Fair Work Act 2009

s.739 - Dispute resolution

Altus Traffic Pty Ltd T/A Altus Traffic, Traffic Diversions Group Pty Ltd T/A Traffic Diversions Group (TDG)

Application to deal with a dispute arising under an enterprise agreement.

• [1] The Altus Group (Victoria) Enterprise Agreement 2023[1] (Agreement) covers Altus Traffic Pty Ltd and Traffic Diversions Group Pty Ltd (together, Altus), all of their respective employees in Victoria employed as traffic controllers (including as new entrants, advanced traffic controllers, team leaders and advanced team leaders), and the Australian Workers' Union (AWU).[2] The Agreement commenced operation on 31 January 2024.

• [2] The AWU has made an application in the Commission in which it contends that Altus is in contravention of the Building and Construction General On-Site Award 2020 (Award) and has contravened s 45 of the Fair Work Act 2009 (Cth) (Act). Broadly, the AWU submits that the base rates of pay in the Agreement fall below the Award when the Award industry allowance is taken into account.

• [3] The pre-requisites to the Commission's involvement having been followed, I am satisfied that the Commission is empowered to arbitrate the dispute in accordance with clause 38.6(b)(i) of the Agreement and s 739 of the Act. The parties agreed that the Commission should determine the following question in resolution of the application:

In light of s 206 of the Fair Work Act 2009 (Cth), what is the rate of pay payable to TC1 and TC2 employees under the Agreement for ordinary hours worked?

• [4] The question for arbitration refers to s 206 of the Act, which relevantly provides as follows:

206 Base rate of pay under an enterprise agreement must not be less than the modern award rate or the national minimum wage order rate etc.

(a) an enterprise agreement applies to an employee; and

(b) a modern award that is in operation covers the employee;

the base rate of pay payable to the employee under the agreement (the agreement rate) must not be less than the base rate of pay that would be payable to the employee under the modern award (the award rate) if the modern award applied to the employee.

(2) If the agreement rate is less than the award rate, the agreement has effect in relation to the employee as if the agreement rate were equal to the award rate.

• [5] The effect of ss 206(1) and 206(2) of the Act is to ensure that the base rate of pay under an enterprise agreement cannot be less than the base rate of pay under an applicable modern award during the life of the agreement.

• [6] Clause 9.8 of the Agreement provides that the ordinary rate of pay for each classification is set out in Appendix A2. Table A2 at Appendix A (read in conjunction with the Undertaking) provides the base rate and applicable penalty rates for permanent (identified as 'PPT' in the Agreement) and casual employees. The table and Undertaking relevantly provide that from 1 July 2024:

(a) a PPT TC1 employee is to be paid a base rate of $27.83 per hour; and

(b) a PPT TC2 employee is to be paid a base rate of $27.90 per hour.

• [7] The AWU's position, in summary, is as follows:

• (a) the Award defines[3] ordinary hourly rate as the hourly rate for an employee's classification in clause 19.1(a) of the Award, plus the industry allowance;

(b) the industry allowance forms an integral part of the employee's ordinary hourly rate under the Award;

• (c) accordingly, and for the purposes of s 206 of the Act, the employee's base rate of pay is this ordinary hourly rate.[4]

• [8] The industry allowance relied upon by the AWU is referable to clause 22.1(a) of the Award. This provision relevantly provides for a weekly allowance of $61.94, payable for works that are classified as general building and construction, civil construction and metal and engineering construction.

• [9] The AWU contends that Altus is not paying the industry allowance to employees covered by the Agreement.[5] Accordingly, it says that when the base rates of pay under the Agreement are compared to the Award ordinary hourly rates, an underpayment arises for TC1 and TC2 classified employees under the Agreement.

• [10] The AWU's Form F10 application contends that Altus is in contravention of the Award by virtue of its non-payment of the industry allowance; or alternatively, in contravention of s 45 of the Act by virtue of its underpayment when compared to the Award.

• [11] For the reasons that follow, the AWU's position must be rejected.

• [12] First, to the extent that the AWU contends that Altus has contravened the Award, such contention cannot succeed. This is because the Award has no application. By s 46 of the Act, a modern award does not impose obligations on a person, and a person does not contravene a term of a modern award, unless the award applies to the person. A modern award does not apply to an employee when an enterprise agreement applies to the employee in relation to that employment (see s 57(1) of the Act). In this case, clause 7.1 of the Agreement states as follows:

7.1 This Agreement operates to the exclusion of any applicable modern award or other industrial instrument.

• [13] Second, the AWU contends that for the purposes of s 206 of the Act, an employee's base rate of pay under the Award is the minimum rate for their classification in clause 19.1(a) of the Award plus the industry allowance (that is, the ordinary hourly rate). However, this contention is erroneous. Section 16 of the Act defines the term base rate of pay and it relevantly provides as follows:

(1) The base rate of pay of a national system employee is the rate of pay payable to the employee for his or her ordinary hours of work, but not including any of the following:

• [14] Section 16(1)(c) provides that monetary allowances are to be excluded from the meaning of base rate of pay. A monetary allowance is a sum of monetary compensation paid additionally to a base rate of pay in consideration for disabilities associated with the work (e.g. wet work) or expenditure incurred (e.g. travel) under an award.[6]

• [15] The industry allowance is unambiguously, in my view, a monetary allowance for the purposes of s 16(1)(c) of the Act and does not form part of an employee's base rate of pay. It is called an allowance, it provides an amount of monetary compensation, and it is paid in addition to an employee's minimum rate of pay in the Award. It follows that for the purposes of s 16 of the Act, the base rate of pay in the Award is the minimum rate prescribed in clause 19.1(a). This is the rate that excludes the industry allowance.

• [16] The industry allowance in clause 22.1(a) of the Award has its origins in the 4 yearly review of modern awards - Construction awards.[7] The Full Bench consolidated a number of disability allowances[8] in the interest of achieving the modern awards objective.[9] In reaching my conclusion at [15] above, I have considered the AWU's submission that the introduction of the industry allowance as an outcome of the 4 yearly review of modern awards has resulted in an ambiguity and/or unintended consequences with respect to the application of ss 16 and 206 of the Act.

• [17] The AWU contends that when the Act commenced, it was not contemplated that the Commission would subsequently introduce an industry allowance payable as an integral component of an employee's ordinary hourly rate under the Award. The AWU submits that in these circumstances, a "technical" interpretation of s 16 to exclude the industry allowance is narrow and/or pedantic and gives rise to industrially absurd results,[10] is at odds with orthodox canons of construction,[11] and undermines the objects of the Act, particularly those set out in

ss 3(b) and 3(c) which are broadly directed to ensuring a guaranteed safety net of enforceable minimum terms and conditions.[12]

• [18] I do not consider that the ambiguities or unintended consequences contended by the AWU arise. The 4 yearly review of modern awards consolidated numerous allowances into a single, all-purpose industry allowance to simplify the regulatory framework. The AWU has not identified any aspect of the Full Bench decision which supports a conclusion that the industry allowance should not continue to be regarded as an allowance in the orthodox sense. The Full Bench expressly retained the concept of an allowance and recognised that the supplementary weekly payment was made in respect of certain disabilities associated with the work covered by the Award. In these circumstances, there is no available basis for concluding that the introduction of the industry allowance has altered the interpretation and application of ss 16 and 206, as contended.

• [19] Third, table A2 of Appendix A of the Agreement, read with the terms of the Undertaking, prescribes base rates payable under the Agreement (in addition to penalty rates). With respect to classifications TC1 and TC2, being those relevant to this application, the base rates prescribed by the Agreement presently exceed the minimum rates prescribed by clause 19.1(a) of the Award. This is demonstrated by reference to the base rates payable to PPT employees as follows:

BASE RATES PRESCRIBED BY TABLE A2 APPENDIX 2 OF THE AGREEMENT (PPT)[13]

Minimum rates prescribed by clause 19.1(a) of the Award

• [20] The base rates payable to PPT employees engaged in classifications TC1 and TC2 are $1.43 and $1.50 per hour higher respectively under the Agreement than the corresponding minimum rates prescribed by the Award. No contravention of the Award or s 45 of the Act arises.

• [21] For the reasons given, I am satisfied that Altus is satisfying s 206 of the Act by paying TC1 and TC2 employees the base rate of pay that is prescribed by the Agreement, which is in excess of the corresponding minimum rates of pay under the Award. For the purposes of s 206, the base rate of pay excludes all monetary allowances, including the industry allowance in clause 22.1(a) of the Award.

• [22] The question posed for determination is answered as follows:

Question: In light of s 206 of the fair Work Act 2009 (Cth), what is the rate of pay payable to TC1 and TC2 employees under the Agreement for ordinary hours worked?

Answer: The rate of pay identified as the base rate in table A2 of Appendix A of the Agreement for TC1 and TC2 employees (read together with the Undertaking).

• [23] The dispute is determined accordingly.

[1] [2024] FWCA 343; AE523292

[2] AE523292 at [3]; [2024] FWCA 343 at [6]

[3] Building and Construction General On-Site Award 2020, cl 2

[4] AWU submissions dated 29 November 2024 (AWU submissions) at [15]

[5] AWU submissions at [3(h)]; Exhibit JC-07 and JC-11 to the witness statement of Jade Campbell dated 28 November 2024

[6] The conventional meaning of an allowance is discussed in the Wage Fixing Principles Case (1978) 211 CAR 268, Principle 8

[7] Re 4 yearly review of modern awards [2018] FWCFB 6019

[8] Special allowance, industry allowance, underground allowance, laser operation allowance, laser safety officer allowance, carpenter-diver allowance, refractor bricklaying allowance, coffer dam allowance

[11] E.g. Short v FW Hercus Pty Ltd [1993] FCA 51; 40 FCR 511 at 518

[12] See AWU submissions at [16]-[18]