[2016] FWCFB 2602
FAIR WORK COMMISSION

DECISION


Fair Work Act 2009
s.156 - 4 yearly review of modern awards

4 yearly review of modern awards—Award flexibility
(AM2014/300)

JUSTICE ROSS, PRESIDENT
DEPUTY PRESIDENT KOVACIC
COMMISSIONER ROBERTS

MELBOURNE, 24 APRIL 2016

4 yearly review of modern awards - common issue - award flexibility - time off in lieu of payment for overtime.

CONTENTS

ABBREVIATIONS

 

1.    Introduction

[1] The July 2015 Award Flexibility decision 1 (the July 2015 decision) dealt with a number of claims to vary certain modern awards in respect of time off in lieu of payment for overtime (TOIL) and make up time. The make up time claim was rejected. At paragraphs [279] and [309] of that decision the Full Bench expressed some provisional views about the type of TOIL term to be inserted into the 113 modern awards set out in Attachment F to the July 2015 decision. In particular, the Full Bench said:

“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.” 2

[2] Directions were issued to provide interested parties with an opportunity to file written submissions in relation to the content of the provisional model TOIL term and the proposition that the model TOIL term be inserted in 113 modern awards. The hearings in respect of these issues were split – the hearing on 4 September 2015 dealt with the content of the provisional model term and a subsequent hearing on 10 December 2015 dealt with the proposition that the model TOIL term be inserted into 113 modern awards. The hearings were split so that the terms of the model TOIL term were finalised prior to any consideration of whether that term should be inserted into particular awards.

[3] A decision issued on 6 October 2015 3 (the October 2015 decision) dealt with the submissions concerning the content of the model term. In that decision we accepted a number of amendments proposed by employer parties, in particular:

[4] A marked up version of the provisional model TOIL term incorporating the changes made is set out at paragraph [68] of the October 2015 decision and a final version of the model TOIL term is set out at Attachment 3 to that decision. In this decision we refer to the model TOIL term determined in the October 2015 decision as the ‘October 2015 model TOIL term’.

[5] To assist in reducing the regulatory burden associated with the introduction of the model TOIL term the Full Bench proposed adding a schedule setting out a template TOIL agreement. The intention is that the schedule will be inserted in each modern award incorporating the model term. The template is set out at Attachment 2 to the October 2015 decision. The Full Bench made the following observation in relation to the template:

“We emphasise that the template agreement is included by way of example and there will be no requirement to use it. While the template agreement is in the form of a signed hard copy document, a TOIL agreement could be made through an exchange of emails between the employer and employee or by other electronic means.” 6

[6] Directions 7 were issued on 6 October 2015 stating that draft determinations would be published for comment and providing for the filing of submissions. The matter was listed for further hearing on 10 December 2015. Draft determinations8 were published on the Fair Work Commission (the Commission) website on 16 October 2015. The draft determinations dealt with the proposed variation of the 113 modern awards listed in Attachment F to the July 2015 decision9 to include the October 2015 model TOIL term. In accordance with the Directions a number of parties filed submissions. Attachment A contains a list of the submissions received.

[7] The submissions filed fall into two broad categories—general submissions and award specific submissions. This decision only deals with one aspect of the general submissions and some other issues relating to the form and content of the October 2015 model TOIL term. Later in this decision we set out how we propose to deal with the other issues raised in the general submissions and the various award specific issues.

[8] General submissions were made by the Australian Industry Group (Ai Group) and Australian Business Industrial and the New South Wales Business Chamber (jointly ABI). Submissions were filed in reply by the AMWU, AMWU—Vehicle Division, The Australian Workers’ Union (AWU) and the Textile, Clothing and Footwear Union of Australia (TCFUA).

[9] Before turning to the submissions we propose to deal with some further amendments to the October 2015 model TOIL term.

2. A Plain Language Model TOIL Term

[10] The modern awards objective requires the Commission to take into account “the need to ensure a simple, easy to understand, stable and sustainable modern award system for Australia that avoids unnecessary overlap of modern awards”: s.134(1)(g).

[11] Since the commencement of the 4 yearly review of modern awards (the Review), the Commission has undertaken a number of steps to reduce the complexity of modern awards including:

[12] As the October 2015 model TOIL term has not yet been incorporated into modern awards the Full Bench has reviewed the model term so that it is expressed in plain language. In general, the plain language re-draft of the October 2015 model TOIL term:

[13] For example, the plain language re-draft of the October 2015 model TOIL term replaces the expression “in lieu of” with the more familiar expression “instead of” throughout the model term, and in the re-drafted template TOIL agreement.

[14] The plain language redraft of the model TOIL term, which we refer to as the ‘April 2016 model TOIL term’, is set out at Attachment B. The plain language redraft of the schedule setting out the template TOIL agreement is set out at Attachment C.

[15] Subclause 1.2(a)(iii) of the October 2015 model TOIL term requires each TOIL agreement to include a note in the following terms:

‘If requested by the employee at any time, 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 next pay period following the request.’

[16] The plain language re-draft requires a TOIL agreement to state:

[17] This change, which does not alter the substantive effect of the subclause, has been reflected in the template TOIL agreement.

[18] Clause 1.2(b) of the October 2015 model TOIL term is to be varied, as shown below:

“Each Any amount of overtime that has been worked by an employee in a pay period and that is to be taken as time off instead of the employee being paid for it must be the subject of a separate agreement under clause A.1.”

[19] The amendment has broadly the same substantive effect as clause 1.2(a) of the October 2015 model TOIL term, but provides greater clarity and reduces regulatory burden. It requires that a separate agreement be made for each occasion on which it is agreed to take time off for a single amount or multiple amounts of overtime that have been worked in a particular pay period. For example, if an employee had worked one hour of overtime on each of six days in the same pay period, the employee and the employer could make a single written agreement that the employee may take those six hours of overtime worked as time off, instead of being paid for the overtime.

[20] Only amounts of overtime worked during a single pay period can be the subject of a single written agreement. This is so because of the terms of clause A.1(b) itself, and because the employer will be obliged to pay the employee at the applicable overtime rates for any overtime worked at the end of each pay period, unless a written TOIL agreement has been made before the end of the pay period. The template TOIL agreement may be adjusted to cover multiple amounts of overtime worked in the same pay period, which the employer and the employee agree are to be taken as time off instead of payment at overtime rates being made to the employee.

[21] In the October 2015 decision we accepted that the requirement for a separate written TOIL agreement ‘on each occasion’ that overtime is to be worked gives rise to a regulatory burden. 11 The change proposed ensures that one written agreement may cover a number of periods of overtime in a single pay cycle and will reduce the regulatory burden associated with the model TOIL term. We note that such a change is consistent with ABI’s submission:

“… there needs to be a practical balance between the need to evidence an agreement between employee and employer to enter into a TOIL arrangement and the imposition of administrative requirements that would dissuade employees and employers from entering into TOIL arrangements.” 12

[22] While ABI’s submission was advanced in relation to the insertion of the model TOIL term in the Clerks-Private Sector Award 2010, it is also apposite to our consideration of the content of the model TOIL term.

[23] The reference to “ordinary time hours” in clause 1.2(b) of the October 2015 model TOIL term has been removed. Subclause A.1(d) and its example make clear that the period of time off that the employee may take instead of being paid is the period of overtime worked by the employee, regardless of when the time off is taken.

[24] In the plain language redraft a note is inserted after the subclause specifying the TOIL agreement requirements (clause A.1(c)), as follows:

Note: An example of the type of TOIL agreement required by this clause is set out at Schedule [x]. There is no requirement to use the form of TOIL agreement set out at Schedule [x]. A TOIL agreement can also be made by an exchange of emails between the employee and employer, or by other electronic means.

[25] We now turn to consider the submissions.

3. The Submissions

[26] Some 83 of the 122 modern awards provide for time off in lieu of payment for overtime (TOIL) and of those 60 provide that TOIL is calculated at the ordinary rate (i.e. ‘time for time’) and the remaining 23 modern awards provide that TOIL is calculated at the overtime rate (i.e. ‘time for penalty’). There are 30 modern awards which contain overtime provisions but which do not contain a TOIL term.

[27] Ai Group and ABI support the inclusion of the model TOIL term in modern awards which do not presently include a TOIL provision, but not in other modern awards.

[28] In respect of the modern awards where TOIL is calculated at the overtime rate Ai Group submits that if the Commission does not accept its primary submission and decides to vary these awards, then the variation determination should be amended to exclude clause 1.2(a) of the October 2015 model TOIL term.

[29] Clause 1.2(a) is in the following terms:

[30] ABI made submissions in support of Ai Group’s position.

[31] The AMWU-Vehicle Division submits that the fact that TOIL is provided on a ‘time for penalty’ basis does not detract from the importance of a written agreement on each occasion that TOIL is agreed:

“Written agreement ensures that employees aren’t pressured into taking TOIL in lieu of receiving payment for overtime worked…

The requirement for a separate written agreement to be reached in awards that contain ‘time for penalty’ arrangements guarantees that proper record keeping is maintained documenting the use of the entitlement. It also ensures that the employee understands the obligations of an employer to make payment if the accrued TOIL is not used.” 13

[32] The TCFUA submits that the retention of the requirement for a separate written agreement is necessary and simply reflects the current safeguards in the Textile Clothing Footwear and Associated Industries Award 2010 and the Dry Cleaning and Laundry Industry Award 2010:

“However, the TCFUA respectfully disagrees with the Full Bench’s statement. If this approach is adopted it would significantly diminish an important safeguard which currently exists in both the TCF Award and the Dry Cleaning Award. In both awards the respective TOIL provisions require as a pre-condition, that a TOIL agreement must be ‘in writing’. 14

In our submission these provisions in the respective awards currently provide for, and have the effect of, requiring a written agreement on each occasion. This precondition is connected to the additional requirement that the employee (subject to the TOIL agreement) is able to take the time off in lieu of payment of overtime within ‘four weeks of working the overtime’ (clause 39.5(a), TCF Award) or ‘a period of two months of the date on which the time is worked (clause 22.5(d)(iii)).” 15

[33] During the course of the proceedings on 10 December 2015, Ai Group acknowledged that there were a range of existing TOIL provisions in modern awards and that different provisions throw up different issues. It was also accepted that the context of each modern award would have to be considered in order to determine whether the model TOIL term should be inserted and, if so, to what extent. 16 We agree with these propositions and, as indicated during the 10 December 2015 hearing, we propose to take a cautious approach in respect of this issue.17

4. Consideration

[34] As we have mentioned, 30 modern awards which contain overtime provisions do not presently contain a TOIL term. Four of those awards, 18 are the subject of award specific submissions: Dredging Industry Award 2010; Live Performance Award 2010; Marine Towage Award 2010; and Professional Diving Industry (Industrial) Award 2010.

[35] Ai Group and ABI support the variation of the remaining 26 modern awards to insert the model TOIL term. No other party opposed that course.

[36] We are satisfied that the variation of these 26 modern awards (set out at Attachment D) to incorporate the April 2016 model TOIL 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). We are also satisfied that such variation would be consistent with the objects of the Fair Work Act 2009 (Cth) (the FW Act).

[37] 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 these 26 modern awards is consistent with the objective of promoting social inclusion through increased workforce participation (see s.134(1)(c)).

[38] Section 134(1)(d) of the modern awards objective requires the Commission to take into account the need to promote flexible modern work practices and the efficient and productive performance of work. Inserting a TOIL provision into these 26 modern awards, which provide for overtime but do not presently contain a facilitative provision permitting TOIL, is consistent with the promotion of flexible modern work practices.

[39] Section 134(1)(f) provides that the Commission must also take into account the likely impact of any exercise of modern award powers on business, including on productivity, employment costs and the regulatory burden. The insertion of the model term will assist in ensuring that these modern awards are relevant to the needs of the modern workplace, and will assist businesses. As outlined earlier in this decision we have taken a number of steps to reduce the regulatory burden associated with the model TOIL term.

[40] Finally, the insertion of the model term into these 26 modern awards is consistent with the objects of the FW Act by: providing workplace relations laws that are fair to working Australians and are flexible for businesses (s.3(a)); ensuring a guaranteed safety net of fair, relevant and enforceable minimum terms and conditions through the NES and modern awards (s.3(b)); assisting employees to balance their work and family responsibilities by providing for flexible working arrangements (s.3(d)); and acknowledging the special circumstances of small and medium-sized businesses (s.3(g)). In respect of s.3(g), a modern award variation of the type proposed will provide a simple mechanism for all such businesses to provide access to mutually beneficial TOIL arrangements between an employee and their employer.

[41] We now turn to Ai Group’s submission in relation to the 23 modern awards that provide for TOIL on a time for penalty basis. A list of these 23 modern awards is set out at Attachment E.

[42] In the October 2015 decision we noted that the requirement for a separate written agreement is not necessary in those awards where TOIL is calculated by reference to the overtime rate, ‘as the financial incentive for employers to enter into a TOIL arrangement on those term is much less’. 19

[43] We adhere to the view expressed in the October 2015 decision. But we acknowledge that there is a level of complexity associated with the variation of existing TOIL provisions which provide for TOIL on a penalty basis. The existing provisions are in various forms, and a number require TOIL arrangements to be reduced to writing.

[44] As a general proposition, we accept that, prima facie, a term which provides for TOIL on a penalty basis may require fewer safeguards than a term providing for TOIL on a time for time basis. But each modern award which contains a penalty basis TOIL term must be considered on a case by case basis, to take account of the particular circumstances pertaining to each modern award.

[45] We propose to publish draft variation determinations in relation to the 21 of the 23 modern awards that contain a penalty basis TOIL term. We do not propose to take any further steps in relation to the Higher Education Industry—General Staff—Award 2010, for the reasons set out at paragraph [50](iii). Nor do we propose to publish a draft variation determination in respect of the Broadcasting and Recorded Entertainment Award 2010, as it is the subject of an award specific submission (see paragraph [50](vi)).

[46] The draft variation determinations will reflect our provisional view as to the type of TOIL term that may be appropriate for that particular modern award. Directions will be issued to provide interested parties with an opportunity to make submissions in relation to the variation determinations.

5. The Next Steps

[47] We propose to vary the 26 modern awards set out at Attachment D to insert the April 2016 model TOIL term and the associated Schedule. Draft variation determinations will be published shortly. Interested parties will have 14 days to comment on the draft variation determinations.

[48] The publication of these draft variation determinations will also provide any interested party an opportunity to comment on the plain language redraft of the model TOIL term. Any comments are to be filed within 14 days of the publication of the draft variation determinations.

[49] As to the 21 modern awards that presently contain a penalty basis TOIL term, draft variation determinations will be published shortly and interested parties will be provided with an opportunity to comment.

[50] As to the remaining 75 modern awards:

[51] The 8 modern awards referred to at (iv) and (v) above were the subject of a conference convened by Deputy President Kovacic on 1 March 2016. We will issue a Statement in respect of our approach to these awards in the next few weeks.

[52] As to the 8 modern awards referred to at (vi) above, we will list those awards for further hearing. Draft variation determinations in respect of these awards will be issued shortly, to account for the changes incorporated in the April 2016 model TOIL term.

[53] In relation to the 49 modern awards referred to at (vii) above, we will issue a decision in the next few weeks dealing with the Ai Group/ABI general submission that these awards not be varied to include the model TOIL term.

[54] The only exception to this process will be the Vehicle Manufacturing, Repair, Services and Retail Award 2010 (the RS & R Award). In a Statement issued by the Full Bench dealing with a number of substantive issues in relation to the RS & R Award the Full Bench expressed a provisional view that the vehicle manufacturing sector should be removed from the RS & R Award and placed with the Manufacturing and Associated Industries and Occupations Award 2010. Exposure drafts have been published identifying all proposed changes; written submissions are due by 6 May and submissions in reply by 18 May 2016. The matter is listed for hearing on 23–24 May 2016. We will deal with any variation to the TOIL provisions in the RS & R Award after that Full Bench has determined the issues before it.

PRESIDENT

Appearances:

L Cottam for The Australian Workers’ Union

S Maxwell for the Construction, Forestry, Mining and Energy Union

B Ferguson for the Australian Industry Group

J Arndt for Australian Business Industrial and the New South Wales Chamber

D Hamilton for the Australian Entertainment Industry Association

V Wiles for the Textile, Clothing and Footwear Union of Australia

A Moussa for the “Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union” known as the Australian Manufacturing Workers’ Union (AMWU)—Vehicle division

M Nguyen for the “Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union” known as the Australian Manufacturing Workers’ Union (AMWU)

G Jolly for News Limited and other publishers

Hearing details:

2015.

Sydney, Melbourne, Canberra (video hearing).

December 10.

Final written submissions:

23 March 2016.

Attachment A—List of submissions

Note this list contains only submissions made in accordance with the Directions issued on 6 October 2015.

Attachment B—April 2016 Model TOIL term

A.1 Time off instead of payment for overtime

(a) An employee and employer may agree in writing to the employee taking time off instead of being paid for a particular amount of overtime that has been worked by the employee.

(b) Any amount of overtime that has been worked by an employee in a particular pay period and that is to be taken as time off instead of the employee being paid for it must be the subject of a separate agreement under clause A.1.

(c) An agreement must state each of the following:

(i) the number of overtime hours to which it applies and when those hours were worked;

(ii) that the employer and employee agree that the employee may take time off instead of being paid for the overtime;

(iii) that, if the employee requests at any time, the employer must pay the employee, for overtime covered by the agreement but not taken as time off, at the overtime rate applicable to the overtime when worked;

(iv) that any payment mentioned in subparagraph (iii) must be made in the pay period immediately following the request.

(d) The period of time off that an employee is entitled to take is the same as the number of overtime hours worked.

EXAMPLE: An employee who worked 2 overtime hours is entitled to time off of 2 hours.

(e) Time off must be taken:

(i) within the period of 6 months after the overtime is worked; and

(ii) at a time or times within that period of 6 months agreed by the employee and employer.

(f) If the employee requests at any time, to be paid for overtime covered by an agreement under clause A.1 but not taken as time off, the employer must pay the employee for the overtime, in the pay period immediately following the request, at the overtime rate applicable to the overtime when worked.

(g) If time off for overtime that has been worked is not taken within the period of 6 months mentioned in paragraph (e), the employer must pay the employee for the overtime, in the pay period immediately following those 6 months, at the overtime rate applicable to the overtime when worked.

(h) The employer must keep a copy of any agreement under clause A.1 as an employee record.

(i) An employer must not exert undue influence or undue pressure on an employee to make, or not make, an agreement under clause A.1.

(j) An employee may, under section 65 of the Fair Work Act, request to take time off, at a time or times specified in the request or to be subsequently agreed by the employer and the employee, instead of being paid for overtime worked by the employee. Clause A.1 applies to any such time off granted by the employer as if it were time off covered by an agreement under clause A.1.

(k) If, on the termination of the employee’s employment, time off for overtime worked by the employee to which clause A.1 applies has not been taken, the employer must pay the employee for the overtime at the overtime rate applicable to the overtime when worked.

Attachment C— TOIL template agreement

AGREEMENT FOR TIME OFF INSTEAD OF PAYMENT FOR OVERTIME

Name of employee: _____________________________________________

Name of employer: _____________________________________________

The employer and employee agree that the employee may take time off instead of being paid for the following amount of overtime that has been worked by the employee:

Date and time overtime started: ___/___/20___ ____ am/pm

Date and time overtime ended: ___/___/20___ ____ am/pm

Amount of overtime worked: _______ hours and ______ minutes

The employer and employee further agree that, if requested by the employee at any time, the employer must pay the employee for overtime covered by this agreement but not taken as time off. Payment must be made at the overtime rate applying to the overtime when worked and must be made in the pay period immediately following the request.

Signature of employee: ________________________________________

Date signed: ___/___/20___

Name of employer
representative: ________________________________________

Signature of employer
representative: ________________________________________

Date signed: ___/___/20___

Attachment D—Modern awards with overtime provisions but no TOIL provision

In accordance with paragraph [47] above, it is proposed that the model TOIL provision be inserted in the following 26 modern awards which currently contain an overtime provision but do not provide for taking time off instead of payment for overtime:

Attachment E— Modern awards with TOIL provided at overtime rates

[Extract from Attachment F to July decision)

23 awards (includes 2 awards that are silent)

 1   [2015] FWCFB 4466

 2   Ibid at para. [309]

 3   [2015] FWCFB 6847

 4   Ibid at para. [51]

 5   Ibid

 6   Ibid at para. 35

 7   Directions 6 October 2015

 8   Schedule of draft determinations 16 October 2015

 9   Directions 6 October 2015

 10   https://www.fwc.gov.au/documents/sites/awardsmodernfouryr/4-yearly-review-Guide-to-Award-Stage.pdf see paras 30 and 32

 11   [2015] FWCFB 6847 at para. [35]

 12   ABI submission 2 December 2015 at para 5.6

 13   AMWU—Vehicle Division submission 30 November 2015 at paras 23–24

 14   See Textile, Clothing, Footwear and Associated Industries Award 2010 (clause 39.5(a)); and Dry Cleaning and Laundry Industry Award 2010 (clause 22.5(d))

 15   TCFUA submission 30 November 2015 at paras 26–27

 16   Transcript 10 December 2015 at paras 1857–1888

 17   Ibid at paras 1891, 1920 and 1928

 18   Dredging Industry Award 2010; Live Performance Award 2010; Marine Towage Award 2010; and Professional Diving Industry (Industrial) Award 2010

 19   [2015] FWCFB 6847 at para. [36]

 20   See [2015] FWCFB 4466 at para. [307]

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