Request from the Minister for Employment and Workplace Relations - 28 March 2008

[1] On 28 March 2008 the Minister for Employment and Workplace Relations signed an award modernisation request pursuant to s.576C(1) of the Workplace Relations Act 1996 (the WR Act). The WR Act requires the Commission to complete an award modernisation process in accordance with the award modernisation request.[1] This Statement contains information about the award modernisation process, the initial consultation and the next steps.

[2] Section 576A of the WR Act provides, among other things, that modern awards must be simple to understand and easy to apply, must be of a safety net character, must promote flexible modern work practices and efficient and productive workplaces and must be in a form that promotes collective bargaining. Section 576B(2) provides that in carrying out the award modernisation process the Commission must have regard to the following factors:

"(a) promoting the creation of jobs, high levels of productivity, low inflation, high levels of employment and labour force participation, national and international competitiveness, the development of skills and a fair labour market;

(b) protecting the position in the labour market of young people, employees with a disability and employees to whom training arrangements apply;

(d) the desirability of reducing the number of awards operating in the workplace relations system;

(e) the need to help prevent and eliminate discrimination on the grounds of race, colour, sex, sexual preference, age, physical or mental disability, marital status, family responsibilities, pregnancy, religion, political opinion, national extraction or social origin, and to promote the principle of equal remuneration for work of equal value;

(f) the need to assist employees to balance their work and family responsibilities effectively, and to improve retention and participation of employees in the workforce;

(h) relevant rates of pay in Australian Pay and Classification Scales and transitional awards;

(i) minimum wage decisions of the Australian Fair Pay Commission;

(j) the representation rights, under this Act or the Registration and Accountability of Organisations Schedule, of organisations and transitionally registered associations."

[3] The Request provides some additional guidance in relation to award modernisation. Clause 2 states that the creation of modern awards is not intended to extend award coverage to classes of employees such as managerial employees, but modern awards may cover new industries or new occupations where the work is similar to work that has historically been performed subject to awards (including State awards). Nor are modern awards intended to cover high-income employees, disadvantage employees, increase costs for employers or result in the modification of enterprise awards.

[4] The content of modern awards is regulated by ss.576J to 576T of the WR Act. Modern awards may include terms relating to minimum wages, types of employment, when work is performed, overtime rates, penalty rates, annualised wages and salaries, allowances, leave and leave loadings, superannuation and procedures for consultation, representation and dispute settlement. The Request also states that in certain circumstances modern awards may include provisions which interact with the proposed National Employment Standards.[2] The Request also makes provision for modern awards to provide a comprehensive range of fair minimum wages for all employees including, where appropriate, junior employees, employees to whom training arrangements apply and employees with a disability in order to assist in the promotion of employment opportunities for those employees.[3]

[5] Since receiving the Request I have consulted with the Australian Chamber of Commerce and Industry (ACCI), the Australian Council of Trade Unions (ACTU) and the AiGroup (AiG), consistently with cl.6 of the Request, concerning the best process to be followed by the Commission when creating modern awards.

[6] The classification of industries (and occupations) used in the Commission's panel system will be the starting point for the award modernisation process. The panel system is familiar to Commission users and will provide a convenient frame of reference. Parties should be able to follow the modernisation process and to know which modern awards might affect their interests without too much difficulty.

[7] Wherever it is convenient and appropriate to do so industries will be grouped together in the one modern award. In some cases several industries may be dealt with together. The fact that industries may be grouped together at the start of the process does not necessarily mean that there will be only one modern award for that group. The grouping of industries with significant common features will expedite the process and enable the parties to make their views known about the extent to which existing award coverage can be rationalized.

[8] It is also possible that after further consultation it will be appropriate to include additional industries in a modern award made earlier. This could be achieved by amendment to the scope clause and some variation to the substantive provisions of the modern award in question.

[9] It follows that the Commission's current classification of industries and occupations should not be regarded as pre-determining the outcome. While it is a starting point it does not constitute the list of modern awards to apply from the commencement of 2010.

[10] The Commission's list of awards, classified by industry/occupation and by panel, is available at 4, have also been included in the lists, classified according to what appears to be the appropriate federal industry/occupation. The classification of a particular State award may change as a result of feedback and consultation.

[11] Within each industry/occupation the principal federal award will usually be the starting point for drafting. The drafting process may take into account the terms of other Federal awards (non-enterprise) in the same industry. The Commission is required to take into account wage rates derived from State awards constituting NAPSAs as well as rates in transitional awards. Other terms in State awards may also be relevant.

[12] Award modernisation will be conducted by one or more Full Benches as provided for in s.576G of the WR Act and cl.18 of the Request. A Full Bench is to be established shortly.

[13] There are three priority tasks to be completed by the Commission by 30 June 2008.[5] The first task is the establishment of a list of priority industries or occupations for which modern awards are to be made by the end of 2008.[6] In developing the list regard is to be had to those industries and occupations with high numbers of Australian Workplace Agreements and NAPSAs. The second priority is to publish a model award flexibility clause to be included in modern awards. The purpose of the clause is to enable an employer and an individual employee to agree on arrangements to meet the genuine individual needs of the employer and the employee.[7] The third priority task is to publish a timetable for the completion of the award modernisation process. A draft list of priority industries/occupations, some draft model flexibility clauses and a draft timetable are attached to this statement.

[14] The draft list of priority industries and occupations is Attachment A. This draft list is the result of discussions between the ACTU, ACCI and AiG. It is not one proposed by the Commission itself but is put forward as a basis for consultation.

[15] There are two draft model award flexibility clauses contained in Attachment B. The first draft is one proposed by the ACTU. The second draft is one proposed by the employers. The second draft contains two options: option 1 is supported by ACCI and option 2 is supported by AiG.

[16] A draft timetable is Attachment C. The draft timetable relates only to the completion of the priority modern awards. The timetable to be published by the end of June will deal with the completion of modernisation as well. Interested parties are encouraged to make their views known not only in relation to the timetable for the completion of the priority awards, but also for the completion of the remainder of the modern awards.

[17] It is clear that consultation with major workplace relations stakeholders and other interested parties is an integral part of the process for the creation of modern awards. Consultation will provide an opportunity to put forward views and present material in relation to all aspects of the process. The Request deals with consultation principally in cll.14, 15 and 21.

[18] Consultation may take a number of forms. At this stage it is envisaged that consultation will be either through attendance at one of the scheduled consultation meetings or in writing by post or email. So far as practicable formal consultation sessions will be transcribed and the transcript will be made available through the internet on the dedicated Award Modernisation page. Written submissions will be made available the same way.

[19] The Commission will conduct a programme of consultation between now and the end of May to give stakeholders and other interested parties an opportunity to express their views in relation to the draft list of priority industries and occupations, the draft model award flexibility clause and the draft timetable with the objective of finalizing those matters by 30 June next.[8] Dates are set out later in this Statement.

[20] Once the priority industries and occupations have been decided, a program of pre-drafting consultation will commence in relation to each of the priority modern awards. Clause 14 of the Request indicates that the Commission should, as appropriate, confer with major employer and employee representative bodies for the purpose of informing the preparation of each exposure draft. The timetable will provide an opportunity for consultation in each State and Territory as appropriate in relation to each industry or occupation prior to the preparation of the exposure draft. Parties wishing to do so may prepare their own drafts, jointly or separately, for the Commission's consideration.

[21] Clause 15 of the Request requires the Commission to publish an exposure draft of each modern award and provide a reasonable opportunity for all stakeholders and interested parties to comment upon the exposure draft. There will be another round of consultation in relation to the exposure draft for each modern award. Parties to relevant federal awards, unions and employers bound by State awards operating as NAPSAs and other interested parties will be able to express views, present material, suggest amendments in the scope of awards or in their substantive provisions and to propose alternate drafts.

[22] It may not be practical to issue a detailed timetable by 30 June for the creation of all modern awards although the timetable may identify significant steps towards completion. It may also be desirable to identify some additional industries/occupations in which the process will commence before the end of this year. It is likely that experience gained over the next nine months will increase general understanding of what modernisation involves and in particular the time which may be required to complete the process in particular industries and occupations. The Commission and the parties to the remaining awards will draw upon the experience in the priority industries and occupations in approaching the creation of the remaining modern awards.

[23] The Commission will develop a modern award drafting guide incorporating a standard format and style. It may also be possible to include model clauses in addition to the model flexibility clause in the guide. The guide will be updated where necessary in light of experience and relevant Commission decisions.

[24] A Full Bench of the Commission will sit on 26 and 27 May in Melbourne and on 28 May 2008 in Sydney to provide an opportunity for consultation in relation to the list of priority industries/occupations, the model award flexibility clause and the timetable. Members of the Full Bench will also sit in Brisbane, Adelaide and Canberra on 29 May and Hobart and Perth on 30 May 2008 to provide further opportunities. Consultation will also be available by video link with Darwin on 30 May 2008. It would assist in programming if parties wishing to attend the consultations could indicate their interest in writing as soon as practicable. Submissions and suggestions may also be forwarded by email or post until 6 June 2008. Communications should be addressed to the Industrial Registrar and forwarded to the Registry postal or email address. Registry addresses appear on the AIRC website.

[25] The drafts attached to this statement provide a starting point for consultation. Nothing will be finalized until the consultation has been concluded and the Commission has had an opportunity to consider all of the matters that have been raised. The Full Bench should decide on the priority list, the model flexibility clause and the timetable by 20 June 2008.

[4] Notional Agreements Preserving State Awards, Schedule 8 of the Workplace Relations Act 1996.

Printed by authority of the Commonwealth Government Printer

• Clerical Occupation (with appropriate exclusions)

• Electrical Occupation (other than electricians covered by relevant industry awards)

• Gardening and Sportsground Maintenance Industry

• Information and Communication Technology (ICT) Industry

• Technical Services - Engineers and Scientists Occupations (with appropriate exclusions)

This attachment includes two draft model award flexibility clauses. The first is an ACTU proposal. The second is a joint ACCI /AiG proposal.

#.1 The following clauses of this award provide a standard entitlement which may be modified, within the limits specified in the clause, by entering into an award flexibility arrangement:

Award flexibility arrangements must only be used to promote the genuine needs of the employer and its employees and must not be used to disadvantage or discriminate against employees or a group of employees, whether directly or indirectly.

Award flexibility arrangements may only be made with existing employees and may not be made a condition of engagement.

An award flexibility arrangement cannot displace a provision of a collective agreement, the National Employment Standards, or applicable State or federal legislation.

#.2 Where a majority of the employees in the business (or a part of the business) and their employer wish to modify the application of the standard award provision to employees in the business (or part of the business concerned), within the limits specified in the relevant award clause, they may enter into a majority award flexibility arrangement.

#.3 Where an employee and their employer wish to modify the application of the standard award provision to a particular employee's employment, within the limits specified in the relevant award clause, they may enter into an individual award flexibility arrangement.

(a) in relation to clause # of the award [majority-only clauses];

(b) in relation to clause # of the award [majority-authorisation clauses], unless a majority of employees in the business (or relevant part of the business) have previously authorised the making of individual flexibility arrangements;

(c) where the employer has previously sought a majority award flexibility arrangement in relation to the same matter but the majority of employees did not agree to enter into the arrangement; or

(d) where half of employees in the business (or relevant part of the business) have already made individual award flexibility arrangements in relation to the same matter.

(a) alters the operation of the standard award entitlement;

(b) must not exceed the flexibility limits set out in the standard award clause, and is void to the extent that it does;

(c) comes into effect immediately or else at a future date specified in the agreement;

(d) expires at a time and in the manner provided for by the arrangement;

(e) (in the case of a majority award flexibility arrangement) applies to all persons employed in the business (or relevant part of the business concerned) whose employment is governed by this award;

(f) (in the case of an individual award flexibility arrangement) prevails over a majority award flexibility arrangement dealing with the same matter; and

(g) may be cancelled in good faith at any time by either party by giving reasonable notice, and ceases to operate at the end of the notice period.

#.5 If one party proposes to enter into an award flexibility arrangement:

(a) that party must give the other party and their representative the opportunity to discuss the proposal (in paid time) in good faith within a reasonable period of time;

(b) (if it is the employee or a majority of employees who make the proposal) the employer must reasonably attempt to accommodate the proposal, having regard to the circumstances of the employee(s) and the needs of the business;

(c) (if it is the employer who makes the proposal) the employer must give the other party a written statement (translated into a language that the other party understands) of the reasons for proposing the arrangement and an explanation of the effect of the arrangements, a copy of the proposed arrangement, a copy of the relevant award provision(s), and a copy of the prescribed letter.

[Note: The prescribed letter is available from the Commission.]

[Note: The Workplace Relations Act 1996 (Cth) prohibits an employer from victimising an employee who wishes to rely on their rights under the award. Serious penalties apply.]

(d) (if it is the employer who makes the proposal) the employer must notify the relevant union(s) and give them an opportunity to participate in negotiations about the proposal.

#.6 If the parties agree to enter into a flexibility arrangement, the employer must:

(a) ensure that the other party genuinely agrees to the arrangement;

(b) ensure that the arrangement does not disadvantage the other party, or other employees;

(c) make a written record of the arrangement (and translate it into a language the other party understands);

(d) ensure that the record is signed by the other party (and, if the other party is under 18 years of age, by the employee's parent or guardian);

(e) keep the written record, as a time and wages record;

(f) give a copy of the record to the other party and their representative; and

(g) notify the relevant union that the agreement has been entered into.

#.7 The parties must regularly review the operation of award flexibility arrangements to ensure that employees are not disadvantaged by their use. The employer must give the relevant unions a reasonable opportunity to participate in the reviews.

#.8 Any disputes about award flexibility arrangements may be dealt with under the dispute resolution procedure contained in this award."

X.X.1(a) This clause enables an employer and an employee to agree on arrangements to meet the genuine individual needs of the employer and the employee.

X.X.1(b) An employee and employer may agree, in writing, to vary one or more of the terms of this award,

(i) The employee not being disadvantaged in his or her employment under the award when considered as a whole, as it applied at the date the flexibility was agreed.

(ii) Genuine agreement being reached between the employer and employee without coercion or duress.

(c) An employer and employee may agree to vary award terms and their application.

(d) Where an arrangement is entered into under this clause, the agreed terms apply in place of the award terms.

…..provided that the employee is not disadvantaged.

For the purposes of this clause, an employee is taken to be not disadvantaged if:

• Genuine agreement is reached between the employer and employee without any coercion or duress; and

• The total remuneration paid to the employee over the relevant period is no less than the employee would be paid under the award, when considered as a whole; and

• The arrangement is consistent with the employer's responsibilities to provide a safe and healthy work environment, including the provision of adequate breaks.

Relevant period means four weeks, or such shorter or longer period as set out in the individual flexibility agreement, provided that the relevant period must not be longer than 12 months.

A copy of the agreed award flexibility arrangement must be given to the employee and retained by the employer.

A dispute arising from the operation of an agreed flexibility arrangement entered into under this clause may be addressed pursuant to the dispute settlement procedure set out in cl.X of this award. However dispute settlement under this award is not available in relation to requests that are not agreed.

Examples of matters which may be dealt with in an award flexibility arrangement, include, but are not limited to:

• Rostering and hours of work;
• All up rates of pay;
• Provisions that certain award conditions may not apply where an employee is paid above a fixed percentage; and
• An arrangement to allow an employee to start and finish work early to allow children to be collected from school without the employer paying additional penalty rates for the early start.[9]"

[9] As set out in Labor's Policy Implementation Plan, August 2007, p.11

President's initial Statement on Award Modernisation

Members of Full Bench sit in Brisbane, Adelaide and Canberra for consultation

Members of Full Bench sit in Perth and Hobart and by video link in Darwin for consultation

Closing date for written submissions and suggestions

Publication of priority list of industries/occupations, model award flexibility clause and timetable for completion, including dates for consultation for each priority industry/occupation

Final date for pre-drafting consultation in each priority industry/occupation.

Final date for publication of draft priority modern awards.

Final date for written submissions and suggestions concerning draft priority modern awards (email and post).