The Power to make a Modern Enterprise Award & Termination
10 The power to make a modern award is found in Division 2 of Part 2 of Schedule 6 to the Transitional Provisions Act.
11 Part 2 sets forth what it describes as "The enterprise instrument modernisation process". Division 1 within Part 2 defines what is there referred to as an "enterprise instrument".
12 Division 2 within Part 2 addresses "the enterprise instrument modernisation process". Within Division 2, Item 4(1) defines the "enterprise instrument modernisation process" as "the process of making modern awards under this Division to replace enterprise instruments". Items 4(2) and (3) provide that an application to "make a modern award … to replace an enterprise instrument" may only be made by a person covered by the "enterprise instrument" and within the period specified. Item 4(4) provides that a "modern enterprise award" must be made by a Full Bench of Fair Work Australia.
13 Those requirements, it may be accepted, were satisfied in the present proceedings.
14 Within that Division Item 4(5) provides as follows:
4 The enterprise instrument modernisation process
…
(5) In deciding whether or not to make a modern enterprise award, and in determining the content of that award, FWA must take into account the following:
(a) the circumstances that led to the making of the enterprise instrument rather than an instrument of more general application;
(b) whether there is a modern award (other than the miscellaneous modern award) that would, for the enterprise instrument, cover the persons who are covered by the instrument, or whether such a modern award is likely to be made in the Part 10A award modernisation process;
(c) the content, or likely content, of the modern award referred to in paragraph (b) (taking account of any variations of the modern award that are likely to be made in the Part 10A award modernisation process);
(d) the terms and conditions of employment applying in the industry in which the persons covered by the enterprise instrument operate, and the extent to which those terms and conditions are reflected in the instrument;
(e) the extent to which the enterprise instrument provides enterprise-specific terms and conditions of employment;
(f) the likely impact on the persons covered by the enterprise instrument, and the persons covered by the modern award referred to in paragraph (b), of a decision to make, or not make, the modern enterprise award, including any impart on the ongoing viability or competitiveness of any enterprise carried on by those persons;
(g) the views of the persons covered by the enterprise instrument.
(h) any other matter prescribed by the regulations.
Item 5 is the source of power to terminate an "instrument" and Item 5(4) is in substantially identical terms to Item 4(5). The only difference is that Item 5(4)(f) refers to the likely impact of "a decision to terminate, or not to terminate, the enterprise instrument".
15 Item 6 provides as follows:
6 The modern enterprise awards objective
(1) The modern awards objective and the minimum wages objective apply to FWA making a modern enterprise award under this Division.
(2) However, in applying the modern awards objective and the minimum wages objective, FWA must recognise that modern enterprise awards may provide terms and conditions tailored to reflect employment arrangements that have been developed in relation to the relevant enterprises. This is the modern enterprise awards objective.
Each of the expressions employed in Item 6(1) - namely "modern awards objective" and the "minimum wages objective" - are further defined by the Fair Work Act 2009 (Cth). Item 4(1)(b) of Schedule 2 to the Transitional Provisions Act provides that unless a contrary intention appears expressions used in the Schedules have the same meaning as they have in the Fair Work Act. No relevant contrary intention appears.
16 Section 134 of the Fair Work Act, accordingly, defines the "modern awards objective" as follows:
The modern awards objective
What is the modern awards objective?
(1) FWA 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
(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 FWA's modern award powers, which are:
(a) FWA's functions or powers under this Part; and
(b) FWA's functions or powers under Part 2-6, so far as they relate to modern award minimum wages.
The expression "minimum wages objective" is defined in s 284 of the Fair Work Act which provides as follows:
The minimum wages objective
What is the minimum wages objective?
(1) FWA must establish and maintain a safety net of fair minimum wages, taking into account:
(a) the performance and competitiveness of the national economy, including productivity, business competitiveness and viability, inflation and employment growth; and
(b) promoting social inclusion through increased workforce participation; and
(c) relative living standards and the needs of the low paid; and
(d) the principle of equal remuneration for work of equal or comparable value; and
(e) providing a comprehensive range of fair minimum wages to junior employees, employees to whom training arrangements apply and employees with a disability.
This is the minimum wages objective.
…
17 The interrelationship between Items 4 and 6 and the drafting of those provisions, leaves much to be desired. Clearly, for instance, the parliamentary draftsman had some distinction in mind when using the expression "must take into account" in Item 4(5) and the different expression "must recognise…" employed in Item 6. But what that distinction is remains elusive. It is nevertheless clear that the mandate imposed by Item 6(2) is confined in its operation - Item 6(2) is confined to the necessity for Fair Work Australia to recognise "that modern enterprise awards may provide terms and conditions tailored to reflect employment arrangements that have been developed in relation to the relevant enterprises". The operation of Item 6(2) is, in that manner, confined; the manner in which recognition is to be given to terms and conditions being "tailored" in the manner specified nevertheless also remains elusive. Perhaps "recognise" is intended to mean no more than that Fair Work Australia should be "aware of" or "conscious of" the prospect that modern enterprise awards may provide "tailored" terms and conditions.
18 But such potential difficulties in construing these phrases may presently be left to one side.