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

[1] This statement deals with award modernisation and in particular the exposure drafts of the priority modern awards. It should be read in conjunction with the Commission's decision of 20 June 2008 (the June 2008 decision). [1] After some introductory comments this statement is divided into two main parts. The first part deals with a number of matters of general relevance. The second part deals with a number of matters which are relevant to particular exposure drafts.

[2] The award modernisation process was initiated by a request signed by the Minister for Employment and Workplace Relations on 28 March 2008 pursuant to s.576C(1) of the Workplace Relations Act 1996 (the Act). We shall refer to the request, as subsequently amended, as the Minister's request. In the June 2008 decision the Commission, among other things, established a list of priority industries and occupations and laid down a timetable for the making of modern awards in relation to those industries and occupations. The dates for pre-drafting consultation in relation to those industries and occupations were subsequently altered in a statement issued on 22 July 2008. [2] The award modernisation timetable still provides that exposure drafts of the priority modern awards should be published by 12 September 2008.

[3] We publish exposure drafts of 14 modern awards with this statement. Written comments and other material in relation to the exposure drafts are to be lodged with the Commission by 10 October 2008. Comments can be lodged by post, fax or email. It would assist if comments could be directed to a specific clause in a particular draft where it is practicable to do so. We shall not require that materials be served on other participants in the process. All relevant material received by the Commission will be made available through the internet as soon as practicable after it has been received. [3] The Commission will sit in Sydney on 16, 17, 20, 21 and 22 October 2008 for final consultations in relation to the exposure drafts. The purpose of those consultations will be to permit discussion on matters arising from the written material already filed but not to repeat that material. The dates and times of the consultations will be confirmed in a Notice of Listing.

[4] As the Commission noted in the June 2008 decision, the Minister's request and the relevant provisions of the Act require us to have regard to, among other things, the desirability of reducing the number of awards in the workplace relations system and minimising the number of awards applying to a particular employee or employer. While we accept that there are difficulties in implementing these objectives in some industries we have continued to focus on simplification and rationalisation of the award system in drafting the application clauses of the priority awards. While in some cases we have accepted, at least at this stage, that particular industries should not be grouped as originally suggested, in others the grouping is broader than some parties would prefer both as to industry coverage and the classifications of employees. We think it is desirable that parties see the exposure drafts and the conditions they contain and have the opportunity to make further suggestions and submissions. To take the retail industry as an example, we have included fast food and pharmacies in the draft scope of the industry at this stage. The parties concerned will have the opportunity to consider their positions in light of the terms of the whole draft and make further comments and proposals. We mention this matter again in commenting on some of the specific exposure drafts but we wish to make it clear that all views will be considered before the scope of each modern award is finalised.

[5] This section of the decision deals with a number of matters of general relevance to the exposure drafts. We do not deal with every potentially relevant matter, only those which appear to us to be the most significant at this stage. The comments are arranged by award subject matter.

[6] Each modern award will have an application clause indicating to whom it applies and on whom it is binding. Modern industry awards will be expressed, so far as practicable, to apply to an employer industry. Modern occupational awards will be expressed to apply to an employee occupation. In each case the modern award will be confined in its application to employees in classifications in the award and will not apply to an employee excluded from coverage by the Act. Each award will be expressed to bind employers and employees to whom it applies but will not bind an employer bound by an enterprise award in respect of an employee to whom the enterprise award applies.

[7] At this stage we have not listed employers to whom an award does not apply. Whether an award applies to a particular employer will depend, among other things, upon whether the employer is an employer within the meaning of the Act and whether the employer is bound by an enterprise award as defined in the Act. We have adopted the relevant definitions in each draft. We do not think it is desirable to embark on a series of cases to decide such questions as whether an employer is a constitutional corporation, whether an employer is bound by an enterprise award, etc. Such questions could in any event only be finally decided by a court.

[8] Many suggestions were made that we should make modern awards binding on particular organisations and other bodies. These submissions give rise to a number of important issues which will require further consideration before the priority modern awards are made. Section 576V(1) of the Act provides that a modern award is binding on, in particular, "organisations and eligible entities that it is expressed to bind." When regard is had to the definitions of "organisation" and "eligible entity", doubts arise as to the Commission's capacity to make modern awards binding on bodies which are not registered organisations either of employers or employees. [4] Bodies which may not be capable of being bound include State branches of organisations, State registered unions and their branches, and other unincorporated entities. Whether it is desirable that bodies other than registered organisations be bound to modern awards is a separate question.

[9] A further question arises as to the basis for binding, or not binding, a particular organisation to a particular modern award. A number of matters are capable of being relevant including bare constitutional coverage of employers or employees to whom the modern award will apply, membership among employers or employees to whom the modern award will apply and the history of the organisation's involvement with a relevant predecessor award. The matters to be taken into account will determine not only the organisations to be bound but also the organisations which will not be bound. Debate on these matters so far has been extremely limited.

[10] Another dimension to this question is that we cannot know at this stage what status the legislation will give to a party bound by a modern award. Legislation might confer rights of award enforcement, rights of entry to premises and/or bargaining rights. It is also unknown what if any formal role awards will have in relation to union rights of representation more generally. We add that based on our experience so far it seems that organisational coverage has a strong influence on views as to industry boundaries. In some cases proposals for modern awards reflect historical demarcations between employer and employee organisations rather than differences in the nature of work or the conditions with which the modern award should deal.

[11] On one view the preferable course is not to make modern awards binding on organisations at all. We think it is desirable to give interested parties the opportunity to make further suggestions and submissions on the matters we have raised before deciding this important question. Taking all of the matters into account we have not made the draft awards binding on organisations.

[12] We deal now with the description of industry in the draft application clauses. To a large extent the drafts reflect agreements reached by major award parties. While consent is obviously a very important consideration, more work can and should be done on a number of the draft application clauses. In saying this we do not intend to undervalue what has already been achieved. We do not underestimate the difficulties in moving to a simpler definition of industry. There is always a risk of unintended inclusions or omissions. It is to be hoped that further agreement might be reached which will make application clauses clearer and more accessible. We recognise that there is scope for refining application clauses as the award modernisation stages progress.

[13] In a number of cases maintenance trades classifications have been included in draft industry awards. This has the potential to minimise the number of awards applying to any one employer. The Metal, Engineering and Associated Industries Award 1998 [5] (Metal Industry Award) and relevant Notional Agreements Preserving State Awards (NAPSAs) contain a very large number of allowances which potentially apply to employees performing maintenance work under those awards. In finally deciding whether to include maintenance trade classifications in modern industry awards questions will arise as to the type and amount of allowances appropriate to be included in those awards. We invite further comments in relation to the desirability of including maintenance classifications in the draft awards concerned and the appropriate allowances.

[14] Before leaving the way in which awards should apply two other matters should be mentioned. The first is that we have not included supersession clauses. While it might in due course be necessary to make some provision for supersession we do not think it is prudent to deal with that question until relevant statutory transitional provisions are available. The second matter, which is closely related, is that at this stage we do not consider it necessary to prescribe in each modern award the pre-reform awards and NAPSAs which the modern award replaces. Such information will be available administratively.

[15] Clause 9 of the Minister's request refers to the desirability of avoiding overlap between awards and, in cases of overlap or potential overlap, the inclusion of clear rules to identify which award applies. [6] We have attempted to meet this objective in the manner in which the application clauses have been drafted. Modifications may be necessary, to clarify the operation of the provisions or to improve their efficacy, in light of comments on the drafts.

[16] As a general rule references to the National Employment Standards (NES) are brief but adequate. The terms of the Minister's request make it clear that the NES and modern awards are separate sources of safety net conditions. [7] Wherever possible we have avoided making detailed reference to NES provisions or paraphrasing them. In particular we see no justification for replicating terms of the NES which are unaltered and operate of their own force. We deal with the NES again several times in considering particular conditions of employment.

[17] With one exception we have not found it necessary to modify the substance of the model award flexibility clause in any of the drafts. To put the intended operation of the clause beyond doubt we have included the words "Notwithstanding any other provision of this award" at the start of the model clause. The draft award flexibility clause in the exposure draft for the textile, clothing, footwear and associated industries contains some modifications directed to the nature of employment in that industry. They deal with translation and time for consideration of proposed agreements.

[18] We have decided to include award obligations upon employers to notify employees and their representatives of significant workplace change and to discuss the change. The draft clause is in similar form to the provision introduced by the Commission more than 20 years ago. We propose that the draft clause be a standard one in modern awards.

[19] The draft dispute resolution clause is designed to be simple, to emphasise the importance of resolution at the workplace, to encourage parties to agree on a process that suits them if the dispute reaches the Commission and, finally, to provide the Commission with the discretion and the power to ensure settlement of the dispute if the dispute is still unresolved. Generally we have not included reference to the dispute resolution provision in draft clauses dealing with particular conditions.

[20] We have adopted a general standard of 25 per cent for the casual loading in the drafts. In some areas transitional arrangements may be necessary to cushion the impact of the change.

[21] We have not included temporary employment provisions in any of the drafts. Our provisional view is that the draft awards do not contain any obstacle to temporary employment.

[22] We have drafted a model termination of employment provision which adds to the NES in two respects. The draft clause contains provision for notice by employees and a job search leave entitlement.

[23] We have also drafted a model provision dealing with redundancy. The draft clause contains provisions dealing with transfer to lower paid duties, employees leaving during a notice period and a job search leave entitlement. In addition the draft clause includes severance pay, at reduced levels, for employees of small employers. That provision is designed to operate prospectively and would therefore not apply to periods of service prior to 1 January 2010.

[24] The minimum wages in the drafts include the increases in pay scales and minimum rates in transitional awards flowing from the most recent decision of the Australian Fair Pay Commission (AFPC) which is operative from October 2008. Minimum wages will require further adjustment should there be a general increase as expected in pay scales before 1 January 2010.

[25] There is general agreement that the National Training Wage Award 2000 [8] requires redrafting. We understand that discussions are likely between the peak representative bodies. It is our intention that in due course the redrafted national training wage provisions should be included as a schedule to each modern award if it is practical to do so.

[26] A number of parties suggested that annualised wage and salary arrangements be included in modern awards. Such arrangements are provided for in the Act. [9] No substantial case was put for inclusion of these arrangements on a general basis and we have considered the situation award by award. We do not consider that such provisions should be included in modern awards as a matter of course. Where there are similar arrangements in a relevant pre-reform award or NAPSA, where there is a consensus, or where there is a case on the merits based on the nature of the industry or patterns of work the situation may be different. Most of the exposure drafts do not contain such arrangements.

[27] Clause 27 of the Minister's request requires the Commission to include an appropriate method or formula for automatically adjusting relevant allowances when minimum wages are adjusted. We propose that all allowances, including those that relate to the reimbursement of expenses, should be expressed as a percentage of the key classification rate. Under this proposal the definition clause will identify the minimum wage for the key classification in the award and each allowance would be expressed as a percentage of that rate, called the standard rate.

[28] There is an unresolved issue concerning allowances variously described as district, locality or remote area. A number of pre-reform awards and NAPSAs contain such allowances. Questions arise about such allowances. They are by nature confined to particular locations. In that connection it is relevant that modern awards will apply throughout Australia. If it is appropriate that these allowances be included in modern awards, which is a matter for discussion, there must be a consistent and fair national basis for their fixation and adjustment. Without a rational system the inclusion of these allowances in modern awards could lead to inconsistency and consequent unfairness. We would welcome views and proposals on these questions. The allowances have not been included in the exposure drafts.

[29] We have drafted a model superannuation provision to be included in modern awards if those awards deal with superannuation. The clause will nominate a default fund or funds should an employee fail to exercise his or her right to nominate the fund to which employer contributions should be made. We do not think it is appropriate that the Commission conduct an independent appraisal of the investment performance of particular funds. Performance will vary from time to time and even long term historical averages may not be a reliable indicator of future performance. We are prepared to accept a fund or funds agreed by the parties, provided of course that the fund meets the relevant legislative requirements.

[30] It has not been practical to develop a single model clause for annual leave. While the drafts generally provide for the employer to require that arrears of annual leave be taken the drafts are not uniform. It is not appropriate to supplement the annual leave entitlements provided for in the NES unless it is necessary to maintain the safety net. [10] Depending upon the circumstances of the industry and the existing award arrangements provision may be required for a shift worker definition, annual close down, holiday pay, annual leave loading and payment on termination.

[31] A number of parties suggested that transitional provisions should not be included in the exposure drafts. We agree that the number and type of transitional provisions are better dealt with after consideration of the net impact on current terms and conditions flowing from each draft modern award. One possible approach is included in the draft retail award. We encourage further comment on whether transitional provisions are needed and if so the form they should take. The drafts do not generally include transitional provisions.

[32] A number of submissions were made as to the Commission's power to include provision for accident pay in modern awards. This is a legal issue which requires further discussion. We think the matter is open to doubt and at this stage the drafts do not include accident pay provisions.

[33] We have not included clauses dealing with stand downs in the exposure drafts because stand downs are provided for in ss.691A and 691B of the Act. Nor have we included anti-discrimination clauses as discrimination is the subject of legislative regulation elsewhere. Both of these matters can be further considered if necessary.

[34] The drafts provide for various schedules. Typically the schedules might include lengthy classification definitions, the supported wage system clause, the national training wage provision and a clause dealing with school-based apprentices. Where appropriate transitional provisions might also be dealt with in a schedule.

[35] This section of our decision makes comment on a number of matters relevant to the preparation of the exposure drafts, the consultation process and the finalisation of the priority modern awards. The exposure drafts are available on the Commission's website in the Award Modernisation/Full Bench Proceedings page. The full list of exposure drafts is:

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