail Award) by the Award Modernisation Full Bench. It also proposed inserting the following provision extracted from clause 18.4 of the Rail Award:

[225]

[41] The ASU provided evidence by way of the witness statement of Terry O'Loughlin, an industrial officer with the ASU. Mr O'Loughlin was not required for cross-examination. Mr O'Loughlin gave evidence in his statement that the ASU had experienced problems where members had been in dispute over the non-payment of overtime where extra hours, early mornings, later evenings or weekends had been worked, the non-payment of shift penalties, the non-payment of annual leave and annual leave loading and the non-payment of annual holidays. Disputes had arisen when letters or contracts of employment had been drafted which referred to an annualised salary as being "all encompassing" in regard to penalties and allowances or that the "salary will cover all overtime entitlements", and claims made by the ASU for the payment of penalties or allowances to a member were often met with the response that an over-award payment formed the basis of an annualised salary that covered all other penalties and allowances even though they were never detailed in the contract of employment. In a number of instances the member had been unaware of the implications of such an arrangement because under the current award provisions it did not require their consent, nor did it require identification of the award provisions which were to be offset. Employers invariably used the annualised salaries provision in preference to the individual flexibility agreement provision because it was less prescriptive.

[42] The ASU also relied upon a survey which it conducted of its members which generated approximately 280 responses. It relevantly showed that:

66% of respondents were female;

66% of respondents did not previously know what an annualised salary arrangement was;

63% were currently paid an annualised salary, with 17% saying that they did not know and 20% saying they were not; and

76% had been paid an annualised salary under a previous employment arrangement.

[43] No other evidence was adduced by any party in relation to these awards.

[232]

[46] The ASU submitted that this analysis showed that the annualised salaries clause contained in the Clerks Award was not the norm, and that it undermined the award flexibility provisions because it did not require agreement between an employee and an employer. In effect, employees were denied the right to utilise the award flexibility provisions by virtue of the annualised salary clause. The addition of a requirement for employee agreement and a right for the employee to terminate the arrangement would deal with this difficulty. Further, the need for adequate safeguards was demonstrated by the recent decision of the Western Australian Industrial Magistrate in Simone Jade Stewart v Next Residential Pty Ltd[21] which found in favour of an employee claim to unpaid overtime because her annualised salary arrangement did not specify the provisions. This was a highly unusual case in which an employee had challenged her payment under an annualised salary arrangement. The great majority of employees covered by the Clerks Award were female and non-unionised, and thus required the protection of greater safeguards.

[47] The ASU opposed the Law Firms' proposed variation to insert shiftwork allowances into clause 30.1 of the Legal Services Award. It submitted that shiftwork allowances were critical to employees' pay, and such a variation would disadvantage employees because an employee could not refuse consent nor terminate the agreement and did not have the protection of safeguards. The ASU disagreed with the Law Firms' submission that the inclusion of shift allowances was an oversight.

[48] The Community Public Sector Union (CPSU) supported the ASU's application with respect to the Call Centre Award, and submitted that an annualised salary provision should continue to apply only to the three highest classifications. The current annualised salary clause did not require employee consent and was contrary to the modern awards objective. It created a disincentive for employers to collectively bargain because an employer could achieve flexibilities in award provisions without negotiation with employees. It also deprived employees of certain award entitlements that would otherwise apply, and could make it difficult for an employee to calculate over the course of the year whether they would have received a greater annual salary than they would have received under specific award entitlements payable at the time of the work being performed. The CPSU submitted that under the Call Centre Award an employee was deprived of the choice of whether they would prefer the clarity and transparency of award entitlements or choose an annualised salary in discharge of those provisions.

[49] The Ai Group submitted that the ASU had not established any deficiency in the existing provision in the Clerks Award. The annualised salary clause in the Local Government Award, which the ASU sought to be replicated in the Clerks Award, was not fully considered in the Transitional Review, but was inserted by consent of the parties so that the Commissioner's decision could not be construed as endorsing any specific elements of the clause. Further, its inclusion did not establish that the provision was desirable or necessary to achieve the modern awards objective. Ai Group submitted that the ASU's allegation that employers had exploited the annualised salary provisions to go further than the award flexibility clauses had not been supported by probative evidence. The current provision in the Clerks Award had been the subject of consideration on a number of occasions such that it could be said that the provision reflected an approach that had been scrutinised, accepted and endorsed by the Commission. The ASU had failed to establish that its proposed provision was necessary to meet the modern awards objective. There was no probative evidence of annualised salary arrangements undermining individual flexibility agreements, and this same argument had been put by the ASU, and rejected, in the Transitional Review. Nor was there probative evidence as to why a requirement for agreement was necessary to avoid unfairness, and the limited evidence of Mr O'Loughlin described award non-compliance rather than any deficiency in the award clause itself.

[50] Ai Group submitted the variations proposed by the ASU would have a number of adverse consequences on business, productivity, employment costs and the regulatory burden (s 134(1)(f) of the FW Act). Firstly, requiring employee agreement to pay an annualised salary would increase the discussions or negotiations required to ascertain employee agreement which may be a time consuming process. Secondly, a requirement for an employer to set out details of any performance pay and performance measurement indicators was not a matter that could be included in a modern award and was not necessary to ensure a fair and relevant minimum safety net. Thirdly, the proposed requirement for a written agreement to contain details of salary package arrangements and other non-salary benefits would create a requirement to define entitlements that do not arise from the terms of the award and instead may be provided subject to a common law contract of employment or a company policy. No basis for requiring the inclusion of this had been advanced, and the assessment of whether an employee was disadvantaged from the payment of an annual salary related only to the amount an employee would have received under the Award.

[51] The Ai Group also opposed the ASU's proposed variation to the Call Centre Award. It submitted that nothing had been advanced to establish the current annualised salary provisions did not provide fair, responsible and robust conditions and a decent safety net. The current clause provided an alternative remuneration structure for higher level classifications and did not contain the express obligation in relation to no disadvantage as the Clerks Award did, and thus was of a different character to the other provisions being considered in the matter. The provision had been negotiated and agreed between the Ai Group and the ASU in relation to a pre-reform award, and an application to delete the provision had been rejected in the Transitional Review.

[52] ABI & NSWBC opposed the ASU claim, and submitted that the claim, if granted, would essentially have the impact of transforming annualised salary arrangements into what would for most intents and purposes be indistinguishable from an individual flexibility agreement. The ASU submission that the annualised salary clause in the Clerks Award was unilaterally determined by employers was incorrect because the clause required express agreement between the employer and the employee in the form of a letter of offer/employment contract which was voluntarily entered into by the parties. ABI & NSWBC submitted that the balance of the ASU claim was unnecessary and inappropriate because the existing annualised salaries clause provides appropriate safeguards consistent with the modern awards objective.

[53] The Chamber of Commerce and Industry of Western Australia (CCIWA) contended the variations proposed by the ASU would make the annualised salary provisions more complex and increase the risk for employers seeking to enter into such arrangements, and that there was no basis for inserting the relevant clauses from the Local Government Award into the awards proposed by the ASU in circumstances where the awards did not share a common history and where the nature of local government was different to private sector business.

[54] The Law Firms submitted, in relation to their own claim, that the omission of shift allowances in the list of what might be satisfied by the payment of an annualised salary was an oversight or technical omission from the original provision. They submitted that a law firm would engage clerical employees on shiftwork only in very limited circumstances, such as those who have clerical staff working overnight, and therefore no disadvantage was likely to arise. Further, shiftwork allowances were the only monetary entitlement in the Legal Services Award which could not be included in an annualised salary, whereas the Clerks Award allowed for this. Employees covered by the Legal Services Award could not reasonably be characterised as vulnerable because 70% of those employees were paid at least $12,000 above the minimum award rates and 21% were paid over $20,000 above the minimum award rates.

[55] The Law Firms also opposed the ASU claims for reasons similar to those advanced by the other employer groups.

[245]

[57] Ai Group submitted that the variation was proposed on the following bases:

it benefited both employers and employees by redistributing wages throughout the year where they might have otherwise fluctuated significantly;

annualised salary provisions provided greater clarity than the common law of set off;

many modern awards applying to employees performing work of a similar nature contained similar provisions;

in light of the above proposition, there was no apparent reason not to include the provisions;

the grant of the claim would not be inconsistent with previous decisions of the Commission;

the claim could be distinguished from previous unsuccessful claims for annualised salary provisions; and

the provision was necessary to achieve a fair and relevant minimum safety net of terms and conditions.

[58] Ai Group submitted that a number of modern awards contained annual salary provisions for employees engaged in supervisory, managerial or other senior roles, and the absence of this flexibility in this award was inappropriate and unduly restrictive. The proposed provision would be limited to employees classified as level 8 or 9 Support Services employees and health professionals. The proposed provision was modelled on clause 17 of the Clerks Award. It met the requirements set out in s 139(1)(f)(i) of the FW Act as it took into account the pattern of work undertaken by the employees in the classification to whom the clause would apply, and met s 139(1)(f)(ii) in that it enabled payment of an annualised salary as an alternate to the minimum weekly wage and other monetary entitlements such as allowances, weekend and shift penalties, overtime and annual leave. It also met the requirements of s 139(1)(f)(iii) as the operation of proposed clause 16.2 was self-evidently designed to ensure that an individual employee was not disadvantaged. Clause 16.2 mandated an annual review that would ensure that the provisions of the award were satisfied by the salary.

[59] The Chiropractors' Association Australia (CAA) supported the Ai Group's claim and submissions, but did not agree that the provision should be restricted to specific classifications. It submitted there was no reason why administrators within the allied health industry should be differentiated from administrators in the private sector and be denied the benefit of annualised remuneration. It noted that, prior to the introduction of the Health Professionals Award, chiropractors were largely award free and their assistants, covered by various clerical awards, were typically paid annual salaries. It sought the inclusion of an annualised salaries provision in the Transitional Review but was unsuccessful. The chiropractic industry was dominated by small businesses, and the use of annualised salaries was much simpler and less of a regulatory burden on employers.

[60] United Voice opposed the claim, and rejected the proposition that annualised salaries were an appropriate method of remuneration for the health industry. It characterised the industry covered by the Health Professionals Award as follows:

most employees were employed in hospitals which operated 24 hours a day 7 days a week;

this led to complex rosters with different penalty rates and loadings; and

most workers would expect to be working at any time of the day or night and overtime hours were common.

[61] The complexity of rostering meant, United Voice submitted, that even with a proper review of provisions, it would be very difficult to assess whether underpayment had occurred. United Voice also submitted that, given the complexity of the annual review, the proposed variation might assist an employer to circumvent award entitlements. No evidence had been provided to demonstrate that the proposed variations were necessary to achieve the modern awards objective. The Ai Group's point that a number of other awards with professional employees contain annualised salary provisions was irrelevant and the Commission should review the award by reference to the particular terms and operation of that award, rather than make a global assessment based on generally applicable considerations.

[62] The Health Services Union (HSU) likewise opposed the proposed variation, which it submitted was supported by no probative evidence demonstrating that the award did not meet the modern awards objective. It rejected the proposition that many modern awards contained provisions of the type sought by the Ai Group, and submitted that many of the awards referred to did not in fact contain annualised salary provisions and, in any event, work performed under the Health Professionals Award was of a different nature to the work performed under the identified awards. There was nothing self-evident in the draft determination that would ensure an employee would not be disadvantaged, and accordingly the proposed provision did not include appropriate safeguards to ensure that individual employees are not disadvantaged as required by the FW Act. Employees in the health workforce regularly worked evenings, weekends and public holidays and the industry was characterised by unsociable hours and irregular work, and there was no protection from disadvantage caused by the loss of entitlement for this type of work.

[63] The ASU also opposed the proposed variation and submissions made by CAA. The ASU submitted the AI Group's proposed clause was weak and minimalist in nature, with few employee safeguards and no agreement required from an employee.

[291]

[72] United Voice was the only party which adduced evidence in relation to the claims. It filed two witness statements. The first statement was treated as confidential to the degree necessary to protect the witness's identity (Witness X). Witness X was cross-examined, but the transcript of his evidence was also the subject of a confidentiality order. We shall refer to his evidence in a way which does not permit him to be identified. His evidence may be summarised as follows:

he was 22 years old, was a qualified chef, and had worked as an apprentice chef at a number of restaurants;

in 2013 he commenced work at a restaurant in a regional area, initially as a casual, but was later placed on an annualised salary;

when he was placed on the annualised salary, he was not told very much about how it would work, what his pay should have been or whether a reconciliation of his hours could take place;

he was classified as a fourth year apprentice chef under the Restaurant Award his minimum weekly rate was $688.28;

he worked split shifts, usually from 10am or earlier until 2pm and then from 5pm to close, which would usually be from 9pm-10.30pm depending on the day but could be after midnight if there was a function;

he sometimes had to work through the break, and regularly worked shifts that were 14 hours per day;

he produced his own work hours records which showed that, over a period consisting of five fortnightly pay periods, he worked a total of 665 hours;

his payslips recorded him as working 80 hours each fortnight over the same period;

his fortnightly pay varied over this period, and his annual pay amounted to about $38,000.00;

his employer did not conduct a reconciliation of his pay and hours;

he complained about his hours and pay to his employer, but nothing was done about it;

with the assistance of United Voice he made a complaint to the Fair Work Ombudsman, and this was resolved by his employer putting him back on award wages;

when he left his employment in 2014, United Voice brought an underpayment claim for $19,115.14 on his behalf in the Federal Circuit Court, which was subsequently settled; and

he had not worked on an annualised salary since that time.

[73] The second witness was Mr Jun Yuan, who was a qualified chef who had emigrated from China to Australia in 2006. After working at a number of restaurants in clubs and hotels, he was employed at the Brighton Metro Hotel in South Australia in June 2014 as a casual chef. In 2015 he was made full-time, and was paid on an annualised salary. In the financial year 2015-16, he earned $52,399. During this period he worked five days per week, averaging about 44 to 47 hours' work. His pay remained the same each week regardless of how many hours he worked. Eventually in May 2016 United Voice complained on his behalf about his pay and hours, and in response the hotel reduced his working week to 4½ days. Mr Yuan was not required for cross-examination.

[74] United Voice also tendered copies of the following expert reports which had originally been prepared for the part of the 4-yearly review concerned with part-time and casual employment:

report of Dr Damien Oliver dated 3 September 2015;

report of Damien Oliver dated 22 February 2016;

report of Dr Olav Muurlink dated 4 November 2015; and

report of Dr Olav Muurlink dated 16 August 2016.

[75] United Voice also tendered a copy of a power-point presentation concerning "The role of job quality in recruitment and retention challenges in the Australian restaurant industry" presented at the 30th Association of Industrial Relations Academics of Australia and New Zealand AIRAANZ Conference: Building Sustainable Workforce Futures in Sydney on 12 February 2016 by S. Belardi, A. Knox A and C.F.Wright. It is not necessary to summarise the expert/industry evidence except to note that United Voice relied on that evidence to demonstrate the following propositions:

hospitality workers were generally low paid, highly award-reliant and dependent on penalty rates and overtime to maintain their living standards;

the industries covered by the Hospitality Award and the Restaurant Award were characterised by unsociable hours and weekend and public holiday work, with 61% of employees usually working weekends;

significant numbers of employees worked long hours, which could have dangerous physical and psychological impacts;

average hours for full-time employees were longer than the all-industries average;

the hospitality industry was marked by very high employment growth, and there were projections for continued growth in demand for skilled workers in full-time positions such as chefs and manager;

there were industry concerns about finding sufficient skilled workers to meet demand; and

skilled workers such as chefs and managers left the industry because of poor job quality due to long hours and poor remuneration.

[76] No other party adduced any evidence in respect of the United Voice and RCI claims.

[292]

[77] United Voice submitted that;

it was necessary in order for there to be proper compliance with award obligations that employees on annualised salaries have access to proper records of their working hours;

in the Hospitality Award that necessitated a new provision giving employees the right to inspect and copy any records, and in the Restaurant Award that required clear record-keeping obligations and an express right for employees to access their records;

the annualised salary provisions in the Hospitality Award did not contain clear procedures for review and reconciliation, and only the Restaurant Award provided for a yearly reconciliation of the annualised salary arrangement;

neither award made express provision for the compensation of an employee should a shortfall occur in payment of wages where an employee is transferred from an annualised salary to weekly wages before the completion of a year;

both awards needed to make express provision for a reconciliation between wages that would have been paid under the award provisions and the actual amount paid under an annualised salary arrangement when the arrangement ends before a year and the employee remains employed;

it was also necessary to reduce the period for review of the arrangement from 12 months to 6 months;

a change in terminology from "reconciliation" to "review" was to express the requirement in plain English;

the NES provided a right to refuse reasonable additional hours and provided the criteria for judging the reasonableness of an employer's request for an employee to work additional hours, one of which was the remuneration an employee would receive for working the additional hours;

under the current salary provisions it would be impossible for any employee to know the reasonableness of a request because they would be unable to judge what remuneration they would receive for working those hours;

the current salary provisions did not meet the modern awards objective because they are essentially a vehicle for avoiding the minimum safety net in the Hospitality Award and the Restaurant Award;

the current provisions allowed employers to avoid paying penalty rates, overtime and other monetary entitlements, and contravened the NES by obscuring an employee's right to refuse unreasonable hours;

there was no clear statement within the two awards that an employee on an annualised salary arrangement had the right to refuse unreasonable directions to work additional overtime;

the annualised salary arrangement provisions in the two awards were terms providing for the averaging of hours under s.62(3)(f) of the FW Act and therefore had to be taken into account when considering whether additional hours were reasonable or unreasonable;

the awards envisaged that the average hours would, from time to time, exceed 38 hours per week, however they did not provide for any clear statement that the maximum weekly hours of a full-time employee should be generally 38 hours a week;

an assessment of the reasonableness of additional hours required a clear understanding of the level of remuneration that an employee would receive for working those additional hours, and the arrangements would only be reasonable if the level of remuneration for the year (or a shorter period if the salary arrangement ends before a year) reflected the actual hours the employee worked;

unless the employee's remuneration was compared with the actual hours worked, it would be impossible to properly assess the reasonableness of any additional hours worked by the employee;

without a clear provision for review and reconciliation of an annualised salary, there was no guarantee that the salary would be appropriate for the employee's real pattern of work;

this flaw is problematic in an award dependent, low paid industry characterised by working weekends, nights and public holidays, and the problems were compounded by the rapid growth of employment in the hospitality industry;

as the proposed variations were limited in scope they would not affect the flexibility of full-time employment or increase the regulatory burden on employers; and

section 134(1)(da) was not in effect when the Hospitality Award and the Restaurant Award were first made, and was highly relevant to the circumstances of the employees under the awards who were covered by annualised salary arrangements, which justified a full review of those provisions.

[78] In relation to the RCI claim, United Voice submitted that including annual leave loading in an annualised salary defeated the purpose of the annual leave loading. The loading was provided to incentivise the taking of annual leave; if this were rolled over into an annual salary it would diminish this incentive. The proposed variation would add an administrative burden on the employer and was not necessary to achieve the modern awards objective.

[294]

[81] The Australian Hotels Association, the Accommodation Association of Australia and the Motor Inn and Motel Accommodation Association (collectively the AHA) submitted that United Voice did not provide any probative evidence for why current requirements do not achieve the modern awards objective. Nor was there any evidence to support the necessity for a 6 month reconciliation and how this would operate in circumstances where employers may be subject to high and low seasons across a period of 12 months. Due to seasonal demands a 6 monthly review process could produce misleading results and unduly alarm an employee or employer.

[82] The AHA submitted that United Voice failed to acknowledge the operation of the FW Act and the NES in setting out clear maximum weekly hours for full-time employees. Under the FW Act and the Hospitality Award an employee could refuse to work additional hours if they were unreasonable. The AHA submitted that United Voice inferred employees who were on an annualised salary arrangement did not have access to time and wages records despite this being required under the FW Act.

[83] In relation to the evidence of Mr Yuan, the AHA submitted that the evidence had not demonstrated how Mr Yuan's salary was not sufficient in the context of his timesheets. On a prima facie basis, Mr Yuan's salary appeared to be in excess of the minimum amount as permitted in the annualised salary provisions. His evidence did not allege an underpayment under the Hospitality Award.

[84] During the AHA's oral submissions, the AHA took on notice questions concerning whether any annualised salary arrangements should be required to be reduced to writing and, if so, whether the arrangement should specify how the agreed salary was constructed having regard to the employee's working pattern and any penalty rates and other additional payments which would apply. In a written submission which it subsequently filed, the AHA submitted that if an annualised salary arrangement in the Hospitality Award was required to be in writing and subject to reconciliation every 12 months then a method of calculation was unnecessary. A requirement for the express identification of a calculation or construct might lead to disputes regarding refusals to work in excess of identified particular day or hour thresholds notwithstanding that the salary was otherwise sufficient or commensurate modification was made elsewhere within a particular work pattern.

[304]

[91] The Rail Employers adduced evidence from David Johnston, the Principal Advisor, Employee Relations at Aurizon Holdings Ltd. In his witness statement, Mr Johnston said:

the Rail Award was the only instrument applying to about 390 employees of Aurizon;

about 97% of the Aurizon employees under the Rail Award were paid based on an annualised salary arrangement;

these arrangements were beneficial to employees because they were flexible, provided a guarantee of regular and consistent earnings, enable employees to average their work hours over the course of the year, and incentivised them to complete work within normal hours and not have to "watch the clock";

such arrangements were also beneficial to employers because they were flexible, provided certainty of regular salary payments and were more simple to administer than the base rate and allowances approach;

for these reasons it was common for Aurizon to explore the option of an annualised salary with a prospective employee at the time of recruitment, but clause 19 of the Rail Award as it currently stood did not allow Aurizon to enter into an annualised salary arrangement with a prospective employee during the recruitment phase;

this was problematic, as it had led to the practice of prospective employees being given a letter of offer showing their role and pay level in the Rail Award and told that after they commenced they could be offered an annualised salary, which created confusion and uncertainty for potential employees; and

being able to make an offer of employment on the basis of an annualised salary before the commencement of employment, where the offer met the award requirements, would simplify the process and remove confusion.

[92] Mr Johnston was cross-examined by the ASU. In cross-examination and re-examination he said:

he envisaged the annualised salaries provision operating in respect of someone who was not yet an employee but had applied for a position and with whom the organisation would like to enter into a contract of employment;

the current position was problematic for Aurizon, but also for the employee, because the Rail Award applied to persons such as accountants, business analysts, human resources professionals and others who were accustomed to being employed on an annual salary in the private sector, and it was confusing to have to tell them that an annual salary could not be part of their offer of employment;

he considered that if a prospective employee was presented with an annualised salary arrangement which, as the Rail Award clause required, set out a number of assumptions in the construction of the salary, that added to the information that they would get about the company and their conditions of employment;

the proposed new clause 18.5 gave employees more information about matters such as the date the annualised salary arrangement commenced, which would generally be the date they commenced employment;

being able to offer an annualised salary to a prospective employee gave the employee some certainty when they were considering whether or not to enter into an employment arrangement as to what their future remuneration would be, whereas currently they had to trust the employer that an annualised salary would be offered after they commenced employment;

prospective employees were told what industrial instrument applied to their employment, and if an enterprise agreement applied they were given a copy of it;

in Aurizon's operations the Rail Award generally applied, outside Queensland, to clerical, professional and administrative areas, graduates and some areas of track maintenance;

Aurizon's enterprise agreement in Queensland provided for salaries but also for overtime and penalties as well;

in the clerical, administrative and professional areas employees generally had a 38 to 40-hour week, which might involve earlier starts or later finishes depending on workload with adjustments to hours at other times;

track maintenance had less predictable hours because they were required to travel to sites and work for long periods, and annualised salaries were used to balance out payments from fortnight to fortnight, otherwise employees might get quite a large pay one fortnight and maybe a very small pay the next fortnight; and

when annualised salaries were entered into, Aurizon looked at how the employee was rostered for the particular work, calculated the penalties and the hours worked and construct the salary from that, and if there was a significant change to the rostering that would affect the penalties and allowances then it would recalculate to ensure that the salary offered was still within the scope of what would be payable under the award.

[310]

[101] On the basis of the (limited) evidence and submissions before us, it is clear that annualised wage arrangements potentially offer benefits for both employers and their employees. For employers, it allows the remuneration of the employee to be set at a fixed amount for each pay period notwithstanding that the employee works varying hours. This may confer business advantages in terms of managing cash flow and creating predictability in labour costs. Additionally, the payment of an annualised wage will be administratively simpler for employers in that it will not require a separate calculation of wages owing to be made in each pay period, and (as discussed further below) may potentially mean that the employer is not required to keep precise records of hours worked by employees, subject to the specific requirements of any applicable award provision concerning annualised salaries. It may also have the advantage of removing any incentive upon employees to "drag out" the performance of their work and thereby earn overtime. For the employee, there are benefits also: the employee will receive a fixed and certain remuneration amount each pay period regardless of the number of hours worked, which will carry with it the advantages of income security and predictability of earnings for the purpose of budgeting and obtaining finance. For these reasons it may therefore be said, as a general proposition, that an annualised wage arrangements provision in a modern award is capable of forming part of a fair and relevant minimum safety net of terms and conditions for the purpose of s 134(1). Certainly the fact that s 139(1)(f) permits the inclusion in a modern award of a term about annualised wage arrangements which satisfies the three identified conditions indicates that it was contemplated by the legislature that provisions of that nature were capable of achieving the modern awards objective.

[102] Of course it is not necessary to have an annualised wage provision in a modern award in order for an employer to be able to pay an employee to whom the award applies an annualised salary that compensates for or "buys out" various identified award entitlements. The principles by which this might be done were stated in the Federal Court Full Court decision in Poletti v Ecob[22] and subsequently affirmed in the Full Court decisions in Australia and New Zealand Banking Group Limited v Finance Sector Union of Australia[23] and Linkhill Pty Ltd v Director, Office of the Fair Work Building Industry Inspectorate.[24] In short, under a contract of employment the employer and employee may agree that the salary payable under the contract has the purpose of satisfying the obligation to pay identified award entitlements (such as, for example, base wages, overtime rates, shifts and weekend penalty rates, allowances and annual leave loading). The payment of salary pursuant to such a contract of employment may be relied upon by the employer as satisfying in part or whole any claim by the employee for under-payment of the identified award entitlements. However this means of paying an annualised wage to an employee to whom a modern award applies is not entirely free from legal difficulty. If there is a lack of a "close correlation between the nature of the contractual obligation and the nature of the award obligations", then payment of the salary may not satisfy the relevant award entitlements.[25] Further, the fact that an annual salary provided for in a contract of employment may, over the course of a year, equal or exceed identified award entitlements such as to discharge payment of them may, arguably, not amount to compliance with an award requirement that pay entitlements are required to be made to the employee within a specified pay period. Issues such as these may make the payment of a salary pursuant to an annualised wages provision in a modern award a more desirable and legally certain option.

[103] We have earlier set out the terms of s 139(1)(f), which sets out three requirements which must be satisfied in order for it to be permissible to include a term concerned with "annualised wage arrangements" in a modern award. The first requirement in s 139(1)(f)(i) requires the arrangements to "have regard to" the patterns of work in an occupation, industry or enterprise. A statutory requirement to have regard to something means it must be taken into account and given fundamental weight.[26] The expression "patterns of work" is used in other provisions of the FW Act, including in relation to the working of additional reasonable hours of work in s 62(3)(g) and in a note relating to employee requests for change to working arrangements in s 65(1). In context it is to be understood as referring to the configuration of the working hours of employees covered by the relevant award, which may include on what days hours are worked, at what time during the day hours are worked, and any variability in the number and arrangement of working hours from week to week. The requirement, we consider, is concerned with ensuring recognition of the need for the design of a term for the payment of annualised salaries to take into account matters such as whether employees under the award work a stable or variable number of hours per week, whether employees' work rosters are fixed or changeable over the course of the year, and whether employees tend to work at unsociable times that would attract the payment of penalty rates under the award or simply perform day work on a Monday-Friday basis. As we discuss later, once fundamental differences in the patterns of work of employees covered by different awards are properly taken into account, it becomes necessary that there be significant differences in the construct of annualised salaries provisions in different awards.

[104] The requirement in s 139(1)(f)(ii) that a term about annualised wage arrangements provide an "alternative" to the "separate payment of wages and other monetary entitlements" means that it must provide for a different payment method which is an available substitute for that of separately calculating and paying employees the various monetary entitlements for which the award provides. Section 139(1)(f)(ii) does not condition the circumstances in which the alternative may be accessed, so that provisions which may be availed of at the election of the employer or only by agreement with the employee would both be permissible.

[105] The requirement in s 139(1)(f)(iii) is that an annualised wage arrangements term include "appropriate safeguards to ensure that individual employees are not disadvantaged". To "ensure" there is no disadvantage is, on the ordinary meaning of the language used, to make certain that it does not happen, so the safeguards required must be sufficient to allow that state of certainty to be achieved. Assessing whether disadvantage exists is inherently a comparative exercise, but the provision does not expressly state what the comparator is. However, the immediate context makes it clear enough that the comparison is between the benefits to the employee under the alternative afforded by an annualised wage arrangement compared to the normal "separate payment of wages and other monetary entitlements" under the relevant award. Because the subject matter is remuneration, it is necessarily implicit that the question of whether there is disadvantage involves a mathematical comparison between remuneration under the annualised wage arrangement and the remuneration which would otherwise be payable under the award's provisions. That the subject matter is annualised wage arrangements suggests that the issue of disadvantage may be assessed over the course of a year (and not necessarily within the pay periods prescribed in the award). Therefore, in summary, a permissible annualised wages term must guarantee that, over the course of a year, an employee does not receive any less remuneration under the arrangement than would otherwise be payable under the provisions of the award.

[106] The 19 modern awards which currently contain annualised salaries provisions are as follows:[27]

[313]

[107] It may initially be observed that the modern awards which contain annualised salaries provisions only constitute a small proportion of all modern awards, and are themselves diverse in terms of their coverage. For example, they include one but not other manufacturing awards, some but not other primary industry awards, and a select group of service sector awards. The proposition that annualised salaries provisions are necessary to achieve the modern awards objective in this group of awards but no others is somewhat counter-intuitive. No common feature of these 19 awards compared to the other 103 modern awards is apparent that provides the rationale for why only they contain such provisions, and as explained in paragraphs [129]-[130] of the Pastoral Award decision the current position pertains because of the approach taken in the award modernisation that annualised salaries provision would be placed in modern awards where they existed in relevant pre-modern awards but not otherwise.

[108] Additionally (and as observed in the Pastoral Award decision and the May statement), there is little commonality in the annualised wages provisions appearing in the above awards. Having regard to the list of issues identified in the May statement, it is useful at the outset to identify certain fundamental features, and differences, in those provisions. First, eight of the awards require employee agreement for the introduction of annualised wage arrangements (in one case by majority vote, and in the others by individual agreement), while the remainder provide that an employer may introduce such arrangements by right. Associated with the question of employee agreement is whether the arrangement is terminable at the initiative of the employee. Of the eight awards where the arrangement must be entered into with employee agreement, five make provision for employee termination of the arrangement. None of the remainder of the 19 awards provide for termination of the arrangement.

[109] Second, while all of the provisions in some form require the annualised wage arrangement not to disadvantage the employee compared to the award, some but not other awards provide for a review at least annually to ensure that applicable award provisions continue to be satisfied by the wage. Ten of the awards contain a requirement of this nature. In addition, one award (the Restaurant Award) requires a "reconciliation" to be carried out at the end of each year whereby a comparison is made between the annualised wage and what the employee would earn if the provisions of the award otherwise applied, with there being an obligation on the employer to pay any identified shortfall.

[110] Third, the large majority of the awards require the arrangement to be reduced to writing and provided to the employee, but four of them contain no such requirement. Eight of the awards go beyond the requirement for the arrangement to be in writing, and further require that the calculation of the various award entitlements used to make up the total wage be also identified.

[111] Fourth, six of the awards limit the application of the annualised wage provisions to persons employed in specified higher-level classifications.

[112] Fifth, all of the awards except three allow for the annual leave loading to be absorbed into the annualised wage amount (that is, the requirement to pay the leave loading may be satisfied by the payment of the salary).

[113] Sixth, five of the awards contain a specific requirement for the employer to keep records of the hours worked by the employee, notwithstanding the payment of an annualised wage.

[114] Seventh, three awards require that the annualised wage be a minimum percentage above the minimum ordinary-time wage rate specified in the award for the relevant classification. They are the Marine Towage Award, which provides for a minimum additional 40%, and the Hospitality Award and the Restaurant Award, where the percentage is 25%.

[115] Finally two awards provide for a restriction on the working of overtime under annualised wage arrangements.

[116] Again we observe that none of these important differences in the construct of the various existing annualised salaries provisions appears to be readily justifiable by reference to the characteristics of the employees covered by the awards. By way of example, it is not easy to identify why the provision in the Restaurant Award requires a minimum 25% pay increment and the conduct of a full reconciliation each year, but that in the Hospitality Award does not contain the latter requirement, since both awards cover workforces with broadly similar characteristics, notably a frequent requirement to work unsociable hours and a high degree of variability in the number of hours to be worked from week to week.

[117] We do not consider that any current annualised wage arrangements provision fails to comply with the requirements in s 139(1)(f)(i) and (ii), and no party contended otherwise. We are satisfied that the current provisions are constructed having regard to the patterns of work in the occupation or industry to which the relevant modern award applies, and they all provide for an alternative to the separate payment of wages and monetary entitlements. The real issue is whether the third requirement in s 139(1)(f)(iii) is satisfied, having regard to the way in which we have construed that provision.

[118] The diversity in the existing provisions means that the way in which they seek to satisfy the s 139(1)(f)(iii) requirement differs in method and the degree of stringency involved. All have various shortcomings. The requirement in the Restaurant Award for the employer to keep records of employee working hours (signed by the employee each week), and then to conduct an annual reconciliation comparing the employee's "ordinary wage under this award" or "wages earned under the award" to what the employee was actually paid and to make good any shortfall, would appear to constitute an absolute guarantee that the employee would not suffer any financial disadvantage (assuming that the expressions quoted from the provision are to be read as meaning the remuneration the employee would have earned under the award had the employee not entered into an arrangement pursuant to the provision). However there are two inter-related practical difficulties that we see with this annual reconciliation requirement.

[119] First, if strictly complied with, it would obviate many of the benefits of an annualised wages arrangement which we have earlier identified. There would be little if any benefit in administrative simplicity: the employer would still have to keep records of all hours worked, and while it would not be necessary to calculate wages owing in each pay period, the employer would face the much larger task annually of calculating wages owed under the award for the last 12 months. Additionally, while the employer would, during the year, have the benefit in terms of financial certainty of only having to pay a fixed amount to the employee each week, the provision creates the possibility of having to make good a potentially large monetary shortfall at the end of the year which would not be quantifiable until the annual reconciliation exercise was carried out, and thus not able to be budgeted for. This could cause considerable business difficulties in an industry which is made up predominantly of small businesses, is characterised by relatively low profit margins, a relatively high rate of business failure, intense competition and an oversupply of businesses, and is highly sensitive to changes in consumer demand.[28]

[120] Second, the complexities in the operation of the provision we have described causes us grave doubt as to whether the reconciliation requirement would actually be the subject of widespread compliance. The restaurant industry generally is marked by significant compliance problems,[29] and we consider that there is somewhat of an air of unreality about the proposition that small business restaurateurs employing persons on annualised wage arrangements would have the capacity readily to undertake the comparative calculation required by the reconciliation exercise. The two witnesses called by United Voice illustrate this point: both witnesses said they were paid annualised salaries at least for certain periods, but in neither case does it appear that any reconciliation was ever done (although we note in the case of witness X that he did not remain on the wage arrangement for a full year).

[121] As we have earlier noted, some awards simply contain a requirement for an "annual review". In such cases the content of the actual obligation imposed upon the employer tends to be imprecise. For example, clause 14.7(d)(v) of the Local Government Award, which we have earlier set out, simply requires that an annual salary agreement "be subject to an annual review" without specifying what such a review actually entails. Clause 17.2(b) of the Clerks Award, which we have again earlier set out, provides greater detail about the required review, but is still imprecise: it merely identifies the purpose of the review as being "to ensure that the compensation is appropriate having regard to the award provisions which are satisfied by the payment of the annual salary". The use of the word "appropriate" suggests that a broad judgment is required rather than the comparative mathematical exercise required by the reconciliation provision in the Restaurant Award. In neither case could it be said that the review is something which, at least by itself, ensures that the employee is not disadvantaged and thus satisfies the s 139(1)(f)(iii) requirement.

[122] The annualised wage arrangement provisions in the Clerks Award and the Local Government Award contain a further safeguard, namely a requirement that the annual salary be no less than the amount the employee would have received if paid in accordance with the award. In clause 17.2(a) of the Clerks Award, this safeguard is expressed as follows:

[315]

[123] As earlier observed, all the existing annualised wages provisions contain a safeguard of the same or a similar nature. On its face, a provision such as that in clause 17.2(a) of the Clerks Award establishes a legal obligation to ensure that an employee on an annualised salary is not financially disadvantaged that meets the requirement in s 139(1)(f)(iii). However again there are practical problems in the way such an obligation would operate in reality. The major problem, as touched upon in the Pastoral Award decision, concerns the issue of keeping records of hours worked. Particularly where the annualised wage arrangement applies to an employee who works significantly variable hours, there will be no practical capacity for the employer to comply with the obligation - or for the employee to seek to enforce it - unless there is a record of hours worked which allows the remuneration payable under the award to be calculated. Unlike the reconciliation provision in the Restaurant Award, the Clerks Award provision contains no requirement to keep any record of hours worked. As we have earlier set out, in the SE Water decision the Full Bench considered that it was not necessary, in relation to the relevantly similar provision in the Water Industry Award, to include any obligations to keep written wage records because the obligations in that respect were "adequately regulated by Part 3-6 of the Fair Work Regulations 2009". [30] We have also earlier set out the doubt expressed about that conclusion by the Full Bench in the Pastoral Award decision.[31] It is necessary for the purpose of this decision that we reach a definitive conclusion about this issue. We consider, in relation to an annualised wages arrangement that is intended to satisfy award entitlements to overtime and penalty rates, the conclusion expressed in the SE Water decision is, with respect, incorrect.

[124] This is for two reasons. First, as pointed out by the Full Bench in the Pastoral Award decision, reg 3.34 of the Fair Work Regulations (FW Regulations), which prescribes the records required to be kept in relation to overtime, only applies "if a penalty rate or loading (however described) must be paid for overtime hours actually worked by an employee". The effect of an annualised wages arrangement which is intended to encompass overtime is to displace the award obligation to pay penalty rates for that overtime within the relevant pay period. A provision of the nature of clause 17.2(a) of the Clerks Award is not an obligation itself to pay overtime rates, but on its face simply an obligation to ensure that the annual salary is no less than would have been payable under the award. Accordingly we consider that reg 3.34 would not apply to an annualised wages arrangement which encompasses overtime. Second, in respect of ordinary hours worked which under the award would attract a penalty rate or loading (for example, weekend work or shift work), reg 3.33(3) provides that "if an employee is entitled to be paid", relevantly, a loading or a penalty rate, the employer must keep a record that "sets out details of the payment, ... loading, rate ... or entitlement". Even if the word "details" encompasses a record of when ordinary hours were worked, the obligation will not apply in respect of an employee on an annualised wage arrangement because the arrangement will displace the entitlement to the loading or penalty rate.[32]

[125] The consequence of this conclusion is that, in order for a provision of the nature of clause 17.2(a) to operate as a practically effective safeguard, there needs to be (as in the Restaurant Award) a requirement to keep the necessary records of hours worked.

[126] An additional difficulty is that provisions of this nature remain imprecise about what steps an employer is actually required to take to discharge the general obligation that the salary must be not less than the remuneration that would otherwise be payable under the award over the course of the year. There is no specific requirement, as in the Restaurant Award, to conduct a reconciliation exercise, nor to pay within any given time or at all any monetary shortfall which might by some means be identified.

[127] Most of the awards containing an annualised wage arrangements provision, as earlier identified, require the arrangement to be in writing, but some also require the written arrangement to identify the way the salary was calculated including any overtime or penalty assumptions upon which the calculation is based. Clause 18.4 of the Rail Award is an example of this. Generally speaking, we consider a provision of this nature is an effective "upfront" mechanism to ensure that an annualised wage is demonstrably equal to or more than the remuneration otherwise payable under the award. However a question remains as to what happens when the employee's pattern of work begins to diverge from the assumptions in the calculation, so that for example more overtime is worked than is assumed in the calculation. The evidence of Mr Johnston concerning Aurizon was that, for employees in rail maintenance who had highly variable hours, it would recalculate the salary when there was a significant change in rostering that affected penalties and allowances to ensure that that it remained compliant. However clause 18.4 does not actually require this to occur.

[128] Finally there are the three awards which have as a condition that the salary to be paid be a minimum percentage amount above the relevant base award weekly wage rate. As a general proposition, a requirement of this nature may be an effective way of ensuring that an employee is not disadvantaged by entering into an annualised wage arrangement. However no reasonable percentage threshold can guarantee that the employee will never be worse off regardless of the hours worked; some limitation on the number of hours of work which attract overtime or other penalty rates is necessary. In none of the three awards does any such limitation apply. It is not sufficient to rely on the NES maximum weekly hours provision in s 62. In the case of the Hospitality Award and the Restaurant Award, where a significant amount of ordinary working hours is likely to be performed at unsociable hours which attract evening or weekend penalty rates, it may only take a relatively small number of weekly overtime hours for remuneration payable under the award to exceed the base weekly wage and a 25% increment. Section 62 does not necessarily produce the result that the additional hours would be unreasonable such that the employee could refuse to work them, given the multi-factor test for reasonable/unreasonable hours in s 62(3). Nor were we taken to any material which demonstrates any particular mathematical justification for the 25% figure used in these two awards.

[129] Having regard to these matters we have reached the following conclusions concerning what is necessary for an annualised wages arrangement provision to form part of the fair and relevant minimum safety of terms and conditions required by s 134(1) taking into account the matters identified in paragraphs (a)-(h) of the subsection:

[405]

[139] We are not satisfied that these awards should be varied to remove the current annualised wage arrangement provisions and replace them with the provision contained in the Local Government Award. The critical difference between the existing provisions and that in the Local Government Award is that the former allows the employer to introduce annualised wage arrangements by right whereas the latter requires the agreement of the employee. Because these awards cover work which is likely to involve reasonably stable hours from one pay period to the next, we do not consider for the reasons explained in our general conclusion that it is necessary to require employees' agreement in order to properly protect employees' interests. However, having regard to the general conclusion we have earlier stated, we consider that the current provisions in these awards may be deficient for the same reasons as we have identified in relation to the NFF's proposed provision for the Pastoral Award and Horticulture Award. We invite interested parties to make submissions as to whether these awards should be varied to include the proposed Model Clause 1 or Model Clause 2 in accordance with the timetable at the end of this decision.

[140] In relation to the Law Firms' claim to vary the current provision in the Legal Services Award, we note that the current provision already allows an annualised wage to be paid in satisfaction of weekend and public holiday penalty rates. The primary additional element which the Law Firms wish to include is shift allowances. The current annualised wages provision in the Clerks Award appears to allow shift allowances to be included in an annualised wage arrangement (clause 17.1(a)(iii) includes a cross-reference to clause 28, which deals with shiftwork, but is misdescribed as dealing with "Overtime and penalty rates"). The work under the Legal Services Award we consider to be highly comparable to that performed under the Clerks Award, so prima facie there is no reason for it to have a provision different to that in the Clerks Award. The position of the ASU we understood to be that it opposed the Law Firms' claim without the annualised wage arrangement clause containing adequate safeguards. We have invited the parties to consider whether the Legal Services Award provision should be varied in line with Model Clause 1 or Model Clause 2, which contain additional safeguards against employee disadvantage. We will defer stating a final conclusion concerning the Law Firms' claim until we have received the parties' further submissions as to this.

[414]

[145] We entertain considerable doubt as to whether we have power to vary clause 18.1 of the Rail Award in the manner proposed by the Rail Employers. Under s 132, modern awards may set minimum terms and conditions for national system employees in particular industries or occupations. Section 133 provides that in Pt 3-2, Modern Awards, "employee" means a national system employee. Thus the reference to "individual employees" in s 139(1)(f)(iii) must be read as referring to individual national system employees. Under s 143(2), the coverage terms of modern awards must be expressed to cover, relevantly, specified employers and employees of employers covered by the modern award, and again this must be read as referring to national system employees. Under s 47(1), a modern award only applies to, relevantly, an employee if the modern award covers the employee. Under s 12, the expression "national system employee" has the meaning given in s 13 and the extended meaning in ss 30C and 30M in relation to referring States. The s 13 definition of the expression is "an individual so far as he or she is employed, or usually employed, as described in the definition of national system employer in section 14, by a national system employer, except on a vocational placement". A prospective employee - that is, a person not yet in an employment relationship with the relevant national system employer - would not appear to be encompassed by this definition. Sections 30C and 30M do not extend the definition to prospective employees (but rather are concerned with persons employed by a wider class of employers in referring States). Accordingly we cannot be satisfied that we have the power to apply clause 18.1 to prospective employees.

[146] In any event, we are also not satisfied that the variation proposed is necessary in practical terms. An employer and a prospective employee can identify the terms of an annualised wage arrangement they are prepared to agree to, and then enter into the agreement immediately upon the commencement of the employment. We see no reason why this would cause confusion and uncertainty, in circumstances where the precise terms of the putative agreement can be shown to the prospective employee in advance of his or her start date. Further, it would be open to a prospective employer and a prospective employee before the commencement of the employment to enter into a contract of employment providing for an annualised wage which takes effect when the employment commences. Accordingly we will not vary clause 18.1 as sought by the Rail Employers.

[147] The proposed variation to clause 18.4 has substantial merit, and reflects concepts which have been incorporated into our proposed model clauses. We do not propose at this stage to form a final conclusion about this proposed variation at this stage, but rather invite the Rail Employers and the ASU to make submissions as to whether clause 18 should be varied to reflect, in whole or in part, Model Clause 3.

Annualised Wage Arrangements [2018] FWCFB 154 (20 February 2018)

At a glance

Court

Decision date

Source

Judgment (458 paragraphs)

Annualised Wage Arrangements [2018] FWCFB 154 (20 February 2018)

Legislation Cited (3)

Cases Cited (2)