Four yearly review of modern awards [2015] FWCFB 4466 | Case summary | Zoe

/

/

Four yearly review of modern awards [2015] FWCFB 4466 | Case summary | Zoe

[78]

(#P2388_213228)

ABBREVIATIONS

ACCI

Australian Chamber of Commerce and Industry

Act

Fair Work Act 2009

ACTU

Australian Council of Trade Unions

Ai Group

Australian Industry Group

AIRC

Australian Industrial Relations Commission

AMWU

"Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union" known as the Australian Manufacturing Workers' Union (AMWU)

AWRS

Australian Workplace Relations Study

AWU

The Australian Workers' Union

ANMF

Australian Nursing and Midwifery Federation

BOOT

better off overall test

CECL

Childcare and Early Childhood Learning, Inquiry Report, Productivity Commission 2014

CFMEU (C&G)

Construction, Forestry, Mining and Energy Union (Construction and General Division)

CFMEU (M&E)

Construction, Forestry, Mining and Energy Union (Mining and Energy Division)

Commission

Fair Work Commission

Family Leave Test Case

Family Leave Test Case - Stage 1 - November 1994 decision - (1994) 57 IR 121

Personal/Carer's Leave Test Case - Stage 2 - November 1995 decision- (1995) 62 IR 48

HSU

Health Services Union of Australia

IFA

individual flexibility arrangement

MBA

Master Builders Australia

MUA

The Maritime Union of Australia

NES

National Employment Standards

NFF

National Farmers' Federation

October 1995 Third Safety Net decision

Third Safety Net Adjustment & Section 150A Review - October 1995 decision (1995) 61 IR 236

OECD

Organisation for Economic Co-operation and Development

PIAA

Printing Industries Association of Australia

Review

4 yearly review of modern awards

TCFUA

Textile, Clothing and Footwear Union of Australia

TOIL

time off in lieu

Transitional Review

Transitional review of modern awards under Item 6 of Schedule 5 to the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009

1. Introduction and background

[1] Section 156 of the Fair Work Act 2009 (the Act) requires the Fair Work Commission (the Commission) to review all modern awards every four years. In a Statement issued on 17 March 20141 the Commission stated that the first 4 yearly review of modern awards (the Review) would comprise of an Initial stage, dealing with jurisdictional issues, a Common issues stage and an Award stage. In that Statement, award flexibility was listed as a common issue to be dealt with as part of the review. Conferences were held on 17 November 2014, 12 December 2014 and 20 February 2015 to determine the scope and indicative timetable for dealing with this matter as a common issue. Directions were then issued for the hearing and determination of the issues.

[2] Two groups of claims are advanced in the context of the award flexibility common issue. The Australian Industry Group (Ai Group) has made two claims in this matter. The first claim seeks to insert a model time off in lieu (TOIL) of payment for overtime clause into a number of modern awards and the second set of proposed variations relate to 'make-up time' provisions. The "Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union" known as the Australian Manufacturing Workers' Union (AMWU) seeks to vary the provisions relating to TOIL in a number of awards to provide for the accrual of TOIL at the 'time for penalty' rate rather than on an 'hour for hour' basis.2

[3] Before we turn to the merits of these claims we propose to set out some of the background to these proceedings.

[4] We begin by making some brief observations about the legislative context for the Review. We note that these issues are canvassed in more detail in the Preliminary Jurisdictional Issues decision of 17 March 2014. 3 We adopt and apply that decision.

[5] The Act provides that the Commission must conduct a 4 yearly review of modern awards (s.156(1)). Subsection 156(2) deals with what has to be done in a Review:

"(2) In a 4 yearly review of modern awards, the FWC:

(a) must review all modern awards; and

(b) may make:

(i) one or more determinations varying modern awards; and

(ii) one or more modern awards; and

(iii) one or more determinations revoking modern awards; and

(c) must not review, or make a determination to vary, a default fund term of a modern award.

Note 1: Special criteria apply to changing coverage of modern awards or revoking modern awards (see sections 163 and 164).

Note 2: For reviews of default fund terms of modern awards, see Division 4A."

[6] Subsections 156(3) and (4) deal with the variation of modern award minimum wages in a Review and are not relevant for present purposes.

[7] Subsection 156(5) provides that in a Review each modern award is reviewed in its own right, however, this does not prevent the Commission from reviewing two or more modern awards at the same time.

[8] The general provisions relating to the performance of the Commission's functions apply to the Review. Sections 577 and 578 are particularly relevant in this regard. In conducting the Review the Commission is able to exercise its usual procedural powers, contained in Division 3 of Part 5-1 of the Act. Importantly, the Commission may inform itself in relation to the Review in such manner as it considers appropriate (s.590).

[9] The modern awards objective is central to the Review. The modern awards objective applies to the performance or exercise of the Commission's 'modern award powers', which are defined to include the Commission's functions or powers under Part 2-3 of the Act. The Review function in s.156 is in Part 2-3 of the Act and so involves the performance or exercise of the Commission's 'modern award powers'. It follows that the modern awards objective applies to the Review.

[10] The modern awards objective is set out in s.134 of the Act, as follows:

"134 The modern awards objective

What is the modern awards objective?

(1) The FWC must ensure that modern awards, together with the National Employment Standards, provide a fair and relevant minimum safety net of terms and conditions, taking into account:

(a) relative living standards and the needs of the low paid; and

(b) the need to encourage collective bargaining; and

(c) the need to promote social inclusion through increased workforce participation; and

(d) the need to promote flexible modern work practices and the efficient and productive performance of work; and

(da) the need to provide additional remuneration for:

(i) employees working overtime; or

(ii) employees working unsocial, irregular or unpredictable hours; or

(iii) employees working on weekends or public holidays; or

(iv) employees working shifts; and

(e) the principle of equal remuneration for work of equal or comparable value; and

(f) the likely impact of any exercise of modern award powers on business, including on productivity, employment costs and the regulatory burden; and

(g) the need to ensure a simple, easy to understand, stable and sustainable modern award system for Australia that avoids unnecessary overlap of modern awards; and

(h) the likely impact of any exercise of modern award powers on employment growth, inflation and the sustainability, performance and competitiveness of the national economy.

This is the modern awards objective.

When does the modern awards objective apply?

(2) The modern awards objective applies to the performance or exercise of the FWC's modern award powers, which are:

(a) the FWC's functions or powers under this Part; and

(b) the FWC's functions or powers under Part 2-6, so far as they relate to modern award minimum wages.

Note: The FWC must also take into account the objects of this Act and any other applicable provisions. For example, if the FWC is setting, varying or revoking modern award minimum wages, the minimum wages objective also applies (see section 284)."

[11] The modern awards objective is directed at ensuring that modern awards, together with the National Employment Standards (NES), provide a "fair and relevant minimum safety net of terms and conditions" taking into account the particular considerations identified in paragraphs 134(1)(a) to (h) (the s.134 considerations). No particular primacy is attached to any of the s.134 considerations and not all of the matters identified will necessarily be relevant to a particular proposal to vary a modern award. 4 A matter which the Commission is directed to 'take into account' is a relevant consideration in the Peko-Wallsend5 sense of matters which the decision maker is bound to take into account and treat as a matter of significance in the decision making process.6

[12] The modern awards objective is very broadly expressed. 7 In National Retail Association v Fair Work Commission8 a Full Court of the Federal Court made the following observation about the modern awards objective:

"It is apparent from the terms of s 134(1) that the factors listed in (a) to (h) are broad considerations which the FWC must take into account in considering whether a modern award meets the objective set by s 134(1), that is to say, whether it provides a fair and relevant minimum safety net of terms and conditions. The listed factors do not, in themselves, however, pose any questions or set any standard against which a modern award could be evaluated. Many of them are broad social objectives. What, for example, was the finding called for in relation to the first factor ("relative living standards and the needs of the low paid")? ..." 9

[13] There is a degree of tension between some of the s.134 considerations. The Commission's task is to balance the various considerations and ensure that modern awards, together with the NES, provide a fair and relevant minimum safety net of terms and conditions.

[14] One of the matters the Commission is required to take into account is the need to ensure a 'stable' modern award system (s.134(1)(g)). The need for a stable modern award system supports the proposition that a party seeking to vary a modern award in the context of the Review must advance a merit argument in support of the proposed variation. The extent of the merit argument required will depend on the variation sought. 10

[15] The Review is broader in scope than the Transitional Review of modern awards 11 completed in 2013 and is the first full opportunity to consider the content of modern awards. However, the broad scope of the Review does not obviate the need for a merit argument to be advanced in support of a proposed variation.

[16] The proponent of a variation to a modern award must demonstrate that if the modern award is varied in the manner proposed then it would only include terms to the extent necessary to achieve the modern awards objective (see s.138). What is 'necessary' in a particular case is a value judgment based on an assessment of the s.134 considerations having regard to the submissions and evidence directed to those considerations. 12

[17] Modern awards are dealt with in Part 2-3 of Chapter 2 of the Act. In addition to the modern awards objective in s.134 there is another provision which is particularly relevant for present purposes. Section 144(1) provides that each modern award must include a 'flexibility term' enabling an employee and his or her employer to agree on an individual flexibility arrangement (IFA), varying the effect of the award in relation to the employee and the employer. The stated objective of such arrangements is 'to meet the genuine needs of the employee and employer'.

[18] The former Australian Industrial Relations Commission (AIRC) was required to prepare a model flexibility clause as part of the award modernisation process governed by Part 10A of the Workplace Relations Act 1996. On 20 June 2008 a Full Bench of the AIRC issued a decision 13 which included the determination of the model flexibility clause. The model clause was modified in December 200814 and April 200915 to take account of submissions from interested parties, amendments to the Ministerial Request under s.576A of the Workplace Relations Act 1996 (Cth) and legislative change. The model term was subsequently varied in the Transitional Review.16

[19] In the present proceedings the Australian Council of Trade Unions (the ACTU) and a number of unions contend that Ai Group's proposed variations are unnecessary and that the flexibility sought can be obtained through the model flexibility term. It is also contended by the Construction, Forestry, Mining and Energy Union (Construction and General Division) (CFMEU (C&G)) that the flexibility term inserted into modern awards pursuant to s.144(1) is the only permitted means of providing for any individual flexibility agreement between an employee and an employer. 17 We deal with these arguments later in our decision.

[20] In performing functions and exercising powers under a part of the Act (including Part 2-3: Modern Awards) the Commission must also take into account the object of the Act and any particular objects of the relevant part (see s.578(a)). The object of Part 2-3 is expressed in s.134, the modern awards objective, to which we have already referred. The object of the Act is set out in s.3.

[21] As we have mentioned, the modern awards objective is that modern awards, together with the NES provide a fair and relevant minimum safety net. The NES are set out in Part 2-2 of the Act.

[22] There is one aspect of the NES which is particularly relevant for present purposes - the right to request flexible working arrangements pursuant to s.65. As we shall see, a number of unions contend that Ai Group's proposed model terms in relation to TOIL and make-up time are inconsistent with s.65 and 'detrimental' to employees (within the meaning of s.55(4)). On that basis it is submitted that the claimed provisions cannot be inserted into modern awards. We deal with that argument, and the terms of s.65, later in this decision.

[23] In dealing with matters arising in the Review the Commission will have regard to the relevant historical context and will take into account previous decisions relevant to any contested issue. The context in which those decisions were made will also need to be considered, as the Full Bench observed in the Preliminary Jurisdictional Issues decision:

" ... In conducting the Review it is appropriate that the Commission take into account previous decisions relevant to any contested issue. The particular context in which those decisions were made will also need to be considered. Previous Full Bench decisions should generally be followed, in the absence of cogent reasons for not doing so." 18

[24] The above observation is particularly relevant in the present proceedings as Ai Group's claims are said to be based on model clauses determined by a Full Bench of the AIRC in the 1994 Family Leave Test Case decisions (the Family Leave Test Case). We deal first with those decisions and the particular context in which they were made first, before turning to the claims before us.

2. The 1994 Family Leave Test Case decisions

[25] As Ai Group readily concedes, the merits of its claim rely 'very heavily on the logic and findings' 19 of the Family Leave Test Case. Ai Group also submits that the context of the Family Leave Test Case decisions 'remain salient in current context and they give great force to our claim'.20

[26] The Family Leave Test Case was determined in two stages:

● Family Leave Test Case - Stage 1 - November 1994 decision (the Stage 1 decision); 21 and

● Personal/Carer's Leave Test Case - Stage 2 - November 1995 decision (the Stage 2 decision). 22

[27] As will become apparent, and contrary to Ai Group's submission, the model TOIL and make-up time terms proposed by Ai Group do not reflect the outcome of the Family Leave Test Case. In this regard it is important to understand the sequence of decisions dealing with the content of the model terms determined in the Family Leave Test Case. For reasons which will become apparent we propose to focus on the model TOIL term.

[28] At the outset we would observe that the package of measures introduced by these decisions was intended to strike an appropriate balance between a number of objectives. As the Full Bench of the AIRC observed in the Stage 2 decision:

"The complete package of measures represents, in our view, an appropriate balance between the following objectives:

● helping workers to reconcile their employment and family responsibilities consistent with the Commission's obligations under s 93A of the Act to take account of the principles embodied in the Family Responsibilities Convention;

● promoting enterprise bargaining by maintaining an incentive to bargain;

● introducing greater flexibility into the award system consistent with the Commission's statutory obligation to ensure that ''awards are suited to the efficient performance of work according to the needs of particular industries and enterprises, while employees' interests are also properly taken into account'' (s 88A(c));

● the need to have regard to the economic impact of our decision pursuant to the Commission's obligations under s 90 of the Act.

The measures we have introduced also reflect the legislative intention that the award system needs to change in response to changed industrial needs. Such an approach is also consistent with the views expressed by the Commission in the September 1994 Safety Net Adjustments and Review decision (at 146; p 52).

In this regard we wish to emphasise that this test case decision will result in the variation of the safety net of minimum wages and conditions of employment. The award safety net is intended to underpin bargaining. As such, variations in the safety net should not, in our view, pre-empt the outcome of bargaining. Rather such award variations should follow outcomes in the bargaining process.

On this basis the measures we have decided to implement can be reviewed over time having regard to prevailing industrial, economic and social circumstances." 23

[29] The issues arising from the Family Leave Test Case were dealt with in two stages. The Stage 1 decision, which is the most relevant for present purposes, extended access to sick leave so that employees could use their sick leave entitlement to provide care or support for an ill member of the employee's family and introduced a range of facilitative provisions (including TOIL and make-up time). The form of the TOIL provision was not determined in the Stage 1 decision and the Full Bench referred the settlement of the orders arising from its decision to Vice President Ross, following a conference of the parties. The orders were the subject of a decision by the Vice President on 3 February 1995, 24 in which his Honour dealt with aspects of the TOIL model clause. Of particular relevance to the present proceedings is that part of his Honour's decision dealing with the rate of compensation for overtime work:

"The second point in dispute concerns the rate of compensation for overtime work.

The ACTU argued that time-off in lieu should be at overtime rates, that is if the overtime rate is time and a half then one and a half hours time-off accrues for every overtime hour worked. In support of their submission the ACTU relied on a preliminary FATEXT search which it was submitted showed that "of the awards which currently provide time-off in lieu the overwhelming majority provide such time-off at overtime rates". [ACTU submission at p.7] Further it was submitted that the awards which provide time-off in lieu of overtime at ordinary rates could be distinguished on the following grounds:

● the time-off in lieu provisions are very restrictive in their application and are not able to be taken simply at the election of the employee;

● overtime hours on weekends and public holidays accrue at overtime rates; and

● time-off at overtime rates generally came about under the structural efficiency principle.

It was also argued that in the limited number of awards which provide time-off in lieu at ordinary time employees usually retained the right to be paid out at overtime rates.

The ACCI, ACM, MTIA and the States of NSW, Victoria and WA opposed the ACTU's proposal and submitted that time-off in lieu should be taken at the rate of one hour for each hour worked. In support it was argued that such a proposal would introduce greater flexibility but with the protection that it's implementation could only be by employee election with the consent of the employer. The ACCI submission concluded that:

'In these circumstances we see no need to restrict the extent of employee and employer agreement by requiring overtime rates, something which can be done on an overaward basis.' [ACCI written submission at p.7]

In my view the objectives of the Test Case decision can best be met by providing that time-off in lieu be at ordinary time. I would however add two limitations:

● existing award provisions dealing with time-off in lieu of overtime should not be amended until this matter is finally determined by the Commission after the August 1995 proceedings; and

● the order will ensure that employees retain the right to be paid out at overtime rates.

The approach adopted will assist employees in reconciling their employment and family responsibilities while maintaining an incentive to bargain and introducing greater flexibility into the award system." 25

[30] The next relevant decision in the sequence is the Third Safety Net Adjustment & Section 150A Review - October 1995 decision (the October 1995 Third Safety Net decision). 26 In that decision the AIRC set out a number of general propositions in relation to the nature and extent of facilitative provisions.27 These general propositions were subsequently adopted in the Family Leave Test Case Stage 2 decision, as is apparent from the following extract from that decision:

"In the course of these proceedings a range of issues has been raised in relation to the facilitative provisions included in Stage 1 and the provisions proposed to be introduced in Stage 2 ...

In the Third Safety Net Adjustment & Section 150A Review - October 1995 decision (1995) 61 IR 236 at 255-257; Print M5600 at pp 27-30, the Commission made five points in relation to the nature and extent of facilitative provisions.

1. At this stage the Commission intends to adopt an approach to the insertion of facilitative provisions into awards which reflects the fact that such clauses are self-executing. Facilitative provisions need to be distinguished from other mechanisms which may be used to introduce flexibility at the enterprise. Enterprise flexibility clause agreements, certified agreements, enterprise flexibility agreements, consent awards or consent award variations all involve an assessment by the Commission of both the process leading to such agreements and their impact on the employees covered by them. By contrast the use of facilitative provisions at the enterprise level is not subject to Commission scrutiny.

2. Facilitative provisions should continue to protect employees while allowing appropriate flexibility for individual enterprises in the way an award clause is implemented.

3. Facilitative provisions should not be a device to avoid award obligations because the Commission is obliged to ensure, among other things, that "employees are protected by awards that set fair and enforceable minimum wages and conditions of employment that are maintained at a relevant level [s 88A]." (Review of Wage Fixing Principles - August 1994 decision (1994) 55 IR 144 at 157; Print L4700 at p 33.)

Neither should the adoption of a facilitative provision result in unfairness to the employees covered by the award. Given the lack of Commission scrutiny in relation to the operation of these clauses, a proposal that a facilitative provision should not operate to reduce ordinary time earnings is inadequate to ensure that in all cases unfairness to employees will not occur.

In order to provide the necessary protection and prevent unfairness the Commission will generally only insert facilitative provisions which require majority agreement at the enterprise level before they become operative. For example:

'The employer and the majority of employees at an enterprise may agree to establish a system whereby the employer and individual employees may agree to take an RDO at any time despite any award provision to the contrary.'

In essence facilitative provisions should require a majority decision to introduce a particular form of flexibility which may then be utilised by agreement between the employer and individual employees.

Once a majority decision has been taken its terms should, in order to provide a record of them, be set out in the time and wages records kept in accordance with regs 131A-131R of the Industrial Relations Regulations (Cth).

The Commission considers that these safeguards are appropriate given the self-executing nature of facilitative provisions and the fact that facilitative provisions have a capacity to directly or indirectly affect all employees at an enterprise.

In circumstances where the Commission has decided that it is appropriate that a facilitative provision requires the agreement of a majority of employees at an enterprise prior to the introduction of a particular type of flexibility, then the relevant provisions should also provide that:

(a) unions which are both party to the relevant award and who have members employed at the particular enterprise must be informed of the intention to utilise the facilitative provision and be given a reasonable opportunity to participate in negotiations regarding its use;

(b) participation by a union in this process does not mean that the consent of the union is required prior to the introduction of the agreed flexibility arrangements at the enterprise. Unions will not have a right to veto the introduction of such arrangements;

(c) union involvement and the requirement for majority consent are only required at the time a decision is made to introduce a particular form of flexibility at the enterprise. Thereafter the only requirement is agreement between the employer and an individual employee to access the agreed flexibility.

The Commission may also decide to establish a monitoring process under which a particular facilitative provision is, after a reasonable period, reviewed to consider its impact in practice.

Such a process can be used to ensure that the practical operation of a facilitative provision is:

not unreasonably impeding the introduction of greater flexibility at the enterprise level; or
resulting in unfairness to employees.

If these objectives are not being met then the provision may be amended.

4. Award parties are not required to include facilitative provisions in all award clauses. An award-by-award process is preferable as it allows the needs and circumstances of the enterprises and employees covered by the award to be properly taken into account in accordance with s 88A of the Act. However all award parties must specifically address the use of facilitative provisions as a means of making their awards more relevant and better suited to the needs of individual enterprises. In this regard, award parties should consider giving priority to an examination of award provisions which affect the organisation of work or the efficiency of enterprises covered by the award.

5. Facilitative provisions should be used to promote the efficient organisation of work at the enterprise level and be designed to avoid the prescription of matters in unnecessary detail.

We intend to apply these guidelines to the issues before us. As the October 1995 Review decision was handed down after the conclusion of the proceedings before us, we will provide the parties with an opportunity to make further submissions in relation to the application of these guidelines to the particular facilitative provisions dealt with in this decision. This can be done during the proceedings to settle the orders arising from this decision." 28

[31] Two other aspects of the Stage 2 decision are particularly relevant for present purposes.

[32] First, the Full Bench dealt with a general submission advanced by the ACTU in relation to the scope of the facilitative provisions. The ACTU had submitted that the facilitative provisions should only be available in the context of leave to care for ill family members. The Full Bench rejected the limitation proposed in the following terms:

"In the November 1994 decision we did not intend that the facilitative provisions determined would be restricted in the manner proposed by the ACTU. That decision states that the package of measures decided upon were intended to represent an appropriate balance between a number of objectives including (146; p 39):

' ... introducing greater flexibility into the award system consistent with the Commission's statutory obligation to ensure that 'awards are suited to the efficient performance of work according to the needs of particular industries and enterprises, while employees interests are also properly taken into account' [section 88A(c)].'

The November 1994 decision also envisaged that the range of facilitative measures to be introduced would facilitate the introduction of greater flexibility at the workplace level. In particular the Commission stated (148; pp 41-42):

'The approach we have adopted is consistent with the submissions of ACCI that the award system at present inhibits the capacity of employers and employees to reconcile work and family responsibilities. ACCI submitted that awards should be amended in a number of respects, including to provide for more flexibility in the use of annual leave entitlements, to amend award provisions which prevent employers allowing employees to make-up time at ordinary time rates at a time agreed between them, to remove restrictions on part-time work, provide adequate flexibility in rostered days off, and to introduce fully flexible working hours.

We also note that the measures to be introduced will facilitate the introduction of greater flexibility at the workplace level and a number of the studies we have referred to reported that employees saw additional flexibility as the primary means of reconciling work and family responsibilities.'

The limitation proposed by the ACTU would mean that employees would have no access to the facilitative provisions for reasons other than the illness of a member of the employee's household or immediate family. If this limitation were adopted employees would not have access to the flexibilities provided in the package of measures we have determined for the purpose of attending, for example, school events and curriculum days. This would be contrary to existing practice. As noted in the November 1994 decision the most common method used by employees with dependent children to arrange time off to attend such events was flexible work arrangements. The evidence submitted in the Stage 1 proceedings was that two out of three employees with dependent children arranged time off for these child related activities by using make-up time, flexitime or rostered days off (140; pp 29-30).

We reject the limitation proposed for the reasons given." 29

[33] Second, the Full Bench dealt with the form of the TOIL provision arising from the Stage 1 decision. As we have set out above, in the decision settling the relevant orders from the Stage 1 decision Vice President Ross stated that the rate of compensation of overtime worked in the context of TOIL would need to be reconsidered in the Stage 2 proceedings. In the Stage 2 proceedings the ACTU argued that TOIL should be at overtime rates, that is if the overtime rate is time and a half then one and a half hours' time off accrues for every overtime hour worked. The ACTU also sought clarification in relation to the level of protection afforded to existing award conditions prescribing TOIL of payment for overtime at overtime rates. The Full Bench dealt with these submissions, as follows:

"We have not been persuaded to depart from the form of order determined by Vice President Ross. In relation to the issue raised by the ACTU concerning the level of protection to be afforded to existing award provisions we have decided that such provisions should be retained. Accordingly where an award currently provides for time off in lieu of payment for overtime at overtime rates then that part of the package we have determined should not be inserted into the award in question. In this regard the approach adopted by the Commission in the variation of the Victorian Local Authorities Interim Award 1991 (Print M2791) is appropriate." 30

[34] The TOIL provision in the draft framework order attached to the Stage 2 decision was in the following terms: 31

"5.1 An employee may elect, with the consent of the employer, to take time off in lieu of payment for overtime at a time or times agreed with the employer.

5.2 Overtime taken as time off during ordinary time hours shall be taken at the ordinary time rate, that is an hour for each hour worked.

5.3 An employer shall, if requested by an employee, provide payment, at the rate provided for the payment of overtime in the award, for any overtime worked under par 5.1 of this subclause where such time has not been taken within four weeks of accrual."

[35] In the decision settling the orders arising from the Stage 2 decision 32 Senior Deputy President Marsh decided, in accordance with the view expressed by the Full Bench in the Stage 2 decision, awards that had not already been varied to provide for make-up time or TOIL should include the general provisions relating to facilitative clauses determined in the October 1995 Third Safety Net decision.33

[36] The application of the observations in the October 1995 Third Safety Net decision to the model TOIL and make-up time clauses arising from the Family Leave Test Case was complicated by the fact that some awards had been varied prior to the October 1995 Third Safety Net decision. In the decision setting the orders arising from the Stage 2 decision Senior Deputy President Marsh dealt with these issues in the following way:

"Turning to existing facilitative clauses, namely, annual leave, time off in lieu and make up time. As set out above many awards had been varied for the First Stage of family leave, prior to the Third Safety Net and Section 150A Review decision being handed down. Guidance as to whether or not these provisions should be distributed in light of the latter decision is found in the Third Safety Net and Section 150A Review decision which states in relation to the guidelines as quoted above and repeated here:

'The safeguards we have provided in relation to facilitative provisions are intended to apply to applications to insert a facilitative provision into an award. They are not intended to automatically apply to existing facilitative provisions. A party wishing to vary an existing provision to incorporate any of the protections we have referred to will bear the onus of establishing that such a protection is necessary in all the circumstances.'

I consider that nothing has been put to justify a departure from this procedure to apply to any existing facilitative clause including those provided for in the First Stage Family Leave proceedings. It therefore forms part of this decision that the employers' draft will apply to awards which have had facilitative clauses inserted as a result of the First Stage decision. At the time of hearing an application to vary the award for the Second Stage a party can seek to vary the existing provisions to incorporate any of the protections provided for in the Full Bench decision if such protections are not already provided. In doing so the party will bear an onus of establishing that such protection is necessary given the nature and circumstances of the matter.

Equally, a party seeking to vary an existing facilitative clause which already provides for the protections currently provided for in the Full Bench decision, will bear an onus in establishing that particular grounds warrant an individual member exercising his/her discretion in favour of granting the application.

In relation to awards which have not yet been varied to provide for facilitative clauses, the general position of the Commission as set out in the Full Bench decision and reproduced in this decision will apply. Any party seeking a departure from the test case provisions must bear the onus to justify that the departure is necessary in the circumstances of the matter." 34

[37] The Senior Deputy President then dealt with a number of specific proposals in relation to the facilitative provisions arising from the Stage 2 decision (including TOIL and make-up time). In the course of finalising the orders arising from this decision her Honour decided as follows:

"(i) to include a majority consent provision whereby the employer and the majority of employees at the enterprise may agree to introduce (relevantly) make up time or TOIL which may then be utilised by agreement between the employer and individual employee; 35

(ii) to include the following provisions in (relevantly) the model TOIL and make up time clauses:

'(a) unions which are both party to the relevant award and who have members employed at the particular enterprise must be informed of the intention to utilise the facilitative provision and be given a reasonable opportunity to participate in negotiations regarding its use;

(b) participation by a union in this process does not mean that the consent of the union is required prior to the introduction of the agreed flexibility arrangements at the enterprise. Unions will not have a right to veto the introduction of such arrangements;

(c) union involvement and the requirement for majority consent are only required at the time a decision is made to introduce a particular form of flexibility at the enterprise. Thereafter the only requirement is agreement between the employer and an individual employee to access the agreed flexibility' 36; and

(iii) make provision for recording facilitative provisions in the 'time and wages book' and, in particular, the wording to be reflected in the order will be consistent with the wording of the Stage 2 decision, that is:

'Once a decision has been taken its terms should be set out in the time and wages record kept in accordance with regn 131A-131R of the Industrial Relations Regulations'." 37

[38] The parties were directed to submit draft orders consistent with her Honour's decision and the awards before her Honour were subsequently varied to give effect to her decision. One of the awards so varied was the Re Laundry Industry (Victoria) Interim Award 1993. The relevant parts of that variation order which deal with TOIL are reproduced below:

"8 Time Off in Lieu of Payment

Notwithstanding provisions elsewhere in the award, the employer and the majority of employees at an enterprise may agree to establish system of time off in lieu of overtime provided that;

8.1 An employee may elect, with the consent of the employer, to take time off in lieu of payment for overtime at a time or times agreed with the employer.

8.2 Overtime taken as time off during ordinary time hours shall be taken at this ordinary time rate, that is an hour for each hour worked. (unless otherwise provided elsewhere in the award)

8.3 An employer shall if requested by an employee, provide payment at the rate provided for the payment of overtime as prescribed in clause 11 of this award, for any overtime worked under this subclause where such time has not been taken within four weeks of accrual.

8.4 Paragraph 1 is subject to the employer informing the ALHMWU which is both party to the Award and which has members employed at the particular enterprise of its intention to introduce an enterprise system of time off in lieu of overtime flexibility, and providing a reasonable opportunity for the union to participate in negotiations.

8.5 Once a decision has been taken to introduce an enterprise system of time off in lieu, in accordance with this clause, its terms must be set out in the time and wages records kept pursuant to regulations 131A - 131R of the Industrial Relations Regulations.

8.6 An employer shall record time off in lieu arrangements in the time and wages book as prescribed in clause 23 of this Award at each time this provision is used." 38

[39] Finally, in the subsequent Parental Leave Test Case 2005 decision 39 a Full Bench of the AIRC considered, among other things, a claim by ACCI and the National Farmers Federation (NFF) to adopt a model TOIL clause in the following terms:

"To assist employees in balancing their work and family responsibilities, an employee may elect, with the consent of the employer, to take time in lieu of payment for overtime at an agreed time or times.

Overtime taken as time off shall be taken at the ordinary time rate, that is an hour for each hour worked."

[40] At paragraphs 278-279 of its decision the Full Bench summarised the submissions put in relation to the above claim, as follows:

"ACCI/NFF submitted that many key awards "have not delivered the options and capacities this clause is so clearly designed to deliver" and that in practice "many federal award provisions differ from this model, they are complicated, and they do not actually deliver direct access to direct toil arrangements". Reasons given included that time off in lieu provisions in many awards have been made subject to employee majority veto clauses, a circumstance that ACCI/NFF submitted is inappropriate and impractical.

The ACTU opposed any variation to the existing standard, submitting that there is no evidence of problems with it or sufficient evidence to justify removal of the safeguard entitling an employee to elect to convert their time off back to wages if more than four weeks has elapsed since the entitlement was earned. The ACTU also submitted that a majority of awards already containing time off in lieu provisions provide for such time off at overtime rates (rather than ordinary rates) and that if the ACCI/NFF proposal was granted, workers taking time off for family reasons would be disadvantaged." (footnotes omitted)

[41] The Full Bench rejected the ACCI/NFF claim in relation to TOIL. 40

[42] It is appropriate that the Commission take into account previous decisions relevant to any contested issue. As we have mentioned, previous Full Bench decisions should generally be followed, in the absence of cogent reasons for not doing so. 41 The particular context in which those decisions were made will also need to be considered. We return to our consideration of the Family Leave Test Case later in our decision. We now turn to the claims before us.

3. Claims

3.1 Ai Group claim

[43] Ai Group has made two claims in this matter. The first seeks to insert a model TOIL clause into a number of modern awards.42 The proposed model clause is set out below:

"Time off in lieu of payment for overtime

(a) An employee may elect, with the consent of the employer, to take time off in lieu of payment for overtime at a time or times agreed with the employer.

(b) Overtime taken as time off during ordinary time hours shall be taken at the ordinary time rate, that is an hour for each hour worked.

(c) An employer shall, if requested by an employee, provide payment, at the rate provided for the payment of overtime in the award, for any overtime worked under paragraph (c) of this subclause where such time has not been taken within four weeks of accrual."

[44] During the course of the hearing on 5 May 2015 we raised a number of issues concerning Ai Group's proposed model clause. These issues primarily related to the payment of untaken TOIL upon termination of employment and the need to address the potential for the indefinite accrual of TOIL. Ai Group addressed these issues in its supplementary written submission of 18 May 2015 and proposed the addition of the following paragraphs to its proposed model clause:

"(d) Subject to an employee's right under (c), where the employee and employer are unable to reach agreement within 12 months as to when the time off in lieu will be taken, the employer may require the employee to take time off in lieu at a time of its choosing. This will be subject to the employer providing the employee with at least 4 weeks' notice of the need to take such time off.

(e) If, upon termination of employment, an employee has an accrued entitlement to take time off in lieu which the employee has not yet accessed, the employee will be paid at the overtime rates applicable under the award for the corresponding overtime worked."

[45] Ai Group submitted that the additional paragraphs are necessary to ensure that the relevant modern awards meet the modern awards objective, as contemplated by s.138. In respect of proposed paragraph (d) Ai Group submitted that it is intended to ensure that "employers retain some influence over the level of TOIL accruals beyond the initial decision to agree to this flexibility" while 'not removing the right of an employee to have his or her accrued entitlements paid out at overtime rates'. 43 It is also submitted that proposed paragraph (d) will be likely to "ensure employees are incentivised to access TOIL in a timely manner, rather than accruing it for an extended period or indefinitely".44 We return to the question of safeguards and TOIL later in this decision.

[46] Currently, 83 of the 122 modern awards provide for TOIL and of those, 59 provide that time off for TOIL is calculated at the ordinary rate (i.e. "time for time") rather than the overtime rate (i.e. "time for penalty").

[47] Ai Group propose to insert the model clause into 26 modern awards that do not currently have a TOIL provision (Attachment A) and to delete existing TOIL provisions in 10 modern awards and replace them with the model clause (Attachment B). In each of these 10 modern awards the existing TOIL provision provides for time off to be calculated on the basis of time for penalty.

[48] Ai Group also seeks to vary 51 of the 122 modern awards (Attachment C) to insert the following make-up time provision:

"Make-up time

(a) An employee may elect, with the consent of the employer, to work make up time under which the employee takes time off during ordinary hours, and works those hours at a later time, during the spread of ordinary hours provided in this award.

(b) An employee on shiftwork may elect, with the consent of their employer, to work make up time under which the employee takes time off during ordinary hours and works those hours at a later time, at the rate which would have been applicable to the hours taken off."

3.2 AMWU claim

[49] The AMWU seeks to vary the provisions relating to TOIL in the following awards:

Manufacturing and Associated Industries and Occupations Award 2010
Food, Beverage and Tobacco Manufacturing Award 2010
Graphic Arts, Printing and Publishing Award 2010
Sugar Industry Award 2010
Airline Operations - Ground Staff Award 2010

[50] The clause proposed by the AMWU is in the following terms:

"(d) An employee may elect, with the consent of the employer, to take time off instead of payment for overtime at a time or times agreed with the employer, provided that:

(i) An employee accrues time off instead of payment for overtime at the overtime penalty; and

(ii) If requested by an employee, an employer must within one week of receiving a request pay the employee for any overtime worked. The employee must be paid at overtime rates; and

(iii) Within four weeks of working the overtime the employee and employer must agree on when the time off will be taken otherwise payment for the overtime must be made to the employee; and

(iv) The amount of accrued hours of untaken Time Off Instead of Payment for Overtime will be recorded on an employee's payslip."

[51] The main effect of the proposed variations is to provide for the accrual of TOIL on a 'time for penalty rate' basis rather than on time for time basis.

[52] The AMWU claim also seeks to vary the general award provisions relating to facilitative provisions in the modern awards which are the subject of its claim. The effect of these related variations is to provide that access to TOIL arrangements by individual agreement is dependent upon an agreement between the employer and the majority of employees in the workplace before such a facilitative provision can be utilised. Further, the variations sought include an additional safeguard which requires that the unions which have members employed in an enterprise covered by the award 'must be informed by the employer of the intention to use the facilitative provision and be given a reasonable opportunity to participate in the negotiations regarding its use'.

4. Submissions

[53] Written submissions in support of the various claims were filed by Ai Group, AMWU and Master Builders Australia (MBA). The ACTU and 11 other organisations subsequently filed submissions in reply.45 A further 10 supplementary submissions were filed following the hearing on 5 May 2015. A list of all submissions received can be found at Attachment D.

[54] It is convenient to first summarise the submissions in relation to the AMWU claim before turning to the Ai Group claims.

[55] As we have mentioned, the AMWU variations provide for the accrual of TOIL on a 'time for penalty rate' basis, rather than an 'hour for hour' basis and incorporate a range of safeguards. The AMWU submitted that the safeguards contained within its proposed clause would ensure:

(i) overtime worked is compensated for its unsocial characteristics and value by ensuring that TOIL accrues at the overtime penalty rate;

(ii) employees have had an opportunity to discuss TOIL across the workplace and are aware of their rights before using the provisions, by ensuring that employers seek a majority agreement under the facilitative provisions as well as individual agreement where it is intended that there is widespread use of TOIL across the organisation;

(iii) access to union advice about TOIL is readily available by ensuring the additional safeguard applies to the TOIL agreement;

(iv) employee applications for TOIL are genuinely considered by employers by ensuring that a time for TOIL to be taken is agreed within 4 weeks of working overtime, otherwise payment for overtime must be made to the employee; and

(v) employees can review their TOIL arrangements by ensuring that the TOIL agreements are kept as part of the employee records which are required by the Act and the Fair Work Regulations 2009 and are accounted for in payslips provided to employees where there is an ongoing accrual.

[56] The AMWU submits that the proposed variations would 'go towards achieving the modern awards objective', and addresses a number of the s.134(1) considerations, in particular:

● the relative living standards and the needs of the low paid (s.134(1)(a));46

● the need to encourage collective bargaining (s.134(1)(b));47

● the need to promote social inclusion through increased workforce participation (s.134(1)(c));48

● the need to promote flexible modern work practices and the efficient and productive performance of work (s.134(1)(d));49

● the need to provide additional remuneration for overtime, working unsocial, irregular or unpredictable hours etc (s.134(1)(da));50

● equal remuneration for work of equal or comparable value (s.134(1)(e));51

● the likely impact of any exercise of modern award powers on business, including on productivity, employment costs and the regulatory burden (s.134(1)(f));52

● a simple, easy to understand stable and sustainable modern award system (s.134(1)(g))53; and

● likely impact on employment growth etc (s.134(1)(h)).54

[57] The AMWU advances two other general points.

[58] First, it is submitted that since the Family Leave Test Case and the Parental Leave Test Case 55 there have been a number of legislative changes which are relevant to any consideration of TOIL in modern awards, in particular:

● the right to request flexible working arrangements (s.65);

● every modern award must contain a flexibility term (s.144); and

● the modern awards objective has been varied to insert s.134(1)(da) - the Commission must now take into account the need to provide additional remuneration for employees working overtime.

[59] The second point advanced is that the AMWU draws a distinction between TOIL and make-up time. Make-up time being granted on an hour for hour basis may be justified as a genuine family flexibility as 'it affords time of value to the employee at the time during which it is needed'. TOIL initiated by an employer is different - the time being sought from the employee is time that might otherwise be spent attending to family responsibilities.

[60] The ACTU supports the AMWU's claim.

[61] The Australian Workers' Union (AWU) supports the AMWU's application to vary TOIL provisions in relation to the following awards:

● Manufacturing and Associated Industries and Occupations Award 2010;

● Food, Beverage and Tobacco Manufacturing Award 2010;

● Sugar Industry Award 2010; and

● Airline Operations-Ground Staff Award 2010.

[62] The preliminary position of the CFMEU (C&G) is that the TOIL provisions sought to be varied by the AMWU be removed. In the alternative, should the Commission reject the CFMEU (C&G)'s primary submission, the CFMEU (C&G) would support the AMWU's proposed variation with respect to the Manufacturing and Associated Industries and Occupations Award 2010.

[63] Ai Group opposes the variations proposed by the AMWU.56 It submits that the proposal is at odds with the balance struck by the Full Bench in developing a TOIL clause to best meet the objectives of the Family Leave Test Case.

[64] Ai Group submits that the AMWU seeks to depart from the test case TOIL clause by:

(i) creating disincentives for employers to agree to TOIL by requiring employers to administer time off based on the applicable penalty rate, rather than actual time worked;

(ii) restricting the availability of TOIL to employers and employees, in some circumstances, based on the vote of a majority of employees;

(iii) giving unions unreasonable and unnecessary rights to interfere with TOIL arrangements that are supported by the relevant employer and employee;

(iv) imposing a four week time restriction on the taking of TOIL; and

(v) imposing unnecessary and additional record-keeping obligations on TOIL where existing recording keeping obligations under the Fair Work Regulations 2009 are appropriate and adequate.

[65] Ai Group also submits that the AMWU's proposals are inconsistent with the modern awards objective and its reply submission discusses each of the s.134 considerations.57

[66] The Printing Industries Association of Australia (PIAA) opposes the AMWU's application to vary the Graphic Arts, Printing and Publishing Award 201058 and supports the retention of the award's current TOIL provision. PIAA submits that the existing clause provides "time for time" which is consistent with the Family Leave Test Case, and that a change to TOIL at overtime rates would make the arrangement very unattractive to employers leading them to refuse an employee's request to take TOIL. As to the additional "safeguards" sought by the AMWU, PIAA submits:

(i) the requirement for majority agreement is unnecessary in what is a matter between an individual employee and their employer and "would add red tape, effectively strangling and stifling an employee benefit";59

(ii) the requirement for TOIL to be taken within four weeks is unnecessary as clause 33.9(a) of the Graphic Arts, Printing and Publishing Award 2010 already stipulates that the employee must take the TOIL within four weeks of working the overtime;

(iii) the requirement to keep TOIL agreements as part of the employee records required by the Fair Work Regulations 2009 and to be recorded on payslips would "unnecessarily increase the regulatory burden on business, and further disincentivises the utilisation of the flexibility provisions in the workplace".60

[67] We now turn to the submissions advanced in relation to the Ai Group claims.

[68] Ai Group submits the model clauses replicate the facilitative provisions determined in the Family Leave Test Case 61 and provide for increased flexibility and an incentive for employers to allow employees to better reconcile work and family commitments.

[69] Ai Group identifies a number of trends in the Australian labour market which are said to support its claims. The trends identified are:

● full-time and part-time employment - part-time work is rising and currently accounts for 30.8% of the workforce;

● participation rate - the current participation rate is drifting lower as the population ages;

● employment growth and contraction in particular industries - employment has been growing more strongly in service sectors than in the industrial sectors for some time;

● working hours patterns and trends - the weekly working hours bracket showing the strongest growth in the past decade is the 16 to 29 hours per week bracket; and

● types of employment - the number of permanent employees has been increasing over many years and the proportion of casual employees has remained relatively stable.

[70] It is contended that the labour market trends identified support Ai Group's contention that the modern award system needs to be more flexible in order to achieve increased workforce participation and to enable employees to better balance their work and family responsibilities.

[71] Ai Group also relies on the 29 January 2015 First Findings Report from the Australian Workplace Relations Study (AWRS) and a number of other research reports in support of its contentions regarding flexible working practices and employee preferences.

[72] Ai Group's submission also addresses the various considerations the Commission is required to take into account in giving effect to the modern awards objective. We deal with these submissions later in our decision.

[73] In its submission of 18 March 2015,62 the MBA supports and adopts Ai Group's submission in its entirety.

[74] In its reply submission,63 the NFF submits that while it supports the principle of make-up time, it does not support the insertion of the proposed clause in the Horticulture Award 2010. The NFF submits the award generally contains sufficient flexibility to accommodate arrangements of this nature.

[75] The ACTU and a number of individual unions oppose Ai Group's claims.

[76] The ACTU64 opposes Ai Group's claims on the following grounds:

(i) The current statutory context is significantly different to that which existed at the time the Family Leave Test Case was decided. The ACTU details these differences at paragraphs 80-122 of its submissions. It is submitted that the Act and modern awards are sufficient to provide the sort of flexibility Ai Group seeks.

(ii) The proposed TOIL provisions do not include any requirements that agreements be recorded in writing and Ai Group is seeking to avoid obligations to record overtime hours as required by the Fair Work Regulations 2009.

(iii) Ai Group's claims do not have the same level of safeguards as other forms of workplace flexibility, for example, IFAs are required to be in writing and must pass the better off overall test (BOOT).

(iv) The workplace flexibility sought by Ai Group would shift flexibility in the employer's favour and does nothing to assist employees to manage their working and personal lives.

(v) The proposed provisions undermine protections for part-time employees relating to their agreed hours and days of work. The proposed make-up time clause does not require an agreement to be in writing in order to change an employee's pattern of hours and nor does it include a period of notice or a requirement that the employee be provided with a copy of the agreement. The proposed make-up time clause would also enable an employer to alter an employee's roster without complying with the relevant award obligations.

(vi) Ai Group has not brought any evidence in support of its submission that the proposed clauses are necessary to ensure that the relevant awards meet the modern awards objective. The ACTU addresses each of the s.134 considerations at paragraphs 124-173 of its submissions.

[77] The AMWU - Vehicle Division opposes the Ai Group claims and, in particular, the claim to remove the existing TOIL provision in the Vehicle Manufacturing, Repair, Services and Retail Award 2010 (the Vehicle RS&R Award). It submits that Ai Group has failed to demonstrate that the variations proposed are necessary to meet the modern awards objective and that the relevant award already provides for mechanisms to assist in achieving flexibility.

[78] The Australian Nursing and Midwifery Federation (ANMF) opposes the claim made by Ai Group. It supports the submissions of the ACTU and submits that, given the existing award flexibility provisions, the claims are unnecessary and are a reduction of existing entitlements.

[79] The AWU opposes the variations sought by Ai Group.65 The AWU relies on the submissions of the ACTU and further submits Ai Group has not established a sufficient merit case, nor advanced satisfactory evidence, in support of the proposed variations.

[80] The CFMEU (C&G)66 opposes the variations sought by Ai Group with respect to the following awards:

● Building and Construction General On-site Award 2010

● Joinery and Building Trades Award 2010

● Mobile Crane Hiring Award 2010.

[81] The CFMEU (C&G) submits that Ai Group has failed to advance a sufficient merit based argument in support of the variations proposed. It also submits that the inclusion of TOIL and make-up time provisions in the three relevant awards has been considered, and rejected, by predecessor bodies to the Commission. The CFMEU (C&G) deals with this arbitral history at paragraphs 22-37 of its 23 April 2015 submission and we return to that aspect of the submission at the end of our decision. Two additional, general, arguments are advanced in opposing Ai Group's claim:

(i) Ai Group's proposed model terms require the consent of the employer and on that basis are inconsistent with s.65, detrimental to an employee when compared to the NES (s.55(4)) and should be rejected.

(ii) The model award flexibility provision in all modern awards already provides for IFAs concerning hours of work, including any arrangement for TOIL and make-up time. The model award flexibility term also includes a number of safeguards which are not a feature of the Ai Group proposed clauses. On this basis it is submitted that the Ai Group proposal should be dismissed: "the variations are not only unnecessary but also a reduction in the safety net".67 It is also contended that the flexibility term is the only permitted means of providing for an individual flexibility agreement between an employee and an employer.

[82] The Construction, Forestry, Mining and Energy Union (Mining and Energy Division) (CFMEU (M&E)) opposes Ai Group's application to insert or amend clauses relating to TOIL.68 The CFMEU (M&E) submits it has an interest in the following awards:

● Black Coal Mining Industry Award 2010

● Mining Industry Award 2010

● Electrical Power Industry Award 2010

● Coal Export Terminals Award 2010.

[83] The CFMEU (M&E) supports the CFMEU (C&G) submission that Ai Group's claim is inconsistent with the NES, and advances the following points in support of its submission that Ai Group's application should be rejected:

(i) Employees will be worse off under the provisions sought and they do not provide for appropriate "workplace flexibility" - the benefit of the proposed clauses are "heavily skewed in favour of the employer":

"The employer makes a saving to the extent of the employee foregoing penalty rates and the employer has the sole discretion as to if and when an employee may utilise those provisions. This provides a strong incentive for the employer to pressure an employee to taking such time off at a time that suits the employer and/or to take them in lieu of payment i.e. whether the employee wants them or not."69

(ii) No evidence is provided about the use of the existing provisions.

(iii) The proposals will not allow workers to better meet their caring responsibilities:

" ... TOIL and MUT [make-up time] are ultimately subject to the control of the employer, an employee cannot have any confidence that they will be available (not to mention the wage reduction problem) as and when they wish to utilise. In such circumstances, what employees need is a degree of certainty that they will get the time off. With TOIL, being predicated to the availability of overtime and with few employers guaranteeing overtime, it is hardly a reliable option for employees with child caring responsibilities. And together with the existence of employer discretion as to if and when such time off is taken, the notion of certainty is non existent."70

(iv) Ai Group fails to make any connection between the material it presents about the changing nature of the workforce and its claim.

(v) The AWRS First Findings Report only refers to the availability of provisions such as TOIL, it does not refer to actual usage.

(vi) Only 59 of the 122 modern awards have TOIL provisions based on an 'hour for hour' entitlement.

(vii) The proposals add nothing to the existing flexibility provided by the Act and the existing model flexibility provision in modern awards:

"The presence and utility of such arrangements are addressed in the ACTU submissions and shall not be repeated here, save to submit that given these flexibilities, TOIL and MUT add nothing to the already existing flexibility arrangements available to employees and employers in circumstances where those provisions provide employees with a form of protection such as the better off overall test that is not present in the Ai Group application."71

(viii) Modifying the arrangements under which working hours are performed can be accommodated through collective bargaining and enterprise agreements:

"Employers should be encouraged to engage in enterprise bargaining rather than endeavour to achieve favourable outcomes by varying the awards."72

(ix) The provisions proposed by Ai Group are not necessary to meet the modern awards objective.73

[84] The CFMEU (M&E) also submits that the provisions proposed are 'of no or at least problematic value' in relation to the awards in which it has an interest.74

[85] The Health Services Union of Australia (HSU) adopts the submissions of the ACTU and makes submissions75 concerning the following awards:

● Ambulance and Patient Transport Industry Award 2010 (Ambulance Award)

● Health Professionals and Support Services Award 2010 (Health Professionals Award)

● Medical Practitioners Award 2010 (Medical Practitioners Award)

● Nurses Award 2010 (Nurses Award).

[86] The HSU opposes Ai Group's application in relation to the awards in which it has an interest. In relation to TOIL, the Ambulance Award and the Nurses Award currently provide for TOIL at the relevant overtime rate. Ai Group seeks to replace these provisions with time for time and the HSU opposes the Ai Group claim on the basis that it is detrimental to the employees concerned and may provide an incentive for employers to 'covertly apply pressure to an employee to accept time off as opposed to payment of the worked overtime'.76

[87] In relation to the Ai Group claim to insert a make-up time clause (insofar as it applies to the Ambulance Award, Medical Practitioners Award, Health Professionals Award and the Nurses Award) the HSU submits that these applications are unnecessary and undermine the entitlements and protections contained within these awards. In particular, it is submitted that the make-up time proposals would allow employers to vary an employee's roster but avoid the restrictions contained in the awards. The HSU further submits that the flexibilities detailed in the ACTU's submission and contained within awards gives an employee the ability to work flexibly without removing or reducing the protections afforded in modern awards. The HSU supports the ACTU's submissions regarding protections provided to part-time employees in relation to agreed days and hours to be worked.

[88] The Maritime Union of Australia (MUA) adopts the ACTU's submissions and opposes the insertion of the proposed provisions in the following awards, submitting their inclusion would either have little utility or would disturb the interrelationship of existing award clauses:

● Dredging Industry Award 2010

● Ports, Harbours and Enclosed Water Vessels Award 2010

● Seagoing Industry Award 2010

● Stevedoring Industry Award 2010.

[89] The MUA submits the existing award flexibility clause provides sufficient flexibility for employers and employees to mutually agree to changes to conditions of employment, including arrangements for when work is performed and overtime rates, with the protection of the BOOT.

[90] The Textile, Clothing and Footwear Union of Australia (TCFUA) opposes Ai Group's proposals and supports the submissions of the ACTU, the CMFEU (C&G) and the AMWU. The TCFUA submits77 that Ai Group's proposals are neither desirable nor necessary in ensuring that awards meet the modern awards objective. The TCFUA has an interest in the Textile, Clothing, Footwear and Associated Industries Award 2010 and the Dry Cleaning and Laundry Industries Award 2010.

[91] The TCFUA submits that the current statutory and award context already provides the flexibility Ai Group seeks, albeit with appropriate safeguards and protections. The Ai Group proposals in respect of the awards in which the TCFUA has an interest are said to undermine and reduce current conditions and protections for employees. The TCFUA submits that Ai Group has not advanced a merit argument and nor has it provided cogent submissions supported by probative evidence.

5. Consideration

5.1 General

[92] The submissions advanced in respect of the Ai Group and AMWU claims deal with both the merits of the claims and what may be regarded as preliminary jurisdictional arguments. Two jurisdictional arguments are advanced.

[93] The first is that Ai Group's proposed model terms (and for that matter the terms as sought to be varied by the AMWU) are inconsistent with s.65 and detrimental to an employee. On that basis it is contended that s.55(4) prevents the inclusion of the proposed terms in a modern award (the NES contention). The second jurisdictional argument is that the flexibility term inserted into modern awards pursuant to s.144(1) is the only permitted means of providing any individual flexibility agreement between an employee and an employer and accordingly there is no jurisdiction to insert the provisions claimed (the IFA contention).

[94] It is convenient to deal first with the submissions which may be characterised as preliminary jurisdictional arguments (the NES and IFA contentions), before turning to the merit arguments.

5.2 Preliminary jurisdictional points

[95] We turn first to the CFMEU (C&G) contention that Ai Group's claims should be rejected as they are inconsistent with the NES. Specifically it is submitted that the TOIL and make-up time provisions proposed by Ai Group require the consent of the employer before the employee can access the flexibility required and as such the claimed terms are said to be inconsistent with s.65 of the NES.

[96] Section 55 deals with the interaction between the NES and a modern award or enterprise agreement:

"55 Interaction between the National Employment Standards and a modern award or enterprise agreement

National Employment Standards must not be excluded

(1) A modern award or enterprise agreement must not exclude the National Employment Standards or any provision of the National Employment Standards.

Terms expressly permitted by Part 2-2 or regulations may be included

(2) A modern award or enterprise agreement may include any terms that the award or agreement is expressly permitted to include:

(a) by a provision of Part 2-2 (which deals with the National Employment Standards); or

(b) by regulations made for the purposes of section 127.

Note: In determining what is permitted to be included in a modern award or enterprise agreement by a provision referred to in paragraph (a), any regulations made for the purpose of section 127 that expressly prohibit certain terms must be taken into account.

(3) The National Employment Standards have effect subject to terms included in a modern award or enterprise agreement as referred to in subsection (2).

Note: See also the note to section 63 (which deals with the effect of averaging arrangements).

Ancillary and supplementary terms may be included

(4) A modern award or enterprise agreement may also include the following kinds of terms:

(a) terms that are ancillary or incidental to the operation of an entitlement of an employee under the National Employment Standards;

(b) terms that supplement the National Employment Standards;

but only to the extent that the effect of those terms is not detrimental to an employee in any respect, when compared to the National Employment Standards.

Note 1: Ancillary or incidental terms permitted by paragraph (a) include (for example) terms:

(a) under which, instead of taking paid annual leave at the rate of pay required by section 90, an employee may take twice as much leave at half that rate of pay; or

(b) that specify when payment under section 90 for paid annual leave must be made.

Note 2: Supplementary terms permitted by paragraph (b) include (for example) terms:

(a) that increase the amount of paid annual leave to which an employee is entitled beyond the number of weeks that applies under section 87; or

(b) that provide for an employee to be paid for taking a period of paid annual leave or paid/personal carer's leave at a rate of pay that is higher than the employee's base rate of pay (which is the rate required by sections 90 and 99).

Note 3: Terms that would not be permitted by paragraph (a) or (b) include (for example) terms requiring an employee to give more notice of the taking of unpaid parental leave than is required by section 74.

Enterprise agreements may include terms that have the same effect as provisions of the National Employment Standards

(5) An enterprise agreement may include terms that have the same (or substantially the same) effect as provisions of the National Employment Standards, whether or not ancillary or supplementary terms are included as referred to in subsection (4).

Effect of terms that give an employee the same entitlement as under the National Employment Standards

(6) To avoid doubt, if a modern award includes terms permitted by subsection (4), or an enterprise agreement includes terms permitted by subsection (4) or (5), then, to the extent that the terms give an employee an entitlement (the award or agreement entitlement) that is the same as an entitlement (the NES entitlement) of the employee under the National Employment Standards:

(a) those terms operate in parallel with the employee's NES entitlement, but not so as to give the employee a double benefit; and

(b) the provisions of the National Employment Standards relating to the NES entitlement apply, as a minimum standard, to the award or agreement entitlement.

Note: For example, if the award or agreement entitlement is to 6 weeks of paid annual leave per year, the provisions of the National Employment Standards relating to the accrual and taking of paid annual leave will apply, as a minimum standard, to 4 weeks of that leave.

Terms permitted by subsection (4) or (5) do not contravene subsection (1)

(7) To the extent that a term of a modern award or enterprise agreement is permitted by subsection (4) or (5), the term does not contravene subsection (1).

Note: A term of a modern award has no effect to the extent that it contravenes this section (see section 56). An enterprise agreement that includes a term that contravenes this section must not be approved (see section 186) and a term of an enterprise agreement has no effect to the extent that it contravenes this section (see section 56)."

[97] The CMFEU (C&G) advances two discrete points. First, it is said that the claimed terms are inconsistent with s.65. Second, the CFMEU (C&G) characterises the claimed provisions as terms that are 'ancillary or incidental' to the operation of an employee entitlement under the NES or they are terms that 'supplement' the NES (within the meaning of those expressions in s.55(4)). It is then submitted that the effect of the claimed terms is 'detrimental' to employees. If the CFMEU (C&G) is correct than the claimed provision cannot be inserted into modern awards because of the operation of s.55(4).

[98] We turn first to the proposition that Ai Group's claims are 'inconsistent' with s.65.

[99] Division 4 of Part 2-2 of the Act deals with requests for flexible working arrangements. Section 65 is the principal provision and it provides as follows:

"65 Requests for flexible working arrangements

Employee may request change in working arrangements

(1) If:

(a) any of the circumstances referred to in subsection (1A) apply to an employee; and

(b) the employee would like to change his or her working arrangements because of those circumstances;

then the employee may request the employer for a change in working arrangements relating to those circumstances.

Note: Examples of changes in working arrangements include changes in hours of work, changes in patterns of work and changes in location of work.

(1A) The following are the circumstances:

(a) the employee is the parent, or has responsibility for the care, of a child who is of school age or younger;

(b) the employee is a carer (within the meaning of the Carer Recognition Act 2010);

(c) the employee has a disability;

(d) the employee is 55 or older;

(e) the employee is experiencing violence from a member of the employee's family;

(f) the employee provides care or support to a member of the employee's immediate family, or a member of the employee's household, who requires care or support because the member is experiencing violence from the member's family.

(1B) To avoid doubt, and without limiting subsection (1), an employee who:

(a) is a parent, or has responsibility for the care, of a child; and

(b) is returning to work after taking leave in relation to the birth or adoption of the child;

may request to work part-time to assist the employee to care for the child.

(2) The employee is not entitled to make the request unless:

(a) for an employee other than a casual employee - the employee has completed at least 12 months of continuous service with the employer immediately before making the request; or

(b) for a casual employee - the employee:

(i) is a long term casual employee of the employer immediately before making the request; and

(ii) has a reasonable expectation of continuing employment by the employer on a regular and systematic basis.

Formal requirements

(3) The request must:

(a) be in writing; and

(b) set out details of the change sought and of the reasons for the change.

Agreeing to the request

(4) The employer must give the employee a written response to the request within 21 days, stating whether the employer grants or refuses the request.

(5) The employer may refuse the request only on reasonable business grounds.

(5A) Without limiting what are reasonable business grounds for the purposes of subsection (5), reasonable business grounds include the following:

(a) that the new working arrangements requested by the employee would be too costly for the employer;

(b) that there is no capacity to change the working arrangements of other employees to accommodate the new working arrangements requested by the employee;

(c) that it would be impractical to change the working arrangements of other employees, or recruit new employees, to accommodate the new working arrangements requested by the employee;

(d) that the new working arrangements requested by the employee would be likely to result in a significant loss in efficiency or productivity;

(e) that the new working arrangements requested by the employee would be likely to have a significant negative impact on customer service.

(6) If the employer refuses the request, the written response under subsection (4) must include details of the reasons for the refusal."

[100] Subsection 65(1) provides that if an employee would like to change his or her working arrangements because of any of the circumstances specified in s.65(1A), then the employee is entitled to request a change in his or her working arrangements. The terms of s.65(1) make clear that the reason the employee would like to change their working arrangements is because of the particular circumstances of the employee. That is, there must be a nexus between the request and the employee's particular circumstances.

[101] Subsection 65(1A) was inserted into the Act by the Fair Work Amendment Act 2013 and sets out the range of circumstances related to a request under s.65(1), namely, that the employee:

● is the parent, or has responsibility for the care, of a child who is of school age or younger;

● is a carer (within the meaning of the Carer Recognition Act 2010);

● has a disability;

● is 55 or older;

● is experiencing violence from a member of the employee's family; or

● provides care or support to a member of his or her immediate family or a member of his or her household who requires care or support because the member is experiencing violence from the member's family.

[102] Subsection 65(1B) explicitly provides that an employee who is a parent, or has responsibility for the care of a child, and who is returning to work after taking leave in connection with the birth or adoption of the child, is entitled to request to work on a part-time basis, to assist the employee to care for the child.

[103] Subsection 65(2) limits the class of employees entitled to request a change in their working arrangements to:

● an employee (other than casuals) with at least 12 months' continuous service with the employer immediately before making the request; and

● a casual employee who is a long term casual employee (defined in s.12 as a casual employee who has been employed by the employer on a regular and systematic basis for a sequence of periods of employment during a period of at least 12 months) and who has a reasonable expectation of continuing employment by the employer on a regular and systematic basis.

[104] Requests for a change in working arrangements must be in writing and set out the details of the change sought and the reasons for the change (s.65(3)).

[105] The employer must provide a written response within 21 days stating whether the employer grants or refuses the request. If the request is refused the written response must include details of the reasons for the refusal (s.65(4) and (6)). Subsection 65(5) provides that the employer may only refuse a request 'on reasonable business grounds'. A non-exhaustive list of 'reasonable business grounds' is set out in s.65(5A).

[106] For reasons which will become apparent it is not necessary for us to consider the contention that Ai Group's make-up time claim is inconsistent with the NES. We later reject that aspect of Ai Group's claim, on other grounds. Accordingly, our consideration of this jurisdictional argument focuses on the TOIL claim.

[107] For our part, we doubt that a TOIL clause can be properly characterised as 'ancillary, incidental or supplementary' to the NES within the meaning of s.55(4). The NES does not provide for compensation for overtime or for rates of pay generally, and while TOIL might be requested for reasons relevant to the s.65 right to request, it might also be requested for other reasons. In the absence of an award TOIL clause, it would not be possible to make a TOIL arrangement solely under s.65, as a TOIL arrangement trades an entitlement to payment at overtime rates for time off. Further, changes in working arrangements obtained under s.65 may commonly be expected to endure for some time (noting, for example, the 21 day time limit for the employer response), whereas TOIL may be agreed on a case-by-case basis.

[108] Accordingly, it appears that a TOIL clause is better characterised simply as an award term permitted under s.139(1)(b) and/or (c) and/or (d) and/or (h) of the Act. It follows that an award TOIL clause is not subject to the prohibition in s.55(4) of a term that is 'detrimental to an employee in any respect, when compared to the National Employment Standards'. However, pursuant to ss.55(1) and 56, such a clause would be of no effect to the extent that it 'excluded' any provision of the NES.

[109] It seems that an award TOIL clause could only potentially exclude some or all of s.65 if:

● the clause applies in circumstances where s.65 also applies (that is; where an employee is in one of the personal circumstances specified in s.65(1A) and wishes to take TOIL because of those personal circumstances, is not excluded by s.65(2), and makes the request in writing setting out the details required by s.65(3)); and

● the clause would enable a request for TOIL in those circumstances to be refused by the employer without the employer having reasonable business grounds for the refusal.

[110] We do not consider that an award TOIL clause could lawfully operate in this way, to circumvent the protections in s.65 of the Act:

● If a request for TOIL was made in accordance with s.65 then an employer could not assert that the provision for employer consent in the TOIL clause itself allowed it freedom to decline the request as it saw fit, as this would in effect exclude s.65(5). Therefore, to this extent, the TOIL clause would be of no effect pursuant to s.56.

● If a request for TOIL was made in circumstances where s.65 applies but was not made in accordance with that section, then a request for TOIL could always subsequently be made in accordance with s.65, even if it had previously been refused under the terms of the TOIL clause.

[111] However, out of an abundance of caution it is considered desirable to make the relationship between an award TOIL clause and s.65 of the Act clear on the face of the model TOIL term. This will avoid any uncertainty about an employer's obligations where a request for TOIL is made in circumstances where s.65 also applies. We return to this issue later in our decision.

[112] We now turn to the proposition, also advanced by the CFMEU (C&G), that the flexibility term inserted into modern awards pursuant to s.144(1) is the only permitted means of providing for any individual flexibility agreement between an employee and an employer.

[113] The CFMEU contends that s.144 is intended to 'cover the field' in respect of the issues identified as being within the scope of the flexibility terms. The following oral submission was put in support of this contention:

"We submit that the flexibility term, and the requirements contained therein, should be the only provision that allows for an agreement between an individual employee and his or her employer of the matters covered the scope of the clause, as required by section 144(4) ...

The wording of section 144, however, is specific, and we submit covers the field in regard to the issues identified in the scope of the flexibility term; that is, arrangements for when work is performed, which in accordance with section 139(1)(c) includes hours of work, rostering, notice periods, rest periods, and variations to working hours; and section 139(1)(d) of which includes overtime rates." 78

[114] The argument put seems to proceed on the following basis:

1. A modern award must include a flexibility term (s.144(1)).

2. The Commission has determined the scope of the model flexibility term to include 'arrangements when work is performed'.

3. The expression 'arrangements for when work is performed' includes 'hours of work, rostering, notice periods, rest breaks and variations in working hours' (see s.139(1)(c)) and overtime rates (see s.139(1)(d)).

4. Ai Group's TOIL and make-up time model terms fall within the scope of the model flexibility term.

5. The model flexibility term inserted into modern awards pursuant to s.144(1) is a 'code' and is the only way in which individual flexibility provisions can be included in a modern award.

[115] Ascertaining the proper construction of a statutory provision necessarily begins with the ordinary grammatical meaning of the words used, having regard to their context and legislative purpose. 79

[116] We turn first to the language of s.144. Subsection 144(1) provides that a modern award must include a 'flexibility term' enabling an employee and his or her employer to agree on an IFA which varies 'the effect of the award in relation to the employee and the employer in order to meet the genuine needs of the employee and employer'.

[117] Subsections 144(2) and (3) deal with the effect of an IFA:

"144 Flexibility terms

Effect of individual flexibility arrangements

(2) If an employee and employer agree to an individual flexibility arrangement under a flexibility term in a modern award:

(a) the modern award has effect in relation to the employee and the employer as if it were varied by the flexibility arrangement; and

(b) the arrangement is taken, for the purposes of this Act, to be a term of the modern award.

(3) To avoid doubt, the individual flexibility arrangement does not change the effect the modern award has in relation to the employer and any other employee."

[118] Importantly, an IFA has the same legal effect as a variation to the modern award, insofar as it concerns the direct parties to the IFA.

[119] Subsections 144(4) and (5) deal with the requirements pertaining to flexibility terms:

"Requirements for flexibility terms

(4) The flexibility term must:

(a) identify the terms of the modern award the effect of which may be varied by an individual flexibility arrangement; and

(b) require that the employee and the employer genuinely agree to any individual flexibility arrangement; and

(c) require the employer to ensure that any individual flexibility arrangement must result in the employee being better off overall than the employee would have been if no individual flexibility arrangement were agreed to; and

(d) set out how any flexibility arrangement may be terminated by the employee or the employer; and

(e) require the employer to ensure that any individual flexibility arrangement must be in writing and signed:

(i) in all cases - by the employee and the employer; and

(ii) if the employee is under 18 - by a parent or guardian of the employee; and

(f) require the employer to ensure that a copy of any individual flexibility arrangement must be given to the employee.

(5) Except as required by subparagraph (4)(e)(ii), the flexibility term must not require that any individual flexibility arrangement agreed to by an employer and employee under the term must be approved, or consented to, by another person."

[120] The model flexibility term in all modern awards is set out at Attachment E.

[121] Section 145 of the Act is also relevant in this context:

"145 Effect of individual flexibility arrangement that does not meet requirements of flexibility term

Application of this section

(1) This section applies if:

(a) an employee and employer agree to an arrangement that purports to be an individual flexibility arrangement under a flexibility term in a modern award; and

(b) the arrangement does not meet a requirement set out in section 144.

Note: A failure to meet such a requirement may be a contravention of a provision of Part 3-1 (which deals with general protections).

Arrangement has effect as if it were an individual flexibility arrangement

(2) The arrangement has effect as if it were an individual flexibility arrangement.

Employer contravenes flexibility term in specified circumstances

(3) If subsection 144(4) requires the employer to ensure that the arrangement meets the requirement, the employer contravenes the flexibility term of the award.

Flexibility arrangement may be terminated by agreement or notice

(4) The flexibility term is taken to provide (in addition to any other means of termination of the arrangement that the term provides) that the arrangement can be terminated:

(a) by either the employee, or the employer, giving written notice of not more than 28 days; or

(b) by the employee and the employer at any time if they agree, in writing, to the termination."

[122] Section 145 deals with the situation where an IFA does not meet a requirement of s.144. In such circumstances the arrangement still has effect as if it were an IFA. However, where an employer is required to ensure that a requirement for a flexibility term in s.144(4) is met (such as ensuring that the employee is better off overall), failure to do so is a contravention of the flexibility term of the award (s.145(3)).

[123] There is nothing in the plain language of ss.144 or 145 to support the proposition advanced by CFMEU (C&G). Nor does the relevant extrinsic material provide any support for the proposition advanced. Further, the legislative context tells against the proposition advanced.

[124] Division 3 of Part 2-3 of the Act deals with the terms of modern awards. Subsection 136(1) provides that a modern award must only include terms that are permitted or required by:

"(a) Subdivision B (which deals with terms that may be included in modern awards); or

(b) Subdivision C (which deals with terms that must be included in modern awards); or

(c) section 55 (which deals with interaction between the National Employment Standards and a modern award or enterprise agreement); or

(d) Part 2-2 (which deals with the National Employment Standards)."

[125] Importantly, s.136(2) provides that a modern award must not include terms that contravene:

"(a) Subdivision D (which deals with terms that must not be included in modern awards); or

(b) section 55 (which deals with the interaction between the National Employment Standards and a modern award or enterprise agreement)."

[126] We have earlier dealt with the interaction between Ai Group's proposed model clauses and the NES (that is the issue raised by s.136(2)(b)).

[127] In determining whether the proposed model clauses can be included in a modern award two preliminary questions must be determined:

(i) Are the model clauses terms permitted or required by Subdivisions B or C, s.55 or Part 2-2?

(ii) Are the model clauses terms that must not be included in a modern award?

[128] Turning to the second matter first, Subdivision D of Division 3 of Part 2-3 of the Act sets out the terms which must not be included in modern awards. A modern award must not include:

an 'objectionable term' as defined in s.12 (s.150);
a term that has no effect because of s.326(1) (which deals with unreasonable payments and deductions for the benefit of an employer) or s.326(3) (which deals with unreasonable requirements to spend an amount) (s.151);
terms about right of entry (s.152);
discriminatory terms, within the meaning of s.153;
terms and conditions of employment that are determined by reference to State or Territory boundaries or are expressed to operate in one or more, but not every, State and Territory (s.154); and
terms dealing with long service leave (s.155).

[129] The model clauses proposed by Ai Group are not excluded by any provision in Subdivision D of Division 3 of Part 2-3, and no party contended to the contrary.

[130] We now turn to the first preliminary question. Relevantly, for present purposes, Subdivision B of Division 3 of Part 2-3 deals with terms that may be included in modern awards. In particular, s.139(1)(b), (c), (d) and (h) provide:

"A modern award may include terms about any of the following matters:

(b) ... and the facilitation of flexible working arrangements, particularly for employees with family responsibilities;

(c) arrangements for when work is performed, including hours of work, rostering, notice periods, rest breaks and variations to working hours;

(d) overtime rates; …

(h) leave, leave loadings and arrangements for taking leave ..."

[131] It seems to us that Ai Group's proposed model clauses are plainly terms of the type contemplated by one or more of the provisions set out above.

[132] The objects of Part 2-3, and of the Act generally, are also relevant. The modern awards objective in s.134 (described in the Act as an 'overarching provision') is for practical purposes the object of Part 2-3. It provides that the Commission 'must ensure that modern awards, together with the NES, provide a fair and relevant minimum safety net of terms and conditions' (see paragraph [10] above). The modern awards objective applies to the performance or exercise of the Commission's functions or powers under Part 2-3 (s.134(2)(a)) and accordingly applies to the Review. In ensuring that the modern awards objective is met the Commission is required to take into account the s.134 considerations, one of which is "the need to promote flexible modern work practices" (s.134(1)(d)). Such a consideration tells against the construction argument advanced by the CFMEU (C&G).

[133] In performing functions and exercising powers under a part of the Act (including Part 2-3: Modern Awards) the Commission must take into account the object of the Act and any particular objects of the relevant part (see s.578(a)). The object of Part 2-3 is expressed in s.134 - the modern awards objective - to which we have already referred. The object of the Act is set out in s.3, as follows:

"3 Object of this Act

The object of this Act is to provide a balanced framework for cooperative and productive workplace relations that promotes national economic prosperity and social inclusion for all Australians by:

(a) providing workplace relations laws that are fair to working Australians, are flexible for businesses, promote productivity and economic growth for Australia's future economic prosperity and take into account Australia's international labour obligations; and

(b) ensuring a guaranteed safety net of fair, relevant and enforceable minimum terms and conditions through the National Employment Standards, modern awards and national minimum wage orders; and

(c) ensuring that the guaranteed safety net of fair, relevant and enforceable minimum wages and conditions can no longer be undermined by the making of statutory individual employment agreements of any kind given that such agreements can never be part of a fair workplace relations system; and

(d) assisting employees to balance their work and family responsibilities by providing for flexible working arrangements; and

(e) enabling fairness and representation at work and the prevention of discrimination by recognising the right to freedom of association and the right to be represented, protecting against unfair treatment and discrimination, providing accessible and effective procedures to resolve grievances and disputes and providing effective compliance mechanisms; and

(f) achieving productivity and fairness through an emphasis on enterprise-level collective bargaining underpinned by simple good faith bargaining obligations and clear rules governing industrial action; and

(g) acknowledging the special circumstances of small and medium-sized businesses." (emphasis added)

[134] The object of the Act speaks, in general terms, of a legislative purpose that seeks to balance fairness and flexibility. An interpretation of s.144(1) which limits the scope for facilitative provisions in modern awards seems inimical to such a purpose.

[135] While not expressly put by the CFMEU (C&G), an aspect of the contextual approach upon which it seems to rely is the general proposition that where a particular procedure is designated to achieve something other procedures are impliedly excluded, reflected in the maxim expressum facit cessare tacitum. As Gavan Dixon CJ and Dixon J said in Anthony Hordern and Sons Ltd v The Amalgamated Clothing and Allied Trades Union of Australia 80:

"When the Legislature explicitly gives a power by a particular provision which prescribes the mode in which it shall be exercised and the conditions and restrictions which must be observed, it excludes the operation of general expressions in the same instrument which might otherwise have been relied upon for the same power."

[136] Similarly, in R v Wallis; Ex parte Employers Association of Wool Selling Brokers 81 Dixon J said: '[A]n enactment in affirmative words appointing a course to be followed usually may be understood as importing a negative, namely, that the same matter is not to be done according to some other course.' In that case the Court held that a section of an act that indicated the manner in which an arbitrator was to deal with a particular issue precluded the arbitrator dealing with that matter in accordance with more general procedures provided for in that act.

[137] We are not persuaded that the maxim operates such that s.144(1) impliedly limits s.139(1) so that facilitative provisions which fall within the scope of the model flexibility term cannot be the subject of a separate award provision.

[138] It is important to appreciate that there are significant conceptual and practical differences between the model flexibility term and facilitative provisions of the type proposed by Ai Group. As we have mentioned, an IFA entered into pursuant to the flexibility term has effect in relation to the employee and employer concerned as if it were a variation to the modern award. Indeed the IFA is taken, for the purposes of the Act, to be a term of the modern award. Facilitative provisions operate in quite a different way.

[139] A 'facilitative provision' was described by a Full Bench of the AIRC, in the September 1994 Safety Net Adjustments and Review decision, as:

" ... that part of an award clause which enables agreement at enterprise level to determine the manner in which that clause is applied at the enterprise. A facilitative provision normally provides that the standard approach in an award provision may be departed from by agreement between an individual employer and an employee or the majority of employees in the enterprise or part of the enterprise concerned. Where an award clause contains a facilitative provision it establishes both the standard award condition and the framework within which agreement can be reached as to how the particular clause should be applied in practice." 82

[140] The above definition was subsequently adopted in the Family Leave Test Case (Stage 1 decision), 83 which introduced a number of facilitative provisions, including in respect of make-up time and TOIL.

[141] The substantive difference between an IFA and a facilitative provision is that a facilitative provision is an award term which prescribes the extent to which an employee and employer may depart from the usual method of implementing an award entitlement. Hence, in relation to overtime, a TOIL facilitative provision permits an agreement between an employee and employer to take time off in place of the overtime payment that would otherwise have been payable for working the overtime. An IFA, on the other hand, is not so limited. Subject to meeting the BOOT, an IFA may vary any substantive award entitlement within the scope of the model flexibility term.

[142] The differences between the flexibility term and facilitative provisions such as TOIL and make-up time are such that they cannot be said to operate in the same way and accordingly the maxim expressum facit cessare tacitum does not apply.

[143] To summarise, the plain language of ss.144 and 145 do not support the proposition that the model flexibility term inserted into modern awards pursuant to s.144(1) is intended to be the only way in which individual flexibility provisions can be included in a modern award. Further, s.139(1) provides that awards may include terms about certain matters, including terms about '(b) … the facilitation of flexible working arrangements'. The legislative context, including the objects of Part 2-3 and of the Act generally, also tell against the proposition advanced by the CFMEU (C&G).

[144] The ordinary grammatical meaning of the words of s.144, having regard to their context and purpose, do not support the proposition that the model flexibility term inserted into modern awards pursuant to s.144(1) is a 'code' and is the only way in which individual flexibility provisions are to be included in a modern award. It follows that we reject the jurisdictional argument advanced by the CFMEU (C&G). We now turn to the merits of the AMWU's claim.

5.3 AMWU claim - the merits

[145] The stated purpose of the AMWU's claim is 'to ensure that employees are safeguarded against abuse of flexibility by employers and ... that the use of ... TOIL does not disadvantage employees'. 84

[146] It is alleged that the TOIL provisions in the awards sought to be varied by the AMWU are being abused by employers. In particular the AMWU advanced the following submission:

"Safeguards against employer abuse of the provisions is critical as there is both anecdotal and first hand evidence of employers asking employees to take TOIL at one hour for each hour of overtime worked instead of being paid their overtime penalty rates without informing employees that they also have a right to choose payment for overtime over TOIL. This abuse is compounded by employers having the ability to not agree to the time off to be taken once it has accrued." 85

[147] In the course of its submissions the AMWU advanced the following critique of the standard TOIL provision:

"TOIL initiated by an employer results in an agreement where the obligations of the employer to provide TOIL are not concrete and may result in an entitlement that may never be accessed or in the worst scenario is not kept track of by either party and is never claimed. Unclaimed TOIL results in a financial windfall to the employer at the expense of a minimum safety net reliant employee."

[148] In support of its contention that the safeguards proposed were 'critical' because of 'anecdotal and first hand evidence' of employer abuse of existing TOIL provisions the AMWU called one witness - Mr Zachary Carleton. Mr Carleton is a second year adult apprentice employed by Crystal Printing Solutions Pty Ltd (Crystal Printing) under the terms of the Graphic Arts, Printing and Publishing Award 2010. The PIAA called Mr Neil Zaltsman, the State Manager of Crystal Printing and tendered an extract from the company's time and wages records (Exhibit PIAA 1).

[149] The gravamen of Mr Carleton's evidence is set out at paragraphs 4-10 of his statement (Exhibit AMWU 2).

"4. My experience of Time Off In Lieu occurred about a year ago, around March 2014. I recall that I was asked by my supervisor words to the effect of:

"Are you able to work back?"

5. I asked, "Would it be for a couple of hours?"

6. My supervisor said, "Yes."

7. I recalled being told that the company did not pay overtime and so I asked:

8. "What would I be paid for working the extra hours?"

9. He replied words to the effect: "You would not be paid overtime, but you would get Time Off In Lieu."

10. I replied words to the effect: "Sorry I can't do the extra hours"."

[150] In the course of his oral evidence Mr Carleton referred to other occasions in the six months or so from March-August 2014 when similar conversations took place:

"There was half a dozen other times where he'd walked past my area and to say, 'Are you able to stay back matey?' And, you know, I'd say, "Is it overtime' and he'd just go, 'No, time off'. And I'd just refuse on that basis." 86

[151] There is some inconsistency in Mr Carleton's evidence regarding the number of occasions in which such conversations took place. Elsewhere in his evidence Mr Carleton confirms that the incident referred to at paragraphs 4-10 of his statement was the only such incident. The following exchanges took place during the course of Mr Carleton's cross-examination:

"Ms Blewett: Yes, and you've just had this one experience?

Mr Carleton: Yes, that's all I could use as a basis for my time off in lieu experience, yes … 87

Ms Blewett: Going back to the conversation you say you had with Mr Dwyer. It just happened once?

Mr Carleton: Yes. That - yes, yes.

Ms Blewett: And the company has not taken any action against you because of your refusal to work overtime on that occasion?

Mr Carleton: Well, I don't know if there was more overtime that could have been worked in the future. After that incident that they just didn't ask to do, because of the fact of - that I did not want to do overtime for time off in lieu. That's, you know, above my head. I don't know anything about that.

Ms Blewett: Yes, but you haven't …

Mr Carleton: As far as I know, I wasn't punished or mistreated or you know, denied a break because of that, no." 88 (emphasis added)

[152] The underlined part of Mr Carleton's answer is inconsistent with the proposition that he was offered overtime (on the basis of TOIL) on half a dozen occasions.

[153] At its highest, Mr Carleton's evidence is that on about half a dozen occasions over a period of about six months in 2014 he was offered overtime on the basis that he would get TOIL and he declined the offers made. We accept this aspect of Mr Carleton's evidence.

[154] As we have accepted the contested part of Mr Carleton's evidence, it is unnecessary to deal with the Jones v Dunkel point raised by the AMWU in relation to the failure to call Mr Dyer.

[155] We also note that there is no evidence that any adverse action was taken against Mr Carleton because he refused to do the overtime on the terms proffered. Indeed, Mr Carleton confirmed as much in his evidence (see paragraph [151] above). Further, the time and wages records provided show that he did in fact work overtime on a number of occasions in 2015 and was paid the appropriate overtime rate (see Exhibit PIAA 1).

[156] Mr Zaltsman has no knowledge of the discussions to which Mr Carleton attests at paragraphs 4-12 of his statement and cannot explain the comment (at paragraph 7) that Mr Carleton had been told that Crystal Printing 'did not pay overtime'. The gravamen of Mr Zaltsman's evidence is set out at paragraphs 15-17 of his statement (Exhibit PIAA 2):

"15. For a limited period during 2014, we did ask some of our employees if they'd consider working overtime and then take TOIL, hour-off-for-hour-worked. This was during a difficult period for Crystal Printing, and we asked employees to consider doing it to assist our business.

16. During this period, some employees elected to work overtime and take TOIL, hour-off-for-hour worked. Other employees chose to work overtime and be paid at the GAPPA overtime rates.

17. We subsequently stopped asking employees to consider taking TOIL (hour-off-for-hour-worked) for overtime worked."

[157] We accept Mr Zaltsman's evidence. He was not challenged on his evidence that during the limited period in 2014 to which he refers, some employees elected to work overtime and received TOIL and others worked overtime and were paid at the appropriate overtime rates; and the challenge to his credibility was unconvincing. 89

[158] It is unnecessary for us to comment on whether the approach taken by Crystal Printing for a limited period in 2014 was in breach of the relevant award or constituted adverse action within the meaning of the Act. What is clear is that conduct occurred over a limited period, some time ago.

[159] The AMWU - Vehicle Division also called a witness - Warren Leslie Butler - who gave some evidence in relation to the use of the existing TOIL provision in the Vehicle RS&R award. Mr Butler is the Assistant National Secretary of the AMWU - Vehicle Division and the gravamen of his evidence on this issue is set out at paragraphs 13-14 of his statement (Exhibit AMWU - Vehicle 1),:

"Although the Award provision clearly stipulates that TOIL may only be taken if an employee elects to utilise this provision (and provided an employer consents), I am aware that there have been cases reported where employers pressure employees to take time off in lieu of overtime payment where:

a. Retail sales slows in the Retail and Repair Industry; or

b. Productions slows in the manufacturing sector.

Although this is not the purpose of the TOIL provision, employers have been using these provisions as a cost management tool in contravention of the Award provisions."

[160] Further, in the course of his oral evidence Mr Butler agreed with the proposition that the union had never prosecuted any employer for an alleged contravention of the TOIL provision and then said that 'there have been a number of issues when contraventions have been discussed, and those matters have been resolved at the workplace'. 90 We note that no particulars were provided of the cases referred to by Mr Butler - no details as to the number of such cases or of the employers involved.

[161] The evidence adduced falls well short of establishing a pattern of systemic abuse of existing TOIL provisions.

[162] The AMWU also addresses each of the s.134 considerations in its written submissions. 91 It is submitted that granting the claim will have a 'neutral impact' on the matters identified in s.134(1)(b) and (f) and a range of submissions are advanced in relation to the other s.134 considerations. We now turn to those matters and in doing so note that they are advanced in the context of a claim to vary an existing TOIL term. As we shall see when considering part of the Ai Group's claims, different considerations arisen when the claim in question is to insert a TOIL term in a modern award which does not presently contain such a provision.

[163] In relation to 'relative living standards and the needs of the low paid' (s.134(1)(a)), it is submitted that low paid employees 'are particularly reliant on overtime penalties and other penalty rates and loadings to advance their relative living standards in a financial sense' and that 'the ability to have an influence over the time available to attend to family and personal responsibilities is an important contributing factor which assists low paid employees in improving their non-financial living standards'. 92 It is also submitted that where an employer initiates a TOIL arrangement and is under no obligation to grant accrued TOIL the employee is affected in the following ways:

"(a) The financial living standards are immediately diminished when compared to the alternative scenario where they are paid for the overtime as they do not have the immediate benefit of funds which they have worked for and those funds continue to be at the disposal of the employer, earning interest or engaged in other money earning activity the employer decides;

(b) Their non-financial living standards are immediately diminished as they must take time away from attending to their family or personal responsibilities." 93

[164] We are not persuaded by the submission advanced. The point raised at paragraph (a) arises in every instance where an employee agrees to a TOIL arrangement. Indeed that is the necessary outcome of such an arrangement - the employee receives time off in lieu of the overtime payment that would otherwise be payable. As to paragraph (b), it is not clear to us what point is being advanced. Entering into a TOIL arrangement does not mean that the employee must take time away from their family or personal responsibilities. A TOIL arrangement provides the opportunity for additional time to be spent on family or other responsibilities. We accept that working overtime necessarily reduces the time an employee has to spend with their family or personal responsibilities but that is quite a different matter and unrelated to the impact of a TOIL arrangement.

[165] In relation to 'the need to promote social inclusion through increased workforce participation' (s.134(1)(c)), the AMWU advance two points. First, it is contended that the variations proposed 'will increase the proper use of TOIL as a flexibility aimed at ensuring employees have greater influence of the time they have available for family responsibilities'. 94 The second point is that providing increased flexibility to assist employees to manage their work and family responsibilities will improve workforce participation rates.

[166] The first point is not relevant to the consideration identified in s.134(1)(c), namely the promotion of 'social inclusion through increased workforce participation'. The social inclusion referred to in this context is employment. In other words, s.134(1)(c) requires the Commission to take into account the need to promote increased employment.

[167] The second point advanced proceeds on the assumption that the variations proposed will increase the utilisation of TOIL. As we observe later, there is no evidentiary basis for such an assumption.

[168] As to s.134(1)(d), it is submitted that the variation proposed will improve the 'uptake and use' of TOIL provisions and thereby promote flexible work practices. It is further contended that when 'used effectively' TOIL provisions 'provide employers with an ability to increase capacity and therefore productivity at periods where overtime is required from the same employee'. 95 These submissions are unpersuasive. There is no evidence as to the current utilisation of TOIL in the awards sought to be varied and nor is there any evidence in support of the proposition that the changes sought will increase the use of such provisions. The submission advanced is simply an assertion and is contested by Ai Group. While the changes proposed may make TOIL more attractive for employees (by providing compensatory time off) they will necessarily reduce the incentive for employers to agree to such arrangements. The submissions that the proposed variations will improve productivity are unsubstantiated and unconvincing.

[169] Section 134(1)(da) refers to 'the need to provide additional remuneration' for, among other things, 'employees working overtime'. The AMWU contends that the effect of s.134(1)(da) is that an employee must receive additional wages or monetary entitlements for working overtime. It is contended that the variations proposed (and in particular the provision of compensatory time) are necessary to ensure that additional remuneration is provided for working overtime. The following submission is advanced in this regard:

"In the context of TOIL, in order to achieve additional remuneration, that is wage or other monetary entitlement, it would be necessary for an employee to accrue the TOIL at overtime penalty rates.

Whilst the time taken off work is not explicitly a monetary entitlement, the accrual is a monetary entitlement in the sense that an employee may seek payment for that entitlement or exchange the accrued TOIL entitlement for time off.

Accruing TOIL at time for time would not satisfy the need for additional remuneration for working overtime because it would only result in a monetary entitlement which can be exchanged only for time equivalent to ordinary time.

The use of the word 'additional' must be in reference to a reference point other than the overtime in question, and should be taken to mean additional in reference to remuneration for ordinary time.

Therefore, to allow for accrual of TOIL at time for time, would not result in a monetary entitlement that is 'additional'.

The other additional protections proposed by the AMWU ensure that the TOIL is in fact a monetary entitlement, satisfying the definition of remuneration. If TOIL is not accrued and recorded appropriately with an appropriate mechanism for an employee to call upon or exchange the monetary entitlement to buy back other time, then it may not satisfy the definition of remuneration." 96

[170] The ACTU adopts the above AMWU submission. 97

[171] We do not find these submissions persuasive, for two reasons.

[172] First, contrary to the submission advanced, s.134(1)(da) does not mandate the provision of TOIL on the basis of compensatory time. As we have observed earlier, the modern awards objective is very broadly expressed; there is a degree of tension between some of the s.134 considerations; and no particular primacy is attached to any of the matters specified in s.134(1)(a)-(h). The matters specified in s.134(1)(da) are to be taken into account in ensuring that modern awards, together with the NES, provide a 'fair and relevant minimum safety net of terms and conditions'. But, importantly, s.134(1)(da) does not amount to a statutory directive that modern awards must provide additional remuneration for employees working overtime and may be distinguished from the terms in Subdivision C of Division 3 of Part 2-3 which must be included in modern awards, including the flexibility term to which we have referred earlier (s.144(1)).

[173] On the basis that s.134(1)(da) does not amount to a legislative direction that all modern awards must provide additional remuneration for working overtime, it follows that s.134(1)(da) does not mandate the provision of TOIL on the basis of compensatory time.

[174] Second, the submission advanced conflates an existing entitlement to be paid additional remuneration for working overtime with a provision which facilitates individual agreements to TOIL instead of receiving the additional remuneration. A TOIL provision which facilitates agreements to take TOIL on an 'hour for hour' basis is not inconsistent with s.134(1)(da). The employee retains the right to receive additional remuneration for working overtime (at all times including after they enter into a TOIL agreement) but may, by agreement take TOIL.

[175] As to the 'principle of equal remuneration for work of equal or comparable value' (s.134(1)(e), the AMWU advances the following submission:

"... women as the predominant users of the current TOIL provisions, which provide for TOIL on an hour for hour basis, then women as a class of workers in the industry would not be receiving equal remuneration to their male counterparts who are paid overtime at overtime penalty rates.

In order for women to be remunerated on an equal level to their male counterparts, the provision of TOIL should be at the overtime penalty rate." 98

[176] The argument advanced is misconceived. TOIL is a facilitative provision - the underlying entitlement to the payment of additional remuneration for working overtime is retained, but by individual agreement an employee may take TOIL. It is the underlying entitlement which determines the rate of remuneration for overtime work and on that basis the assertion that women as a class of workers would not be receiving equal remuneration compared to their male counterparts is incorrect. 99

[177] In relation to s.134(1)(g) ('the need to ensure a simple, easy to understand, stable and sustainable modern award system ... ') it is submitted that the variations sought will set out the parameters of TOIL in a way that will ensure that the provision is easier to understand.

[178] We agree with the proposition that a TOIL provision should clearly set out the rights and obligations of the respective parties and that it should be simple and easy to understand. We deal later with the terms of a model TOIL provision and the changes we propose are intended to reflect the application of such a proposition. For the reasons we set out later we are not persuaded that the other changes proposed by the AMWU are necessary to achieve the modern awards objective.

[179] As to s.134(1)(h) ('employment growth, inflation and the sustainability, performance and competitiveness of the national economy'), the AMWU contends that 'improving productivity increases the possibility of employment growth', the implication being that granting the AMWU's claim will increase productivity. For the reasons we have given, the asserted connection between the AMWU's claim and improved productivity is unconvincing. It is also submitted that the proposed variations will improve workforce participation and on that basis have the potential to improve the 'sustainability, performance and competiveness of the national economy'. It is further submitted that:

"Improving the appeal of TOIL by providing accrual of TOIL at the overtime penalty rate has a greater potential for improving workforce participation than the current time for time arrangements."

[180] The submission advanced proceeds on the assumption that providing TOIL at the overtime penalty rate will increase the utilisation of the TOIL provision. For the reasons already given we do not accept that premise. While such a variation may make the use of TOIL more attractive for employees it is likely to make TOIL less attractive for employers.

[181] As we have mentioned, a party seeking to vary a modern award in the context of the Review must advance a merit argument in support of the proposed variation. The extent of the merit argument required depends on the variation sought. The AMWU claim seeks to vary the TOIL provisions in five modern awards by providing for the accrual of TOIL on a 'time for penalty rate' basis, rather than on a 'time for time' basis, and by inserting a range of safeguards. The 'time for penalty rate' aspect of the claim is inconsistent with the Family Leave Test Case standard and the AMWU has not mounted a persuasive case to depart from that standard. No evidence has been adduced to suggest that the existing 'time for time' basis for calculating TOIL has provided an impediment to the utilisation of these facilitative provisions. We are not persuaded that the variations sought are necessary to achieve the modern awards objective.

[182] We deal later with the safeguards to be incorporated into standard TOIL clauses.

[183] We now turn to Ai Group's claims.

5.4 Ai Group's claim - the merits

[184] Ai Group makes two claims:

(i) to vary 36 modern awards to insert Ai Group's model TOIL clause; and

(ii) to vary 51 modern awards to insert Ai Group's model make-up time clause.

[185] We deal first with the proposition raised by opponents to the Ai Group claim that the flexibility term in modern awards is sufficient to provide the sort of flexibility sought by Ai Group.

(i) The flexibility term argument

[186] It is common ground that TOIL and make-up time fall within the scope of the model flexibility term in modern awards and accordingly could potentially be the subject of an IFA. Ai Group contends that specific facilitative provisions should be inserted in the nominated awards for, in essence, two reasons.

[187] The first is administrative convenience. In particular, Ai Group submits that the proposed TOIL and make-up time clauses provide a 'more appropriate' means of achieving the flexibility sought. In this context, Ai Group describes the model flexibility term as 'providing a much more cumbersome route' for achieving such flexibilities. 100

[188] The second reason advanced in support of a specific facilitative provision, which is only advanced in relation to the TOIL claim, relates to the requirement in the model flexibility term that any agreement entered into pursuant to the model term result in the employee being better off overall at the time the agreement is made than the employee would have been if no individual flexibility agreement had been agreed to. Ai Group's TOIL claim does not provide for TOIL at the 'time for penalty rate', rather an employee would get an hour off for each hour of overtime worked. If such an arrangement was entered into as an agreement under the model flexibility term it would give rise to a question as to whether any non-monetary benefit that may accrue to the employee (as a result of obtaining the benefit of TOIL instead of the overtime payment) is taken into account in deciding whether the agreement would result in the employee being 'better off overall' at the time the agreement was made. 101

[189] It is convenient to deal with the make-up time claim first.

[190] As mentioned, Ai Group contends that a specific facilitative provision dealing with make-up time is a more appropriate option than leaving such arrangements to be dealt with in accordance with the model flexibility term in all modern awards. The essence of the argument put is administrative convenience - in short, the model flexibility term provides a number of safeguards which Ai Group contends are unnecessary. The submission advanced is encapsulated in the following extract from the transcript:

"Now yes, the IFA provisions, if I can call that the model term, provides one avenue and we say that there would be a power to deal with these things but it provides a much more cumbersome route for achieving it. These test case provisions have operated in a great many awards for a long time, we think successfully, and without any evidence of any sort of problem or need for there to be any additional protections in the provisions…

We say that employers prefer to...utilise those sort of informal arrangements than the more cumbersome approach contemplated under the IFA provisions.

We take your point that there would be another avenue, it's just that this one is better, more appropriate. It's consistent with what is applied very widely through the award system and has applied for a very long time, and we can't see how it would be necessary to impose any sort of additional protections. It should be aligned so that everyone can access these flexibilities. Again, coming to the point that this is something that's beneficial to employees and we think it should be made as easy as possible for employers to enter into these kinds of arrangements." 102

[191] Four points may be made about this aspect of Ai Group's submission.

[192] First, it will be recalled that Ai Group submitted that make-up time provisions operate 'very widely' throughout the award system. Contrary to Ai Group's submission such provisions are not common, indeed, at present only 38 of the 122 modern awards contain such a provision.

[193] Second, no evidence has been adduced to suggest that the procedural requirements and safeguards in the model flexibility term are an impediment to employers and employees entering into arrangements with respect to make-up time.

[194] Third, depending on the award context, a make-up time facilitative provision may create some practical difficulties due to the interaction of such arrangements with other provisions in the award - such as rostering arrangements and award safeguards in relation to the predictability of part-time work. The potential for such interaction is a further reason for caution. In circumstances where the utilisation of make-up time may conflict with other award terms it is appropriate that the BOOT be applied, as required by the model flexibility term. It would be more appropriate for such matters to be addressed in the context of an IFA pursuant to the model flexibility term rather than by a self-executing facilitative provision.

[195] Lastly, Ai Group contends that the model term it proposes reflects the outcome of the Family Leave Test Case and that no further safeguards are needed. We deal with this proposition in more detail later, suffice to say now that Ai Group's claim does not reflect the outcome of the Family Leave Test Case proceedings. The settlement of the orders from those decisions resulted in a number of additional safeguards being inserted into the model terms dealing with make-up time and TOIL. These additional safeguards are not reflected in Ai Group's claim.

[196] Ai Group is seeking to vary 51 of the 84 modern awards which do not presently contain a make-up time provision. As we have mentioned, the proponent of a variation to a modern award must demonstrate that if the modern award is varied in the manner proposed then it would only include terms to the extent necessary to achieve the modern awards objective (see s.138). We are not persuaded that it is necessary to vary the 51 modern awards which are the subject of Ai Group's claim in order to achieve the modern awards objective.

[197] It seems to us that agreements of the type sought to be facilitated by Ai Group's claim can be entered into pursuant to the model flexibility term in all modern awards. We accept that Ai Group's proposed facilitative provision may be more administratively convenient than the process prescribed for entering into an IFA pursuant to the model flexibility term, but the material before us falls short of establishing that the variations proposed are necessary, within the meaning of s.138. In particular, no evidence was adduced to the effect that the procedural requirements in the model flexibility term created a practical barrier to employees and employers entering into make-up time arrangements.

[198] Different considerations arise in relation to Ai Group's TOIL claim. We accept that the requirement in the model flexibility term that any agreement entered into pursuant to the model term must result in the employee being 'better off overall' may create a practical impediment to entering into TOIL agreements of the type contemplated in Ai Group's claim. If we were persuaded as to the merit of Ai Group's claim, that is that TOIL be available on an 'hour for hour' basis (as opposed to TOIL at the time for penalty rate), then it would be necessary to insert a specific facilitative provision to that effect in order to avoid the uncertainty associated with entering into such an agreement pursuant to the model flexibility term. In such circumstances a facilitative provision of the type proposed would provide a simple decision rule and greater certainty to both employees and employers. We now turn to the merits of Ai Group's TOIL claim.

(ii) Ai Group's TOIL claim

[199] Currently, 83 of the 122 modern awards provide for TOIL and of those 59 provide that time off for TOIL is calculated at the ordinary rate (i.e. 'time for time') rather than the overtime rate (i.e. 'time for penalty'). The other 24 modern awards provide that time off for the purpose of TOIL is calculated at the overtime rate.

[200] As we have mentioned, there are two aspects to Ai Group's TOIL claim. The first seeks to insert Ai Group's model TOIL clause into 26 modern awards which do not currently contain a TOIL provision and the second seeks to delete existing TOIL provisions in 10 modern awards and replace them with Ai Group's model TOIL clause.

[201] The first aspect of Ai Group's claim seeks to vary 26 modern awards in order to 'enable an employer and employee to agree to take time off in lieu of overtime'. 103 This aspect of Ai Group's claim proceeds on the basis that the 26 modern awards sought to be varied do not currently contain a TOIL provision. In respect of two of the 26 modern awards sought to be varied this assumption is incorrect - the Electrical Power Industry Award 2010 and the Horse and Greyhound Training Award 2010 already have a TOIL provision.104 We deal later with the variations we propose in respect of existing TOIL provisions in modern awards.

[202] Two of the remaining 24 modern awards (the Air Pilots Award 2010 and the Road Transport (Long Distance Operations) Award 2010) do not appear to contain any overtime provisions 105 and hence the utility of a TOIL provision is not immediately obvious. The remaining 22 modern awards sought to be varied are as follows:

● Aircraft Cabin Crew Award 2010

● Alpine Resorts Award 2010

● Aquaculture Industry Award 2010

● Black Coal Mining Industry Award 2010

● Building and Construction General On-site Award 2010

● Business Equipment Award 2010

● Coal Export Terminals Award 2010

● Concrete Products Award 2010

● Cotton Ginning Award 2010

● Dredging Industry Award 2010

● Electrical, Electronic and Communications Contracting Award 2010

● Joinery and Building Trades Award 2010

● Miscellaneous Award 2010

● Nursery Award 2010

● Pest Control Industry Award 2010

● Pharmaceutical Industry Award 2010

● Plumbing and Fire Sprinklers Award 2010

● Poultry Processing Award 2010

● Seagoing Industry Award 2010

● Security Services Industry Award 2010

● Silviculture Award 2010

● Stevedoring Industry Award 2010.

[203] Three broad lines of argument are advanced in support of the first aspect of Ai Group's claim.

[204] First, as we have mentioned, the merits of Ai Group's claim rely 'very heavily on the logic and findings' 106 of the Family Leave Test Case. Ai Group also submits that the context of the Family Leave Test Case decisions 'remain salient in the current context and they give great force to our claim'.107 The Family Leave Test Case deals with the calculation of TOIL. As noted above (at paragraph [33]) the Full Bench endorsed the proposition that the model TOIL provision provide for time off on an 'hour for hour' basis rather than the time for penalty rate. In this regard, the Family Leave Test Case provides support for Ai Group's TOIL claim.

[205] However, the difficulty with this argument is that while some aspects of Ai Group's claim (such as TOIL on an 'hour for hour' basis) are consistent with the Family Leave Test Case, other aspects are not. As is apparent from the arbitral history set out at paragraphs [26]-[38] above, the Ai Group claim departs from the Family Leave Test Case standard in terms of the safeguards incorporated into the proposed model term.

[206] Later in this decision we return to deal with the appropriateness of retaining these safeguards in the context of modern awards.

[207] In addition, as we have mentioned, Ai Group seeks to modify the model Family Leave Test Case TOIL claim to address the payment of untaken TOIL on termination of employment and the potential for the indefinite accrual of TOIL (see paragraph 45 above).

[208] Further, the aspect of the TOIL claim which seeks to delete existing TOIL provisions in 10 modern awards and replace them with Ai Group's model TOIL clause, is inconsistent with the approach adopted in the Family Leave Test Case. We shall return to this point shortly.

[209] The second broad line of argument is the general proposition that the modern award system needs to be more flexible in order to increase workforce participation and enable employees to better balance their work and family responsibilities. Ai Group relies on a number of labour market trends and various reports, including the AWRS First Findings Report, in support of this contention.

[210] For our part we accept that the participation rate is falling as the population ages and that workforce participation is a key driver of economic growth. It may also be accepted, as a general proposition, that flexible working arrangements may encourage greater workforce participation, particularly by workers with caring responsibilities.

[211] The projected fall in the participation rate is noted in the 2015 Intergenerational Report:

"Over the next 40 years, the proportion of the population participating in the workforce is expected to decline as a result of population ageing. A lower proportion of Australians working will mean lower economic growth over the projection period.

By 2054-55, the participation rate for Australians aged 15 years and over is projected to fall to 62.4 per cent in 2054-55, compared with 64.6 per cent in 2014-15." 108

[212] Over the past 30 years or so, the workforce participation rate of Australian women aged 25 to 54 years has grown substantially - from 50 per cent in February 1978 to 76 per cent in September 2014. In contrast, the workforce participation rate of men aged 25 to 54 years has fallen over the same period - from 95 per cent to 90 per cent. 109

[213] However, compared with the OECD, the workforce participation of Australian parents is noticeably lower. As the Productivity Commission observes in its 'Childcare and Early Childhood Learning, Inquiry Report' (the CECL Report):

"Around 62 per cent of Australian mothers with a child under 15 years undertook some form of work in 2009. This is about the same employment rate as in New Zealand, but lower than the OECD average of 66 per cent. The largest discrepancy between Australia and the OECD average is in employment rates for those mothers with a child aged 3 to 5 years. For this group, the 60 per cent employment rate of Australian mothers is below the OECD average of 64 per cent and trails many comparable countries such as Sweden, Denmark and Canada but is similar to New Zealand and the United States." 110

[214] Increasing the workforce participation of mothers can result in a range of benefits to the wider community, including reduced social and economic disadvantage as well as increased economic output and productivity. 111 In the CECL Report, the Productivity Commission examined the scope for further increases in the workforce participation of mothers and in that context, looked at the factors determining workforce participation decisions. The factors identified included 'availability of family-friendly workplace arrangements for parents - such as flexible work arrangements, paid parental leave and carer's leave; school hours and holidays'.112 The availability of flexible work and other family-friendly arrangements was described by the Productivity Commission as 'a key positive workforce participation driver':113

"One set of options for supporting the workforce participation of parents is the availability of flexible work and other family friendly arrangements by employers. These arrangements can benefit both parents and employers. They enable parents to better manage or balance their work and family responsibilities. They also enable employers to attract skilled staff, reduce staff turnover, reduce recruitment and training costs, lower staff absenteeism and improve productivity." 114

[215] These observations are broadly supported by the data from the AWRS First Findings Report.

[216] Figure 4.4 from the First Findings Report (which is reproduced below) sets out the availability of flexible work practices at the enterprise level:

Figure 4.4: Availability of flexible work practices to employees of the enterprise, per cent of enterprises

Source: AWRS 2014, Employee Relations survey.

Base = 3057 enterprises.

[217] Figure 4.4 shows that in 43 per cent of enterprises TOIL was available to all employees and was available to most employees in a further 8 per cent of enterprises. TOIL was not available to any employees in some 34 per cent of enterprises. We note that the data presented concerns the availability of TOIL, it provides no insight into the extent to which TOIL is actually utilised.

[218] The AWRS asked employees to rate their level of satisfaction across seven aspects of their job. These aspects were developed through consultation and cognitive testing processes. Employees were required to use a 7-point scale to indicate their level of satisfaction, where one was extremely dissatisfied and seven extremely satisfied. Employees were then asked to rate their overall job satisfaction, considering the aspects they had just rated using the same scale.

[219] Tables 6.1 and 6.2 from the First Findings Report deal with job satisfaction. These tables are reproduced below.

[220] The average scores presented in Table 6.1 and Table 6.2 that are closer to seven indicate employees were satisfied with those aspects of their employment, while scores closer to one indicate employees were dissatisfied with those aspects.

Table 6.1: Average overall job satisfaction of employees and satisfaction with aspects of current employment by employee gender and hours worked

All employees

Female

Male

All

Full-time

Part-time

All

Full-time

Part-time

All

Full-time

Part-time

Overall job satisfaction

5.42

5.37

5.56

5.49

5.43

5.59

5.33

5.32

5.44

The flexibility to balance work and non-work commitments

5.67

5.55

6.00

5.78

5.63

6.05

5.51

5.48

5.77

The freedom to decide how to do your own work

5.66

5.64

5.75

5.72

5.68

5.79

5.59

5.59

5.56

Your say about what happens in your job

5.27

5.26

5.33

5.31

5.27

5.37

5.23

5.24

5.12

The total pay

4.79

4.75

4.92

4.82

4.77

4.93

4.75

4.74

4.91

The job security

5.32

5.35

5.26

5.35

5.39

5.31

5.28

5.31

4.99

The work itself

5.53

5.51

5.61

5.59

5.55

5.65

5.46

5.46

5.40

The hours worked

5.32

5.27

5.48

5.45

5.37

5.58

5.16

5.18

4.98

Source: AWRS 2014, Employee survey.

Base = 7810 respondents provided a response for their overall level of satisfaction with their current employment.

Table 6.2: Average overall job satisfaction of employees by employment size

All employees

Employed in a small enterprise (5-19 employees)

Employed in a medium enterprise

(20-199 employees)

Employed in a large enterprise (200+ employees)

Overall job satisfaction

5.42

5.54

5.39

5.32

The flexibility to balance work and non-work commitments

5.67

5.79

5.65

5.50

The freedom to decide how to do your own work

5.66

5.80

5.64

5.49

Your say about what happens in your job

5.27

5.46

5.23

5.06

The total pay

4.79

4.92

4.77

4.63

The job security

5.32

5.47

5.25

5.24

The work itself

5.53

5.61

5.51

5.45

The hours worked

5.32

5.42

5.31

5.17

Source: AWRS 2014, Employee and Employer Characteristics survey.

Base = 7810 employees provided a response for their overall level of satisfaction with their current employment. Of these employees, 1763 worked in small enterprises (5-19 employees), 4665 worked in medium sized enterprises (20-199 employees) and 1382 worked in larger enterprises (200+ employees).

[221] Overall, female employees were more satisfied across all of the measured aspects of employment than male employees. This is reflected in a higher average overall job satisfaction among female employees (5.49) than male employees (5.33). Employees were most satisfied with having flexibility to balance work and non-work commitments (5.67) and the freedom to decide how to do their work (5.66). Average satisfaction among females was notably higher than for males in these aspects of employment.

[222] Male employees were most satisfied with having the freedom to decide how they can do their own work (5.59), while female employees were most satisfied with the flexibility to balance work and non-work commitments (5.78).

[223] After employees indicated their level of satisfaction, they were asked to consider the level of importance of the same seven aspects of their employment. Cognitive testing revealed that ranking all seven aspects was difficult and it was much easier and valid to restrict this assessment to the three most important aspects, ranked from one to three. A rank of one indicated that the respondent considered that aspect to be the most important to them when considering their overall job satisfaction.

[224] Figure 6.1 (which is reproduced below) demonstrates the proportion of employees that selected an aspect as the most important (i.e. the highest ranked aspect). Flexibility to balance work and non-work commitments was considered to be the most important aspect of employment for almost one-third (32 per cent) of employees when considering their overall satisfaction with their current job.

[225] A higher proportion of female employees (37 per cent) considered the flexibility to balance work and non-work commitments to be the most important aspect of employment, compared to males (26 per cent). Regardless of the industry employees worked in, the most important aspect of determining employee satisfaction with their current job was the flexibility to balance work and non-work commitments. 115

Figure 6.1: Aspects considered the most important when determining overall job satisfaction by gender, per cent of employees

Source: AWRS 2014, Employee survey.

Base = 7505 respondents reported their gender and also ranked the aspects of job satisfaction by importance.

Note: Respondents by gender, who indicated that a specific item was ranked '1'.

[226] We note that the data does not provide specific evidence of a desire, by employees or prospective employees, for a facilitative provision of the type sought to be inserted into modern awards. Nor is there any evidence, by any party, as to the utilisation of the current make-up time and TOIL provisions in modern awards. Instead, we are asked to draw an inference that such flexibility is desired by employees and would be utilised if introduced.

[227] The data presented does support a general finding that the flexibility to balance work and non-work commitments is an important determinant for employees, particularly female employees, when considering their overall satisfaction with their current job. Such a finding lends some support to the proposition that the increased flexibility associated with a TOIL facilitative provision is consistent with the encouragement of greater workforce participation, particularly by workers with caring responsibilities.

[228] We now turn to the third broad line of argument advanced by Ai Group in support of its claims - that the variations proposed are necessary to achieve the modern awards objective. In the course of its submissions Ai Group addresses a number of the s.134(1) considerations; we propose to deal with each of these matters in turn.

[229] In relation to 'relative living standards and the needs of the low paid' (s.134(1)(a)), it is submitted that the provisions sought are 'consistent with maintaining living standards and supporting the needs of the low paid' on the basis that they are 'voluntary mechanisms through which employees, including the low paid, can better enhance their living standards while protecting their ordinary time income'. 116 It is also submitted that the proposed clauses 'facilitate employee choice as to what s/he values at a particular point in time to better align their living standards' and that employees who rely on overtime penalties to maintain their living standards will not be adversely affected given the voluntary nature of the facilitative provisions and the safeguards in the proposed clause, such as the ability to 'cash in' banked overtime at the applicable overtime rate.117

[230] This consideration is neutral in our assessment of the Ai Group's claim. While a TOIL provision has the potential to address 'the needs of the low paid', by providing a means whereby a low paid employee can balance their work and family or social responsibilities, there is no evidence of a specific demand by low paid workers for a facilitative provision of the type proposed. Further, the submission put in relation to 'relative living standards' is misconceived and unpersuasive. The assessment of relative living standards requires a comparison of the living standards of other relevant groups (such as those covered by enterprise agreements). 118 No attempt has been made to undertake such a comparison.

[231] As to the 'need to encourage enterprise bargaining' (s.134(1)(b)), Ai Group submits that granting its claim will not adversely affect the ability of employers and employees to collectively bargain.

[232] We note that TOIL provisions have been a feature of the award safety net for 20 years and there is no evidence to suggest that such provisions have adversely impacted on enterprise bargaining. We also acknowledge that there is a considerable force in the argument put by Ai Group that it is not always appropriate for collective bargaining to provide the solution for flexibility to accommodate individual needs that vary from person to person. As Ai Group submits:

"It is not appropriate or fair that a majority of employees determine whether a working parent should be able to access TOIL or make up time. The needs of individual employees for this type of flexibility vary significantly." 119

[233] Ai Group also contends that providing TOIL on an 'hour for hour' basis (as opposed to 'time for penalty') will encourage enterprise bargaining. We do not find this submission persuasive. While such a provision would provide an incentive for employees and their representatives to bargain for a higher level of TOIL compensation it may also create a disincentive for employers to bargain. 120

[234] We are not persuaded that granting Ai Group's TOIL claim will encourage enterprise bargaining.

[235] In relation to the need 'to promote social inclusion through increased workforce participation' (s.134(1)(c)), Ai Group submits that the availability and uptake of flexible working arrangements will support increased workforce participation. The Productivity Commission's CECL Report is relied on in support of this proposition.

[236] As we have mentioned, as a general proposition we accept that flexible working arrangements, such as TOIL, may encourage greater workforce participation, particularly by workers with caring responsibilities. The insertion of an appropriate TOIL facilitative provision in modern awards is consistent with the objective of promoting social inclusion through increased workforce participation.

[237] As to s.134(1)(d) (the 'need to promote flexible modern work practices and the efficient and productive performance of work'), Ai Group advances the following submission:

"TOIL and make up time, while offering important flexibility valued by employees, particularly those with caring responsibilities for either a child or elderly parent, also provides employers with the flexibility to reach agreement with employees on arrangements that allow work to be organised in response to the fluctuations in demand for the goods and services that the business provides. This ensures that businesses, and employees, remain efficient and productive.

In times of a slowdown in demand, the opportunity to access flexible work practices like TOIL and make up time would reduce any need to shed excess labour." 121

[238] We accept the proposition that inserting a TOIL provision into a modern award which provides for overtime but does not presently contain a facilitative provision permitting TOIL, is consistent with the promotion of flexible modern work practices.

[239] Section 134(1)(da) refers to 'the need to provide additional remuneration' for, among other things, 'employees working overtime'. Ai Group submits that this consideration is a neutral factor in these proceedings on the basis that utilisation of the proposed TOIL flexibility is voluntary and does not interfere with an employee's entitlement to additional remuneration for working overtime hours. For the reasons given above (at paragraphs [153]-[158]) we accept this submission.

[240] As to the 'principle of equal remuneration for work of equal or comparable value' (s.134(1)(e)), Ai Group contends that this is a neutral consideration in these proceedings. We agree with that assessment.

[241] In relation to s.134(1)(f) ('the likely impact … on business, including on productivity, employment costs and the regulatory burden'), Ai Group advances the general submission that providing employees with an opportunity to choose to substitute overtime payments for TOIL 'will assist businesses to improve productivity and to lessen the regulatory burden'. In particular Ai Group submits that:

"Time for time TOIL is simpler and easier for employees and employers to understand and apply than 'time for penalty' TOIL … the proposed variations would improve productivity as businesses would more easily be able to respond to fluctuations in demand for their goods and services [and] would reduce the regulatory burden imposed on employers through inflexible award provisions." 122

[242] We accept that the flexibility provided by a TOIL term may be said to reduce regulatory burden, but the asserted link between the proposed variations and improved productivity was not supported by any detailed argument and on the material before us is tenuous at best.

[243] In relation to s.134(1)(g) ('the need to ensure a simple, easy to understand, stable and sustainable modern award system …'), Ai Group submits that providing greater consistency in respect of the TOIL provisions in modern awards will further the objective of making the award system simpler and easier to understand. We accept this submission. Greater consistency in the provisions governing TOIL will make the modern award safety net simpler and easier to understand.

[244] As to s.134(1)(h) ('employment growth, inflation and the sustainability, performance and competitiveness of the national economy'), Ai Group submits that granting its claim will have a positive impact on employment growth and on the performance and competitiveness of the national economy through increased workforce participation and productivity growth.

[245] As we have mentioned, we accept that flexible working arrangements, such as TOIL, may encourage greater workforce participation, particularly by workers with caring responsibilities. We also accept that increasing workforce participation may also result in increased economic output and productivity.

[246] It is convenient to now deal with the arguments put against Ai Group's claim.

[247] The merits arguments directed against the Ai Group's claims may be distilled into seven broad lines of argument:

(i) the current statutory context is significantly different to the context at the time the Family Leave Test Case was decided;

(ii) the variations are unnecessary as modern awards and the Act are sufficient to provide the flexibility sought;

(iii) Ai Group has not established a sufficient merits case, nor advanced any satisfactory evidence in support of the proposed variations;

(iv) the safeguards contained in the proposed model terms are inadequate;

(v) the flexibility provided by the Ai Group model terms would shift flexibility in favour of the employer and do nothing to assist employees;

(vi) the proposed variations are not necessary to ensure that the relevant awards meet the modern awards objective; and

(vii) the variations to existing TOIL provisions will disadvantage employees.

[248] We deal with the last point in our consideration of that aspect of Ai Group's claim which seeks to vary the existing TOIL provisions in 10 modern awards (see paragraphs [282]-[293] below).

[249] As to the first point, we accept that there are some similarities and some significant differences between the current statutory context and the context at the time the Family Leave Test Case was decided.

[250] While the objects of the then Industrial Relations Act 1988 (Cth) are expressed in different terms to those in the current Act, there are some conceptual similarities. 123

[251] We also acknowledge that compared to the position when the Family Leave Test Case was determined ,the current statutory framework provides additional flexibilities, protections and rights to employees and employers, for example:

● the right to request flexible working arrangements (s.65)

● the making of IFAs under the model flexibility term (s.144)

● personal carer's leave (ss.95-107)

● greater flexibility in relation to the taking of annual leave (s.88).

[252] There are two other important differences in the comparative statutory context.

[253] The first is that the role of modern awards and the nature of the Review are quite different from the arbitral functions performed by the AIRC (and other predecessor tribunals) in the past. The Review is essentially a regulatory function. In the Review context, the Commission is not creating an arbitral award in settlement of an inter partes industrial dispute - it is reviewing a regulatory instrument.

[254] The second important contextual difference is the modern awards objective. As we have mentioned, the modern awards objective is central to the Review and is directed at ensuring that modern awards, together with the NES, provide a 'fair and relevant minimum safety net of terms and conditions'. The proponent of a variation to a modern award must demonstrate that if the modern award is varied in the manner proposed then it would only include terms to the extent necessary to achieve the modern awards objective.

[255] We have had regard to these contextual differences in our consideration of the Family Leave Test Case. Despite the differences in the statutory framework we have concluded that some aspects of the Family Leave Test Case TOIL provision retain their cogency in the current statutory context. In particular, we see no reason to depart from the test case standard regarding the calculation of time for the purpose of TOIL, that is at the ordinary rate (i.e. time for time) rather than the overtime rate (i.e. time for penalty).

[256] Further, and contrary to those who oppose Ai Group's claim, we are satisfied that it is necessary to vary those modern awards which do not presently contain a TOIL provision to insert a model TOIL provision (subject to some exceptions we mention later). Such variations are necessary to ensure that the relevant modern awards meet the modern awards objective. We are satisfied that Ai Group has advanced a sufficient merits case in support of such variations, though we have provisionally reached a different conclusion as to the content of a proposed model TOIL clause.

[257] As to the nature of the flexibility provided, the ACTU submits that the proposed provision does not provide employees with anything more than a right to request certain rights - they are ultimately contingent on the employer's agreement. It is submitted that award reliant employees are less likely to be able to access any flexibility available of their own volition and on their own terms, and that it is more likely that such employees will have arrangements 'foisted upon them as and when it suits their employers'.124 The ACTU relied on a Canadian study in this regard, (Zeytinoglu et al) 125 which it submits indicates that flexible work schedules are created for business reasons rather than for the needs of individual workers.

[258] The ACTU also submits that if Ai Group's claim is granted, employees will never actually able to access the provisions because an employer will 'say no' in cases where there is no benefit to it, employees will lose a significant value of the time they spent at work, and their patterns of work will be able to be disrupted.

[259] We do not find the ACTU's submission persuasive. Three points may be made in this regard.

[260] First, the criticism directed at Ai Group's proposed clause - that it is simply a right to request which is ultimately contingent upon employer agreement - can equally be made of the AMWU claim, which the ACTU supports. It is an inherent feature of facilitative provisions that they are dependent upon agreement between the employer and employee.

[261] Second, the Canadian study relied upon is of limited assistance in the context of the present proceeding. The dependent variables used in the study as a proxy for flexibility included: long work week, flex time, compressed work week, variable work week length, and variable work week schedule. No information was provided as to the legal parameters in relation to accessing such flexibilities and, importantly, the study did not consider a TOIL term of the type before us.

[262] Third, the ACTU contends that employers will never actually be able to access the provisions because an employer will 'say no' in cases where they derive no benefit. This submission is simply an assertion with no evidentiary foundation. Awards have contained TOIL clauses in similar terms to those sought by Ai Group for about 20 years, yet no evidence has been adduced of employer intransigence in relation to the utilisation of the provisions. Further, the safeguards in the model TOIL term we propose will provide an incentive for employers to agree to granting TOIL at a time of the employee's choosing.

[263] We now turn to the question of safeguards.

[264] As we have mentioned, the Ai Group TOIL claim departs from the Family Leave Test Case standard in terms of the safeguards provided. The test case standard includes three safeguards which do not feature in Ai Group's claim:

(i) no provision is made for majority agreement prior to individual access to TOIL;

(ii) no provision is made to notify the unions, which are both party to the award and who have members employed in the particular enterprise, of the intention to utilise the facilitative provision and to provide those unions with an opportunity to participate in negotiations; and

(iii) no provision is made in respect of recording the introduction of such facilitation.

[265] The above safeguards were regarded as appropriate at the time the Family Leave Test Case was decided. They are also features of the AMWU claim in these proceedings.

[266] We are not persuaded that safeguards (i) and (ii) are necessary to achieve the modern awards objective. The nature of the flexibility which is the subject of a TOIL provision only affects the employer and the individual employee concerned and the utilisation of the provision will depend on individual preference. It may be contrasted with a facilitative provision relating to a change to the spread of hours or an annual close down, which will affect most or all employees. In such cases a majority agreement safeguard may be appropriate.

[267] In support of safeguard (ii), it is submitted that access to union advice will ensure that employees are aware of their rights before using the provisions. In our view it is more appropriate to provide clear decision rules regulating TOIL in the award clause itself. We propose to incorporate a number of safeguards which will provide clear rules about the taking and recording of TOIL. The model TOIL provision we propose is set out below. It should be noted that this is our provisional view only.

1. Time off in lieu of payment for overtime

1.1 An employee may elect with the consent of the employer to take time off in lieu of payment for overtime at a time or times agreed with the employer, in accordance with this clause.

1.2 The following requirements apply to an agreement to take time off in lieu of payment for overtime:

(a) A separate written agreement must be made by the employee and employer for each occasion on which overtime that has been worked is to be taken as time off in lieu. Each such agreement must:

(i) state when the employee started and ceased working overtime hours;

(ii) state that if requested by the employee the employer must pay the employee for any accrued entitlement to take time off in lieu of payment for overtime which the employee has not yet used. Payment must be made at the overtime rate applying to the overtime worked and must be made in the first pay period following the request for payment; and

(iii) be retained as an employee record.

(b) Overtime taken as time off during ordinary time hours shall be taken at the ordinary time rate; that is, an hour for each hour worked.

(c) The employee and employer must, within four weeks of the overtime being worked, agree on when the time off will be taken, otherwise payment for the overtime must be made to the employee at overtime rates in the first pay period after that four weeks.

(d) The time off in lieu of overtime must be taken within 12 weeks of the overtime being worked, otherwise payment for the overtime must be made to the employee at overtime rates in the first pay period after that 12 weeks.

(e) Notwithstanding subclauses (c) and (d) above, if requested by an employee, the employer must pay the employee for any accrued entitlement to take time off in lieu of payment for overtime which the employee has not yet used. Payment must be made at the overtime rate applying to the overtime worked and must be made in the first pay period following the request for payment.

(f) If, upon termination of employment, an employee has an accrued entitlement to take time off in lieu of payment for overtime which the employee has not yet used, the employee must be paid for the overtime at the overtime rate applying to the overtime worked.

1.3 An employee who is entitled to request a change in working arrangements under section 65 of the Fair Work Act 2009 may make a request under that section for time off in lieu of payment for overtime at a time or times specified in the request or at a time or times to be subsequently agreed with the employer. This clause will apply to such time off in lieu. Pursuant to section 65(5) of the Fair Work Act 2009, the employer may refuse such a request only on reasonable business grounds.

1.4 An employer must not exert undue influence or undue pressure on an employee in relation to a decision by the employee to make, or not make, an agreement to take time off in lieu of payment for overtime.

Note: Under s.345 of the Fair Work Act 2009, a person must not knowingly or recklessly make a false or misleading representation about an employee's workplace rights under this award clause.

[268] The model term facilitates agreements between an employee and their employer to take TOIL instead of payment for overtime at a time or times agreed, subject to appropriate safeguards. It is proposed that TOIL will generally be calculated at the ordinary time rate, consistent with the Family Leave Test Case standard (subclause 1.2(b)). The exception will be in relation to those modern awards which currently provide for TOIL at the overtime penalty rate. In those awards subclause 1.2(b) will be replaced by a reference to the time for penalty rate.

[269] Subclause 1.2(a) provides that TOIL agreements are to be in writing. This will assist in ensuring that both parties are aware of their rights and obligations. The retention of the TOIL agreement as an employee record is directed at minimising subsequent disputes. In this regard, we note that during the course of oral argument Ai Group submitted that such records were probably already being kept in practice, thought they had no direct evidence about the extent of such practices. 126

[270] Subclause 1.2(c) and (d) provide the framework within which the employee and employer are to agree on when the TOIL is to be taken. Such an agreement must be reached within four weeks of the overtime being worked or the overtime must be paid out at overtime rates (subclause 1.2(c)). Pursuant to such an agreement the TOIL must be taken within 12 weeks of the overtime being worked, or the overtime must be paid out at overtime rates (subclause 1.2(d)).

[271] We have considered the alternate proposal advanced by Ai Group intended to address the potential for the indefinite accrual of TOIL. It will be recalled that Ai Group proposed a clause in the following terms:

"(d) Subject to an employee's right under (c), where the employee and employer are unable to reach agreement within 12 months as to when the time off in lieu will be taken, the employer may require the employee to take time off in lieu at a time of its choosing. This will be subject to the employer providing the employee with at least 4 weeks' notice of the need to take such time off."

[272] It seems to us that including a right to direct an employee to take TOIL at a time of the employer's choosing is inimical to the nature of the facilitative provision.

[273] The model term is intended to provide employees with a means of trading overtime pay for time off at a time which assists them to balance their work and non-work commitments. The TOIL is intended to provide a benefit to the employee and be taken, subject to the agreement of their employer, at a time of their preference. The benefit to the employer is in the calculation of TOIL (i.e. an hour for hour rather than at the relevant overtime penalty rate).

[274] Further, we are not persuaded that TOIL should accrue for 12 months; in our view a 12 week time period is sufficient given that the employer receives the benefit of the employee's labour at the time the overtime is worked.

[275] Subclause 1.2(e) is an important safeguard. It provides that if requested by the employee, the employer must pay the employee for any accrued entitlement to take TOIL which the employee has not yet used. Payment must be made at the overtime rate applying to the overtime worked and must be made in the first pay period following the request for payment. Under subclause 1.2(a)(ii), this requirement must be reflected in every written agreement to take TOIL. As well as preserving an employee's right to access their entitlement to be paid at the appropriate overtime rate, subclause 1.2(e) will provide employers with an incentive to agree to granting an employee's request to take TOIL at a particular time.

[276] Subclause 1.2(f) deals with the payment of unused TOIL upon termination of employment and is consistent with clause (e) of Ai Group's model term (see paragraph [44] above).

[277] Subclause 1.3 addresses any potential inconsistency between the NES (in particular s.65) and the model term. Pursuant to ss.55(1) and 56 of the Act, the model term would be of no effect to the extent that it excluded any provision of the NES (see paragraphs [97]-[111] above).

[278] Subclause 1.4 is consistent with the protections in s.344 of the Act.

[279] Our provisional view is that the variation of modern awards to incorporate the model term is necessary to ensure that each modern award provides a fair and relevant minimum safety net, taking into account the s.134 considerations (insofar as they are relevant), and would also be consistent with the object of the Act. This is so because of the various safeguards provided within the term itself and because it facilitates the making of mutually beneficial arrangements between an employer and employee.

[280] As mentioned earlier, we accept that flexible working arrangements, such as TOIL, may encourage greater workforce participation, particularly by workers with caring responsibilities. We also accept that increasing workforce participation can result in increased economic output productivity. The available evidence also supports a general finding that regardless of the industry employees work in, the most important aspect of determining employee satisfaction with their current job is the flexibility to balance work and non-work commitments.

[281] We express a provisional view only at this stage, because we are conscious that the scope and content of the variations we propose were not fully canvassed during the proceedings. We propose to provide interested parties with an opportunity to make further submissions - directed at both the model term and the proposition that all modern awards which provide for overtime be varied to insert the model term, subject to some exceptions to which we refer to later. A list of such awards is set out at Attachment F. The process for filing further submissions is dealt with in Chapter 6 of this decision. We will only reach a concluded view in respect of these issues after considering all of the further submissions filed.

[282] We now turn to the remaining aspect of Ai Group's claim.

[283] The existing TOIL clause in each of the 10 modern awards which Ai Group seeks to vary in the second aspect of its claim provides for TOIL to be calculated at the overtime rate. For example, clause 28.3 of the Vehicle (RS&R) Award provides as follows:

"28.3 Time off instead of payment for overtime may be provided if an employee so elects and is agreed to by the employer.

(a) Time off instead of payment for overtime must be taken at a mutually convenient time within four weeks of the overtime being worked. However, an employee with the agreement of the employer may elect to bank up to eight hours of time off instead of overtime to be taken no later than eight weeks after the overtime was worked.

(b) Any agreement reached in accordance with this subclause should be placed in writing and recorded with the employee's wage records and for file. Any hours banked and cleared in accordance with this subclause must be recorded in the employees wage records.

(c) Time off instead of payment for overtime must equate to the overtime rate i.e. if the employee works one hour overtime and elects to claim time off instead of payment the time off would be equal to time and a half.

(d) Provided that where an employee's employment is terminated or the employee resigns or the entitlement has not been taken, the entitlement will be paid out at the rate at which it was accrued.

(e) Clause 28.2 will not apply when the time is worked:

(i) by arrangement between the employees themselves;

(ii) for the purpose of effecting the customary rotation of shifts; or

(iii) in accordance with clause 24.6 in this award." (emphasis added)

[284] The above provision has an extensive history, which is canvassed in the written submission filed by the AMWU (Vehicle Division). 127 A TOIL provision was first inserted into the pre-modernised Vehicle Industry awards in 1990,128 and the provision has been refined over time.129 During the award simplification review of the Vehicle Industry - Repair, Services and Retail Award 1983 pursuant to Item 51 of Schedule 5 of the Workplace Relations and Other Legislation Amendment Act 1996, the AIRC rejected an employer proposal to vary the TOIL provision to remove the requirement that time off be calculated by reference to the overtime rate and replace it with an 'hour for hour' provision.130

[285] As we have mentioned earlier, the Family Leave Test Case deals with the approach to be taken to existing award provisions. The Full Bench decided that where an award currently provided for TOIL at overtime rates, then such a provision should be retained and the model term not be inserted into the award in question.

[286] Ai Group seeks to characterise this aspect of the Family Leave Test Case decision in the following way:

"Ai Group submits that the Full Bench's decision to retain existing 'time for penalty' TOIL clauses was not part of the reasoning behind its decision on the terms of the standard test case clause. It was a decision to clarify how the test case standard should interact with existing provisions when differing approaches had been taken by the AIRC to that issue. That is, it was a decision to clarify how applications to vary awards to reflect the Family Leave Test Case provisions under s.113 of the IR Act should proceed when awards already contained 'time for penalty' TOIL clauses.

Ai Group's application to vary existing TOIL clauses providing 'time for penalty' is of course not subject to s.113 of the IR Act but subject to the Commission's modern award powers and the modern awards objective. It is consistent with the modern awards objective for a consistent approach to be taken across the award system." 131

[287] Ai Group contends that the decisions which inserted TOIL at the time for penalty rate in specific awards should be given 'less weight' than the Family Leave Test Case decisions, for a range of reasons, including that they were determined by single Members and in some cases on the basis of the consent position of the parties. 132 As Ai Group put it in its Supplementary Note dated 25 May 2015:

"Our proposals are premised on the merits and objectives of the Family Leave Test Case Decisions - Stage 1 and Stage 2 notwithstanding the earlier existence of some other decisions determining TOIL on an award level." 133

[288] We do not find Ai Group's characterisation of this aspect of the Family Leave Test Case to be persuasive. The AIRC Full Bench plainly turned its mind to the application of its decision to existing 'time for penalty' TOIL clauses and, importantly, decided not to disturb the existing clauses.

[289] Further, Ai Group submits that certain modern awards, such as the Textile, Clothing, Footwear and Associated Industries Award 2010 and the Nurses Award 2010 presently contain TOIL at 'time for penalty' as a result of relevant award modernisation decisions relating to the making of these modern awards. 134

[290] Ai Group notes that the relevant award modernisation decisions do not provide any explicit consideration of TOIL, but acknowledges that the issue may have been the subject of submissions by the relevant parties. For the following reasons Ai Group submits that the relevant award modernisation decisions should be given less weight because:

no analysis or reasoning can be deduced from the decisions regarding TOIL;
award modernisation proceedings were conducted against different objectives, primarily the rationalisation and consolidation of a large number of awards into far fewer;
award modernisation proceedings were constrained by the terms of the Ministerial Request under s.576A of the Workplace Relations Act 1996 (Cth); and
insofar as the decisions related to TOIL, they were confined to particular industries and awards. 135

[291] We are not persuaded that the award modernisation decisions referred to should be accorded 'less weight' than the Family Leave Test Case, as contended by Ai Group. As observed in the Preliminary Jurisdictional Issues decision of 17 March 2014, in the Review the Commission will proceed on the basis that prima facie the modern award being reviewed achieved the modern awards objective at the time that it was made. 136

[292] During the Part 10A process, a Full Bench of the AIRC decided to provide for TOIL at overtime rates in the Textile, Clothing and Footwear and Associated Industries award 2010 and the Nurses Award 2010, despite submissions by employer parties that TOIL should be provided on a "time for time" basis. The Textile, Clothing and Footwear and Associated Industries Award 2010 was made to replace around 33 pre-reform instruments, many with varying overtime terms. Thirty two industry-wide federal and State awards during the Part 10A process that led to the making of the Nurses Award 2010. Of the 26 awards that contained TOIL provisions, 17 provided for TOIL at penalty rates. As stated in the Award modernisation decision of 2 September 2009:

"The creation of modern awards which will constitute the award elements of the safety net necessarily involves striking a balance as to appropriate safety net terms and conditions in light of diverse award arrangements that currently apply." 137

[293] We are not persuaded that it is appropriate to vary any of the 10 modern awards sought to be varied by Ai Group. Each of the awards contains a TOIL provision and Ai Group has not advanced any cogent submission in support of the variations sought. Further, Ai Group's application is inconsistent with the approach adopted in the Family Leave Test Case in which existing TOIL provisions, which provided time off to be calculated at overtime rates, were preserved and not varied to insert the model TOIL facilitative provision. We are not persuaded that the variations proposed are necessary to achieve the modern awards objective.

6. Conclusion and Next Steps

[294] For the reasons given we have decided to reject the following aspects of the claims before us on the basis that the variations sought are not necessary to achieve the modern awards objective:

(i) the AMWU's claim to vary the existing TOIL provisions in five modern awards (see paragraphs [145]-[182] above);

(ii) Ai Group's claim to vary 51 modern awards to insert a make-up time provision (see paragraphs [183]-[281] above); and

(iii) Ai Group's claim to vary the existing TOIL provision in 10 modern awards (see paragraphs [282]-[293]).

[295] The remaining aspect of Ai Group's claim - to insert a model TOIL clause into 36 modern awards - has been subsumed by our consideration of a model TOIL provision.

[296] As we have mentioned, our provisional view is that the variation of the modern awards listed in Attachment F to incorporate the model term is necessary to ensure that each of these modern awards provides a fair and relevant minimum safety net, taking into account the s.134 considerations (insofar as they are relevant) and would also be consistent with the object of the Act. We express a provisional view only at this stage because we are conscious that the scope and content of the variations we propose were not fully canvassed during the proceedings.

[297] Three further modern awards make provision for overtime but have not been included in the list of awards in Attachment F. The three awards in question are the Building and Construction General On-Site Award 2010, the Joinery and Building Trades Award 2010 and the Seagoing Industry Award 2010. As outlined in the submission of the CFMEU (C&G), the two construction awards have a particular arbitral history. 138

[298] Some 55 Federal and State awards were considered during the Part 10A process that led to the making of the Building and Construction General On-Site Award 2010 and of those 55 awards 37 did not contain a TOIL provision. Some 26 Federal and State awards were considered in the process that led to the making of the Joinery and Building Trades Award 2010, and of those only 2 contained a TOIL provision. The CFMEU (C & G) submits that the main pre-reform awards on which the two modern awards were based were the National Building and Construction Industry Award and the National Joinery and Building Trades Products Award (we refer to these as the two pre-reform awards). Neither of the two pre-reform awards contained a TOIL provision and the arbitral history relating to attempts to insert TOIL provisions in those awards is dealt with in the CFMEU (C & G) submissions of 23 April 2015. 139 We briefly summarise this history below.

[299] In November 1997 the CFMEU filed applications to vary the two pre-reform awards to introduce family leave provisions based on the Family Leave Test Case decisions. The CFMEU and MBA submitted consent orders that only dealt with the personal leave provisions. The issues of TOIL and make up time were to be left to the subsequent award simplification proceedings. Ai Group's supported this consent position. Commissioner Lawson issued orders reflecting the consent position of the parties. 140

[300] The inclusion of a TOIL provision in the two pre-reform awards was subsequently raised in the award simplification proceedings. The TOIL issue was not pressed by either the MBA or Ai Group. The Civil Contractors Federation took a different view and sought the inclusion of a facilitative clause which included TOIL.

[301] On 23rd July 1999 Commissioner Merriman handed down his decision 141 on award simplification for the National Building and Construction Industry Award 1990 and addressed the issue of facilitative provisions as follows:

"[43] In conducting the review and in deciding whether a provision is appropriate, the Commission has taken into consideration not only the submissions of the parties, but given the wording of item 51(7)(a):

'where appropriate it contains facilitative provisions that allow agreement at the workplace or enterprise level, between employers and employees (including individual employees) and how the award provisions are to apply'

the Commission must heavily rely upon its experience of the award and its operation.

The Commission has had significant experience in the operation of this award in the industry, having been assigned to the panel in 1980 and having sat on a range of matters including Full Benches which have dealt with major disputes in the industry over the last 19 years. In arriving at the decision as to the appropriateness of facilitative provisions in this award, the Commission has had regard to the type of employment, daily hire and weekly, the flexibility of the workforce as it is required to move from work site to work site, the short term nature of many employment contracts and the inter relationship of many different employers working on the same site."

[302] The award that was made from this decision, the National Building and Construction Industry Award 2000, 142 did not include TOIL and make-up time provisions.

[303] In the decision 143 that made the National Joinery and Building Trades Products Award 2002 it was noted that the award simplification review of the National Joinery and Building Trades Products Award 1993 was originally deferred to allow the review of the National Building and Construction Industry Award 1990 and that:

"[2] Lengthy discussions between the parties to this award ensued and an agreed position has now been reached as to the contents of a simplified version."

[304] The award that was made 144 did not contain TOIL or make-up time provisions.

[305] In 2003 the MBA made an application to vary the National Building and Construction Industry Award 2000, which included the insertion of a TOIL provision. The MBA application was referred to a Full Bench which was dealing with 13 other applications. In a decision issued on 23 June 2004 the Full Bench stated:

"[26] It seems to have been accepted by the MBA that the CFMEU is in substance correct in its submission that the remaining claims (other than the part-time claim and the casual claim) do not raise novel issues and might be dealt with within the principles already established by test case decisions. Nevertheless we see no cogent reason why those claims should be dismissed at the outset.

[27] This brings us to the MBA's submission that its application should be joined or heard concurrently with the other applications. We have decided that in all of the circumstances it is more appropriate not to follow either of those courses. The better course is to adjourn the MBA application generally pending the determination of the main applications. There are several reasons for our decision.

[28] While the part-time claim and the casual claim may be relevant to the area of work and family balance, they also involve issues which do not arise in the main applications. In relation to the part-time claim, the MBA application is concerned with the introduction of part-time work in the context of daily hire employment. In relation to the casual claim, the six-week limitation on casual employment has a particular history which will undoubtedly be relevant to the application. Partly for these reasons, and partly because of the history of the existing award provisions, we have no doubt that joinder or concurrent hearings would add substantially to the time required to hear and determine the main applications. Those applications are already scheduled for 19 days of hearing on evidence alone. Furthermore the program for filing of submissions is well advanced.

[29] It is fair also to observe, as the CFMEU pointed out, that test case decisions have not always been implemented in the building and construction industry. Although we should not be taken as deciding the point, this lends some support to the view that there are particular aspects of the industry which require special consideration.

[30] Furthermore, if the MBA application is heard after the main applications have been determined, the decision can be addressed effectively in the building and construction industry context at that time. In saying this we do not intend to limit the MBA's rights of intervention in the main applications. Its evidence and submissions in those applications may deal with the potential effects on the building and construction industry of the various claims advanced by the parties and, subject to the bounds of relevance, any other matter.

[31] This leaves for consideration the remaining claims in the MBA application. On what we have heard we agree with the CFMEU that all of those claims are capable of being addressed by a single member of the Commission. It is a matter for the MBA whether it wishes the whole of the application to be dealt with by the Full Bench. On application by the MBA we are prepared to refer the claims other than the part-time claim and the casual claim, pursuant to s.107(9)(a), to a member to hear and determine." 145

[306] The MBA's TOIL claim was referred for further conciliation. It appears that no further action was taken in respect of this aspect of the MBA's application because of the impact of legislative changes at that time. 146

[307] Given the unusual arbitral history and the particular features of the industry covered by the two construction awards (including the operation of daily hire) we think the most expeditious course is to deal with any application to insert a TOIL provision in these awards during the award stage rather than in the settlement of any orders which may arise` from our further consideration of the provisional model term.

[308] We take the same view in relation to the Seagoing Industry Award 2010, though for different reasons. Work under this award is predominantly performed at sea and includes an aggregate annual salary provision. The variation of the award to include a TOIL provision is opposed by the MUA on the basis that such a provision would have little utility given the manner in which work is carried out and the terms of the award. It is appropriate that any application to vary this award to insert a TOIL provision be dealt with during the award phase of the Review.

[309] As outlined in paragraph [279], the model term set out in paragraph [267] only reflects our provisional view. Interested parties will be provided with an opportunity to make further submissions directed at both the model term and the proposition that all modern awards be varied to insert the model term. Directions will be issued in relation to the filing of further submissions and a final oral hearing. Submissions filed in accordance with those directions should also address the modern awards objective. We will only reach a concluded view in respect of these issues after considering all of the further submissions.

PRESIDENT

Appearances:

S Maxwell for the Construction, Forestry, Mining and Energy Union (Construction and General Division) and Construction, Forestry, Mining and Energy Union (Mining and Energy Division).

L Svendsen for the Health Services Union of Australia.

B Ferguson for The Australian Industry Group.

M Adler for the Housing Industry Association.

G Kusuma for the NSW Farmers' (Industrial) Association and the National Farmers' Federation.

S Crawford for The Australian Workers' Union.

A McCarthy for the Australian Nursing and Midwifery Federation.

G Starr for the Australian Council of Trade Unions.

O Tran for the Textile, Clothing and Footwear Union of Australia.

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

A Moussa for the Australian Manufacturing Workers' Union - Vehicle Division.

R Calver for Master Builders Australia.

M Blewett for Printing Industries Association of Australia

Hearing details:

Sydney: (with video links to Melbourne, Canberra and Perth)

May 5.

Before Commissioner Roberts:

Sydney: (with video link to Perth)

May 19.

**ATTACHMENT A - Awards proposed to be varied to insert the TOIL clause (26 awards)**A

Air Pilots Award 2010

Aircraft Cabin Crew Award 2010

Alpine Resorts Award 2010

Aquaculture Industry Award 2010

Black Coal Mining Industry Award 2010

Building and Construction General On-site Award 2010

Business Equipment Award 2010

Coal Export Terminals Award 2010

Concrete Products Award 2010

Cotton Ginning Award 2010

Dredging Industry Award 2010

Electrical, Electronic and Communications Contracting Award 2010B

Electrical Power Industry Award 2010

Horse and Greyhound Training Award 2010

Joinery and Building Trades Award 2010

Miscellaneous Award 2010

Nursery Award 2010

Pest Control Industry Award 2010

Pharmaceutical Industry Award 2010

Plumbing and Fire Sprinklers Award 2010

Poultry Processing Award 2010

Road Transport (Long Distance Operations) Award 2010

Seagoing Industry Award 2010

Security Services Industry Award 2010

Silviculture Award 2010

Stevedoring Industry Award 2010

A Ai Group Submission - 13 November 2014 at Schedule 1.

B Inserted by Ai Group Supplementary Submission - 5 December 2014 at Schedule 1.

**ATTACHMENT B - Awards proposed to be varied by deleting existing TOIL provision and replacing with test case TOIL clause (10 awards)**A

Airport Employees Award 2010

Ambulance and Patient Transport Industry Award 2010

Dry Cleaning and Laundry Industry Award 2010

Fast Food Industry Award 2010

Meat Industry Award 2010

Nurses Award 2010

Road Transport and Distribution Award 2010

Textile, Clothing, Footwear and Associated Industries Award 2010

Timber Industry Award 2010

Vehicle Manufacturing, Repair, Services and Retail Award 2010

A Ai Group Supplementary Submission - 5 December 2014 at Schedule 2.

**ATTACHMENT C - Awards proposed to be varied to insert make-up time clause (51 awards)**A

Air Pilots Award 2010

Aircraft Cabin Crew Award 2010

Airline Operations-Ground Staff Award 2010

Ambulance and Patient Transport Industry Award 2010

Asphalt Industry Award 2010

Black Coal Mining Industry Award 2010

Building and Construction General On-site Award 2010

Business Equipment Award 2010

Cement and Lime Award 2010

Cleaning Services Award 2010

Coal Export Terminals Award 2010

Commercial Sales Award 2010

Concrete Products Award 2010

Cotton Ginning Award 2010

Dredging Industry Award 2010

Dry Cleaning and Laundry Industry Award 2010

Electrical Power Industry Award 2010

Electrical, Electronic and Communications Contracting Award 2010

Fast Food Industry Award 2010

Gas Industry Award 2010

General Retail Industry Award 2010

Health Professionals and Support Services Award 2010

Horse and Greyhound Training Award 2010 B

Horticulture Award 2010 B

Joinery and Building Trades Award 2010 B

Market and Social Research Award 2010 B

Medical Practitioners Award 2010 B

Mining Industry Award 2010 B

Miscellaneous Award 2010 B

Nurses Award 2010 B

Nursery Award 2010 B

Oil Refining and Manufacturing Award 2010 B

Passenger Vehicle Transportation Award 2010 B

Pest Control Industry Award 2010 B

Pharmaceutical Industry Award 2010 B

Plumbing and Fire Sprinklers Award 2010 B

Ports, Harbours and Enclosed Water Vessels Award 2010 B

Poultry Processing Award 2010 B

Premixed Concrete Award 2010 B

Quarrying Award 2010 B

Road Transport (Long Distance Operations) Award 2010 B

Road Transport and Distribution Award 2010 B

Salt Industry Award 2010 B

Seagoing Industry Award 2010 B

Security Services Industry Award 2010 B

Silviculture Award 2010

Stevedoring Industry Award 2010

Sugar Industry Award 2010

Textile, Clothing, Footwear and Associated Industries Award 2010

Water Industry Award 2010

Wool Storage, Sampling and Testing Award 2010

A Ai Group Submission - 13 November 2014 at Schedule 2.

B Inserted by Ai Group Supplementary Submission - 5 December 2014 at Schedule 3.

ATTACHMENT D - Index of material

SUBMISSIONS AND CORRESPONDENCE

Australian Council of Trade Unions

Submission

22 May 2015

4 May 2015

Submission in reply

23 April 2015

Correspondence

13 February 2015

4 December 2014

2 December 2014

Australian Hotels Association

13 November 2014

Australian Industry Group

Supplementary note to joint submission

25 May 2015

18 May 2015

List of authorities and materials

1 May 2015

Submission in reply

23 April 2015

18 March 2015

5 December 2014

13 November 2014

Australian Industry Group and AMWU

Joint submission

19 May 2015

AMWU

1 June 2015

22 March 2015

10 December 2014

4 December 2014

13 November 2014

AMWU - Vehicle Division

Submission in reply

1 June 2015

Submissions in reply

28 April 2015

Australian Nursing and Midwifery Federation

Submission in reply

23 April 2015

The Australian Workers' Union

Submission in reply

23 April 2015

8 December 2014

BusinessSA

2 December 2014

13 November 2014

CFMEU - Construction and General Division

Submission in reply

22 May 2015

Submission in reply

15 May 2015

1 May 2015

Submission in reply

23 April 2015

CFMEU - Forestry and Furnishing Products Division

8 December 2014

CFMEU - Mining and Energy Division

1 May 2015

Submission in reply

22 April 2015

21 January 2015

4 December 2014

Fair Work Commission

Summary of submissions

29 April 2015

Health Services Union of Australia

Submission in reply

23 April 2015

Housing Industry Association

4 May 2015

Maritime Union of Australia

17 April 2015

5 December 2014

Master Builders Association

15 May 2015

18 March 2015

National Farmers' Federation

Submission in reply

22 April 2015

13 November 2014

Printing Industries Association of Australia

Supplementary evidence

18 May 2015

Witness statement

12 May 2015

Submission in reply

22 April 2015

SA Unions

13 February 2015

Textile, Clothing and Footwear Union of Australia

Submission in reply

1 June 2015

Submission in reply

23 April 2015

Submission in reply

4 December 2014

ATTACHMENT E - Model Flexibility Term

'7. Award flexibility

7.1 Notwithstanding any other provision of this award, an employer and an individual employee may agree to vary the application of certain terms of this award to meet the genuine individual needs of the employer and the individual employee. The terms the employer and the individual employee may agree to vary the application of are those concerning:

(a) arrangements for when work is performed;

(b) overtime rates;

(c) penalty rates;

(d) allowances; and

(e) leave loading.

7.2 The employer and the individual employee must have genuinely made the agreement without coercion or duress. An agreement under this clause can only be entered into after the individual employee has commenced employment with the employer.

7.3 The agreement between the employer and the individual employee must:

(a) be confined to a variation in the application of one or more of the terms listed in clause 7.1; and

(b) result in the employee being better off overall at the time the agreement is made than the employee would have been if no individual flexibility agreement had been agreed to.

7.4 The agreement between the employer and the individual employee must also:

(a) be in writing, name the parties to the agreement and be signed by the employer and the individual employee and, if the employee is under 18 years of age, the employee's parent or guardian;

(b) state each term of this award that the employer and the individual employee have agreed to vary;

(c) detail how the application of each term has been varied by agreement between the employer and the individual employee;

(d) detail how the agreement results in the individual employee being better off overall in relation to the individual employee's terms and conditions of employment; and

(e) state the date the agreement commences to operate.

7.5 The employer must give the individual employee a copy of the agreement and keep the agreement as a time and wages record.

7.6 Except as provided in clause 7.4(a) the agreement must not require the approval or consent of a person other than the employer and the individual employee.

7.7 An employer seeking to enter into an agreement must provide a written proposal to the employee. Where the employee's understanding of written English is limited the employer must take measures, including translation into an appropriate language, to ensure the employee understands the proposal.

7.8 The agreement may be terminated:

(a) by the employer or the individual employee giving 13 weeks' notice of termination, in writing, to the other party and the agreement ceasing to operate at the end of the notice period; or

(b) at any time, by written agreement between the employer and the individual employee.

Note: If any of the requirements of s.144(4), which are reflected in the requirements of this clause, are not met then the agreement may be terminated by either the employee or the employer, giving written notice of not more than 28 days (see s.145 of the Fair Work Act 2009 (Cth)).

7.9 The notice provisions in clause 7.8(a) only apply to an agreement entered into from the first full pay period commencing on or after 4 December 2013. An agreement entered into before that date may be terminated in accordance with clause 7.8(a), subject to four weeks' notice of termination.

7.10 The right to make an agreement pursuant to this clause is in addition to, and is not intended to otherwise affect, any provision for an agreement between an employer and an individual employee contained in any other term of this award.' 147

ATTACHMENT F - Modern awards with overtime provisions

In accordance with paragraph [281], it is proposed that the model TOIL provision be inserted in the following 113 modern awards:

Award code

Award title

Overtime provision

TOIL

Aboriginal Community Controlled Health Services Award 2010