[74] In contrast, the plain language re-draft in Attachment 2 at clause 29.7 provides that:

[75] The plain language re-draft has the same substantive effect as the September 2015 model term, but avoids the use of the complex legal concept of ‘deemed withdrawal’, which may not readily be understood.

[76] Attachment 2 is a comparative document which compares the September 2015 annual leave model terms with the May 2016 plain language model terms. The May 2016 plain language model terms are referred to as the ‘revised model terms’, in this decision.

[77] An annotated version of the May 2016 plain language template model terms is set out at Attachment 3.

[78] The revised model terms and the associated template agreements are set out at Attachment 4.

[79] We now turn to consider the submissions filed.

6. The Submissions

[80] The submissions received fall into two broad categories – general and award specific. We deal first with what we have categorised as the general submissions.

6.1 General Submissions

[81] Ai Group has made a general submission in response to the Commission’s provisional view that the excessive leave model term be inserted into all modern awards. 54 There are three aspects to the Ai Group’s submission:

(i) the transitional arrangements in relation to clause 1.2(c) of the model term (the transitional issue);
(ii) the contention that 55 modern awards, set out at Attachment 5 (see paragraph [10] of Ai Group’s Further Submission of 7 December 2015) should not be varied to insert the model term on the basis that they currently contain an excessive annual leave clause which affords greater flexibility (the ‘existing flexibility issue’); and
(iii) the contention that 22 modern awards which currently contain a provision which requires the taking of annual leave within a specified period after accrual should not be varied to insert the model term (the ‘taking of leave issue’).

[82] We propose to deal with each of these aspects of the Ai Group’s submission in turn.

(i) The transitional issue

[83] As we have previously noted the model term provides employers with the right to direct an employee to take ‘excessive annual leave’ and also makes provision for the circumstance where an employee accrues excessive annual leave but no employer direction is made. In such circumstances clause 1.2(c) of the model term provides an avenue for an employee to exercise control over the time at which that leave is to be taken.

[84] In the proceedings following the June 2015 decision a number of submissions were advanced in relation to clause 1.2(c) of the model term. Clause 1.2(c) sets out the circumstances in which an employee may require their employer to grant them a period of paid annual leave. Relevantly for present purposes, Ai Group advanced the proposition that clause 1.2(c) not commence until 12 months after the commencement of the balance of the clause, in order to address situations where a significant proportion of an employer’s workforce currently has excessive leave accruals.

[85] In the September 2015 decision the Commission concluded that the transitional arrangement proposed by Ai Group had merit:

‘We acknowledge that a provision such as subclause 1.2(c) is a significant change to the modern award system and it is appropriate that employers are provided with some lead time to adjust. Subclause 1.2(c) will commence operation 12 months after the commencement of subclauses 1.2(a) and (b).’ 55

[86] The short point advanced by Ai Group in the present proceedings is that neither the final form of the excessive leave model term nor the draft determinations contain the transitional arrangement contemplated in the September 2015 decision. Ai Group submits that consistent with the above passage from the September 2015 decision subclause 1.2(c) of the model term should be amended to insert a new subclause (i), in the following terms:

‘(i) Clause 1.2(c) comes into operation from [insert date 12 months after the commencement of clauses 1.2(a) and (b)]’

[87] As we decided in the September 2015 decision, any variation determination inserting the model excessive leave term into a modern award will provide that subclause 1.2(c) commences operation 12 months after the commencement of subclauses 1.2(a) and (b). The transitional subclause proposed by Ai Group will be inserted into each variation determination.

[88] The purpose of the transitional subclause is to delay the commencement of subclause 1.2(c) and hence it will cease to have any purpose after subclause 1.2(c) commences. Accordingly, any variation determination inserting the model excessive leave term will provide for the deletion of the transitional subclause after 12 months. Such a proposal was generally agreed during the course of the proceedings on 8 December 2015. 56

(ii) The existing flexibility issue

[89] Ai Group submits that where an excessive leave provision is currently in a modern award, that provision should be retained where it affords greater flexibility. 57 On this basis Ai Group submits that 55 modern awards should not be varied to insert the model excessive annual leave term as these awards currently contain an excessive leave clause that provides ‘greater flexibility’ than the model term. Ai Group’s submission is encapsulated at paragraph 9 of its Further Submission of 7 December 2015:

‘…existing flexibilities should not be removed from awards that presently contain excessive leave provisions. Rather, the model clause regarded as the minimum level of flexibility that employers should have access to with regard to excessive leave accruals. Thus, where there is a pre-existing approach in an award that presently affords greater flexibility, a more restrictive provision should not be inserted.’

[90] The 55 modern awards which are the subject of this aspect of Ai Group’s submission are set out at Attachment 5. Of those 55 modern awards, 31 were the subject of the Employer Group’s excessive leave claim (marked with an * in Attachment 5).

[91] A number of the 55 modern awards which are identified in Ai Group’s general submission are also the subject of award specific submissions by other employer organisations (these awards are shaded in Attachment 5). We deal later with the award specific submissions in relation to the following awards:

Horticulture Award 2010
Pastoral Award 2010		see [128]–[164]
Wine Industry Award 2010
Hospitality Industry (General) Award 2010
Registered and Licensed Clubs Award 2010		see [201]–[230]
Restaurant Industry Award 2010
Passenger Vehicle Transportation Award 2010		see [239]–[262]
Hydrocarbons Industry (Upstream) Award 2010
Mining Industry Award 2010		see [263]–[289]
Oil Refining and Manufacturing Award 2010
Salt Industry Award 2010

[92] In addition to these 11 modern awards, the Nursery Award 2010 is addressed as part of the third aspect of Ai Group’s general submission and Ai Group has sought a further opportunity to make submissions directed at the particular circumstances relevant to the Aircraft Cabin Crew Award 2010.

[93] The excessive leave clause in the Textile, Clothing, Footwear and Associated Industries Award 2010 (the TCF Award) also warrants separate consideration. In a decision 58 published on 11 May 2015 a Full Bench of the Commission dealt with various substantive issues which had arisen in the review of the TCF Award. One of those issues concerned the variation of clause 41.4 of that award, which deals with the circumstances in which an employer can direct an employee to take a period of accrued annual leave. The Textile, Clothing and Footwear Union of Australia (TCFUA) and The Australian Workers’ Union (AWU) supported a proposed variation of clause 41.4 and this course was not opposed by any other party. The Full Bench decided to make the proposed variation, for the following reasons:

‘[147] We are satisfied that the variation proposed complies with the modern awards content requirements of the Act, being part of a term about arrangements for taking leave (s.139(h) of the Act).

[148]The addition of safeguards in relation to the right of an employer to direct the taking of excessive accrued annual leave arising from the variation, involves the maintenance of a minimum of four weeks accrual and a right to an employee to suggest an alternate basis of taking the period of annual leave directed (subject to a capacity of the employer to refuse, unless the refusal is unreasonable). The safeguards better protect the benefit of the leave to employees and have regard to the needs of the employees, better accommodate employees taking accrued annual leave at a time that suits their personal circumstances, including family commitments and better promotes the purpose of recovery, rest and recreation and are consistent with those parts of the modern awards objective in ss.134(1)(a) and (c) of the Act and may enhance the productivity of employees when they return to work from leave. Whilst the variations introduce some safeguards which may raise issues in respect of s.134(1)(f) of the Act, the safeguards are not unreasonable and employers remain able to manage excessive accrual of annual leave. Overall, we are satisfied that the variation is necessary to achieve the modern awards objective, having regard to the reasonableness requirement within s.93(3) of the Act.’ 59

[94] The TCF Award Full Bench decision was handed down before the June 2015 decision which expressed the provisional view that all modern awards should be varied to insert the excessive leave model term. Clause 41.4 of the TCF Award, as varied, is not in the same terms as the model term.

[95] Given that the excessive accrued leave term in the TCF Award has been the subject of recent consideration by a Full Bench in the context of the Review proceedings in relation to that award, we do not propose to vary clause 41.4 of the TCF Award at this time. We will relist this issue for further consideration later this year.

[96] Taking into account the matters referred to at paragraphs [90]–[94], that leaves 41 modern awards which Ai Group contends should not be varied to insert the excessive leave model term. Each of these awards currently contains an award provision which allows an employer to direct an employee to take a period of accrued annual leave. The relevant provisions in these 41 modern awards fall into three broad categories:

Category A

[97] Thirteen modern awards 60 provide that upon giving at least four weeks’ notice to the employee, an employer may require an employee to take an unspecified amount of accrued annual leave in circumstances where the employee has more than eight weeks’ accrued leave. The Alpine Resorts Award 2010 contains a similar provision, except that it operates where the employee has more than 30 days’ accrued leave.

Category B

[98] Twenty-four modern awards adopt the same basic provision as in Category A (i.e. employer direction with four weeks’ notice when the employee has more than eight weeks’ accrued leave) but contain additional safeguards:

● Twenty-one modern awards provide that the amount of leave an employee can be directed to take is no more than one quarter of the employee’s accrued leave. 61
● Three modern awards provide that the employee must retain a balance of at least 8 weeks’ accrued leave. 62

[99] It should be noted that 19 of these 24 awards also contain a requirement that the employer must have discussed the issue of excessive leave or genuinely tried to reach agreement with the employee before the employer can require the employee to take annual leave.

Category C

[100] The remaining three modern awards contain unique provisions:

Clause 24.3 of the Cemetery Industry Award 2010 states:

‘An employee must take a period of annual leave when directed by the employer to do so during a period when the employer’s operations are closed or partially closed or the employee has at least 18 months of annual leave accrued.’ (emphasis added)

Clause 26.5 of the Pharmaceutical Industry Award 2010 states:

‘Notwithstanding s.88 of the Act, if an employer has genuinely tried to reach agreement with an employee as to the timing of taking annual leave, the employer can require the employee to take annual leave by giving not less than four weeks’ notice of the time when such leave is to be taken if:

(a) at the time the direction is given, the employee has 12 weeks or more of annual leave accrued; and

(b) the amount of annual leave the employee is directed to take is less than or equal to a third of the amount of leave accrued.’

Clause 25.2 of the Real Estate Industry Award 2010 states:

‘(a) The employer and employee may agree when and for what period the employee is to take the employee’s accrued annual leave, having regard to the personal circumstances of the employee and the operational requirements of the employer. Provided that the employer must not unreasonably refuse to agree to a request by the employee to take accrued annual leave.

(b) Annual leave should be taken by the employee in the employee’s anniversary year in which the entitlement accrues, except if agreed otherwise.

(c) The employer may require the employee to take any portion of annual leave that has accrued in excess of four weeks. In such circumstances the employer must give the employee at least four weeks’ notice of the requirement to take the excess period of accrued annual leave.

(d) If the employer has a business shut-down (which may include a partial shut-down) during the year, the employer may require the employee to take any or all accrued annual leave during the period of the shut-down.

(e) In the event that the employee has insufficient accrued annual leave for the period of the shut-down, the employee may be granted annual leave in advance by the employer.’ (emphasis added)

[101] Ai Group’s submission focusses on the maintenance of what it refers to as the ‘existing flexibilities’ in the current award provisions dealing with excessive paid annual leave accruals. To be clear, the ‘flexibilities’ to which Ai Group refers relate to the capacity of an employer to direct an employee to take accrued paid annual leave. Understandably enough, Ai Group’s submission is concerned with the effect upon employers of replacing the existing clauses with the model term. But it is important that the issue raised by Ai Group be seen in its broader context. Three points are relevant in this regard.

[102] First, ss.93(3) and (4) of the FW Act provide the jurisdictional basis for the insertion of terms in modern awards which deal with excessive paid annual leave accruals. These subsections provide as follows:

‘Terms about requirements to take paid annual leave

(3) A modern award or enterprise agreement may include terms requiring an employee, or allowing for an employee to be required, to take paid annual leave in particular circumstances, but only if the requirement is reasonable.

Terms about taking paid annual leave
(4) A modern award or enterprise agreement may include terms otherwise dealing with the taking of paid annual leave.’ (emphasis added)

[103] A modern award term which provides that an employee can be required to take a period of annual leave to reduce the employee’s excessive level of accrued paid annual leave is a term of the type contemplated by s.93(3) of the FW Act. Importantly, this type of term is subject to the legislative direction that any such requirement to take leave ‘is reasonable’. The Explanatory Memorandum to the Fair Work Bill 2008 provides some guidance as to subclause 93(3) of the assessment of what is reasonable in this context, it states:

‘381. Subclause 93(3) permits terms to be included in an award or agreement that require an employee, or that enable an employer to require or direct an employee, to take paid annual leave in particular circumstances, but only if the requirement is reasonable. This may include the employer requiring an employee to take a period of annual leave to reduce the employee’s excessive level of accrual or if the employer decides to shut down the workplace over the Christmas/New Year period.

382. In assessing the reasonableness of a requirement or direction under this subclause it is envisaged that the following are all relevant considerations:

[104] The Full Bench decision in Australian Federation of Air Pilots v HNZ Australia Pty Ltd 63 observed that in assessing the reasonableness of any employer requirement to take leave, ‘all relevant considerations needed to be taken into account including those which are set out in paragraph [382] of the Explanatory Memorandum to the Fair Work Bill 2008’.64

[105] Plainly, the assessment of whether a requirement to take paid annual leave is ‘reasonable’ within the meaning of s.93(3) is not viewed solely through the perspective of the employer.

[106] As to s.93(4), it provides that a modern award may include terms ‘otherwise dealing with the taking of paid annual leave’. The expression ‘otherwise dealing with’ is an expression of broad import. As the Full Bench decided in the September 2015 decision, subclause 1.2(c) of the model term is an award term which is expressly permitted by s.93(4) and accordingly it may be included in a modern award (see s.55(2)(a)). 65

[107] The second contextual consideration is that these proceedings form part of the Review. Section 156 of the FW Act imposes an obligation on the Commission to review all modern awards and each modern award must be reviewed in its own right.

[108] There is a degree of tension between some of the s.134 considerations and the Commission’s task is to balance these considerations and ensure that modern awards, together with the NES, provide a fair and relevant safety net of terms and conditions (see paragraph [19]).

[109] In performing this task the Commission must take into account the likely impact of any exercise of modern award powers on business (s.134(1)(f)), but that is not the sole relevant consideration. It should be constantly borne in mind that the legislative direction is that the Commission must ensure that modern awards, together with the NES provide ‘a fair and relevant minimum safety set of terms and conditions’. Fairness is to be assessed from the perspective of both employers and employees. 66

[110] The final general contextual consideration is the findings made by the Commission in the June 2015 decision, on the basis of the evidence adduced (primarily by the Employer Group). These findings as summarised in the September 2015 decision at paragraphs [133] and [137], underpin the decision to redraft the Employer Group claim and to formulate the provisional model term. Relevant for present purposes is the finding concerning the reasons why employees do not fully utilise their accrued annual leave. At paragraph 144 of the June 2015 decision the Full Bench stated:

‘The above data suggest that a significant barrier to the use of leave entitlements by employees is work pressures, with 43.9 per cent of employees in the AWALI survey being either too busy at work (30.7 per cent) or unable to take leave at a time that suited them (13.2 per cent). This suggests that employers are not creating workplaces that allow for employees to use their entitlements.’

[111] This finding is important because it provides the foundation for that part of the model term which provides, subject to certain limitations, employees with the ability to issue a notice to their employer requiring that a period of paid leave be granted.

[112] Having regard to these general contextual considerations we now turn to Ai Group’s submission that the existing excessive leave provisions in the 41 modern awards mentioned above should not be varied to insert the excessive leave model term. Ai Group seeks to retain the existing provisions allowing an employer to direct an employee to take a period of paid annual leave, unencumbered by a number of the safeguards which are contained in the revised excessive leave model term.

[113] It is apparent from an examination of the existing clauses in these awards that they differ from the revised model term in a number of respects, in particular:

(i) None of the 41 modern awards provide a mechanism, subject to appropriate limitations, for employees to require that their employer give them a period of paid annual leave. These modern awards make no provision for the circumstance where an employee accrues excessive paid annual leave but no employer direction is made.
(ii) None of the 41 modern awards provide that an employer direction to take a period of paid annual leave be in writing. Such a procedural safeguard assists in ensuring that the employee is aware of his or her obligations to comply with the direction and of the limitations on such a direction.
(iii) None of the 41 awards contains a requirement that the minimum length of any period of employer directed paid annual leave be one week. Such a provision would avoid the circumstance where an employee may be required to take their paid annual leave in a series of single days or small clusters of single days – thereby denying the employee the benefits associated with taking a longer period of leave. As the Full Bench said in the September 2015 decision:

‘It is desirable that some minimum period of leave be prescribed in circumstances where the employee concerned has an excessive leave accrual and may not have had the benefit of any paid annual leave for a period of more than two years.’ 67

(iv) 40of the 41 modern awards provide that an employer can direct an employee to take a period of accrued paid annual leave by giving the employee four weeks’ notice. The remaining modern award – the Cemetery Award 2010 – makes no provision as to notice. The model term requires that employees be given eight weeks’ notice of the commencement of employer directed leave. The provision of eight weeks’ notice ensures that the employee has a reasonable amount of time to make arrangements for activities during the leave period and/or to coordinate their leave with family members.
(v) 15 of the 41 modern awards do not place any limitation on the amount of accrued paid annual leave that an employer may direct an employee to take. The model term provides that an employer direction must not result in the employees’ remaining accrued entitlement to paid annual leave being less than six weeks. As the Full Bench said in the June 2015 decision:

‘Maintenance of a six week minimum is consistent with s.236(6) of the former WR Act and with the majority of current modern award clauses which limit the amount of accrued paid annual leave that an employer can direct an employee to take. It also accommodates the circumstance of an employee seeking to accrue leave so that he or she can take a reasonable extended holiday.’ 68

(vi) 15 of the 41 modern awards do not require an employer to enter into any dialogue with an employee before directing them to take part of their annual leave. In these awards the employer is under no obligation to discuss the issue of excessive annual leave accrual with the employee or to seek to reach an agreement with the employee about the time when such leave will be taken. The model term includes such a provision on the basis that it is plainly preferable that these matters be resolved by agreement between the employer and employee, without the need for a direction.
(vii) The Alpine Resorts Award 2010 provides a 30 days’ accrued leave threshold to ‘trigger’ the right of an employer to direct an employee to take paid annual leave. The model terms provides that a direction can only be made where an employee has accrued 8 weeks’ paid annual leave. The adoption of a lower threshold unfairly limits the capacity for employees to accrue leave for a later, longer, holiday.

[114] On the basis of the matters set out above we have concluded that the excessive leave terms in these 41 modern awards do not provide a fair and relevant minimum safety net of terms and conditions of employment. On that basis the terms do not meet the modern awards objective. We are also satisfied that these existing excessive leave terms do not meet the requirements of s.93(3) of the FW Act. These award terms provide that an employee may be required to take paid annual leave in particular circumstances and, having considered the terms of each of these provisions, that requirement is not reasonable. As the existing excessive leave terms in these awards do not meet the requirements of s.93(3) it follows that they are not terms which may be included in a modern award.

[115] We have concluded that the excessive leave terms in these 41 modern awards should be deleted and that these modern awards should be varied to insert the revised excessive leave model term. We rely on the findings set out in the June 2015 decision. 69

[116] As we noted earlier, a number of the modern awards which Ai Group contends should not be varied were in fact the subject of the Employer Group’s excessive leave claim. Indeed, in the June 2015 proceedings Ai Group supported varying the existing excessive leave terms in 25 of the 41 modern awards which are the subject of present consideration. Implicit in Ai Group’s submission at that time was the proposition that the existing excessive leave terms in these awards did not meet the modern awards objective. It is plainly difficult to reconcile Ai Group’s position in the June 2015 proceedings with its current contention that the excessive leave terms in these 25 modern awards should not be varied.

[117] None of these 41 modern awards make provision for the circumstance where an employee accrues excessive paid annual leave but no employer direction is made. The same observation may be made in respect of the Employer Group’s proposed excessive leave term which was rejected by the Commission in the June 2015 decision. The Employer Group’s proposed term sought to replicate previous mechanisms to address excessive leave accruals. Such mechanisms have had, at best, limited success in the past in addressing the issues associated with excessive annual leave accruals. The claim did not address a significant factor in the excessive accrual of annual leave – where work pressure prevents an employee from taking all of their paid annual leave. It was on that basis that the Commission concluded that granting the Employer Group claim would not be sufficient to address the problems of excessive accrued paid annual leave and went on to formulate the model term. The problem that the model term is seeking to address is the accrual of excessive annual leave and the negative impacts this may have on employees and employers. The FW Act does not require that this problem only be addressed by way of employer directions to take leave.

[118] The revised model term provides that an employee’s right to require that a period of paid annual leave is granted is subject to a number of limitations, including:

(i) the employee must have had an excessive leave accrual (i.e. eight weeks’ for most employees 70) for more than six months;

(ii) the employee must seek to confer with the employer and genuinely try to agree on steps that will be taken to reduce or eliminate the employee’s excessive leave accrual;
(iii) the employee may only give a direction in circumstances where the employer has not given a direction that will eliminate the employee’s excessive leave accrual;
(iv) the employer must be given at least eight weeks’ notice of the commencement of leave; and
(v) for most employees the maximum period of paid annual leave that may be the subject of a notice by an employee in any 12 month period will be four weeks’ leave.

[119] The revised model term facilitates the making of mutually beneficial arrangements between an employer and employee and provides an effective mechanism to address excessive annual leave accruals. It provides an employer with a reasonable opportunity to deal with an employee’s excessive leave accrual before the employee is able to issue a notice requiring that a period of paid annual leave be granted. The various safeguards incorporated into the revised model term seek to protect the interests of both employees and employers and the revised model term satisfies the requirements of s.93(3) of the FW Act.

[120] When leave is taken so as to reduce or eliminate excessive leave accruals, employees benefit from a period of rest and recovery from work, which has significant positive implications for employee health and wellbeing. Reducing fatigue at work and improving workplace health and safety also benefits employers. The evidence before the Commission in the June 2015 proceedings indicates that absenteeism is also reduced after a period of leave. In addition, there was employer evidence that excessive leave accruals represent a significant financial liability and can give rise to cash flow problems (particularly for small businesses) when paid out on termination.

[121] As to the matters in s.134(1)(a)–(h), insofar as they are relevant, we are satisfied that the insertion of the revised model term in these awards will promote flexible modern work practices and the efficient and productive performance of work (s.134(1)(d)) and will assist business in managing excessive leave accruals (s.134(1)(f)). We are satisfied that the variation of these 41 modern awards to delete the existing excessive leave terms and to insert the revised excessive leave model term is necessary to ensure that each of these modern awards meets the modern awards objective. We are also satisfied that such variations are consistent with the objects of the FW Act. 71

(iii) The taking of leave issue

[122] Ai Group submits that there are 22 modern awards which contain provisions relating to the taking of annual leave which ‘appear to have been crafted to prevent an excessive accrual of paid annual leave; or would at least have that effect’. 72

[123] The 22 modern awards identified by Ai Group fall into three categories:

(i) 13 modern awards currently include a term which requires annual leave to be taken within 18 months of accrual. Such a provision appears in the following modern awards:

● Aquaculture Industry Award 2010 – clause 23.4;
● Asphalt Industry Award 2010 – clause 25.5;
● Broadcasting and Recorded Entertainment Award 2010 – clause 23.6;
● Cement and Lime Award 2010 – clause 24.5;
● Gardening and Landscaping Services Award 2010 – clause 24.4;
● Gas Industry Award 2010 – clause 25.4;
● Horse and Greyhound Training Award 2010 – clause 23.4;
● Premixed Concrete Award 2010 – clause 24.5;
● Quarrying Award 2010 – clause 29.5;
● Racing Clubs Events Award 2010 – clause 30.4;
● Racing Industry Ground Maintenance Award 2010 – clause 24.3;
● Silviculture Award 2010 – clause 29.4;
● Sporting Organisations Award 2010 – clause 25.4.

(ii) 7 modern awards contain terms which are, in effect, substantially similar to those which provide for accrued leave to be taken within a specified period of time (referred to as category B in Ai Group’s Further submission). These modern awards are:

● Ambulance and Patient Transport Industry Award 2010 – clause 30.8;
● Architects Award 2010 – clause 20.2;
● Black Coal Mining Industry Award 2010 – clause 25.4;
● Mobile Crane Hiring Award 2010 – clause 25.2(a);
● Nursery Award 2010 – clause 27.8(a);
● Nurses Award 2010 – clause 31.2;
● Security Services Industry Award 2010 – clause 24.3.

(iii) Ai Group contends that the particular employment arrangements in the airline industry ‘may not be amenable to the model excessive leave cause’ 73 The two modern awards which are the subject of this submission are:

● Air Pilots Award 2010 – clause 27.4; and
● Aircraft Cabin Crew Award 2010 – clause 25.5.

[124] In relation to the category (i) and (ii) awards Ai Group proposes that the Commission convene a conference to enable the interested parties to canvass their respective positions. We agree to the course proposed and Commissioner Hampton will convene a conference in the coming weeks.

[125] As to the two modern awards in category (iii), Ai Group submits that a determination as to whether these awards should be varied to include the excessive leave model clause ‘be deferred until the Award stage of the review’. 74 The two awards are in Group 4 of the Award stage of the Review. In support of this proposition Ai Group submits that such a deferral:

‘…would provide us with an opportunity to make further relevant enquiries in order to assess whether the insertion of the model excessive leave provision in the … awards would in fact be problematic.’ 75

[126] We are content to defer our consideration of the insertion of the excessive leave model term into these two modern awards in order to give Ai Group and other interested parties an opportunity to make further relevant inquiries. The matter will remain before this Full Bench and will be the subject of further proceedings in the second half of this year.

[127] We now turn to deal with the award specific submissions.

6.2 Award specific submissions

(i) Agriculture group

[128] The National Farmers’ Federation (NFF) opposes the insertion of the model terms dealing with excessive leave and leave in advance into the Horticulture Award 2010, Pastoral Award 2010 and Wine Industry Award 2010 (collectively, the Agriculture Awards). The submission is advanced on the basis thatthese awards already contain provisions dealing with the matters which are the subject of the model terms.

[129] In each of the Agriculture Awards the provision in relation to ‘excessive leave’ is in the same terms, that is:

‘Notwithstanding s.88 of the Act, if an employer has genuinely tried to reach agreement with an employee as to the timing of taking annual leave, the employer can require the employee to take annual leave by giving not less than four weeks’ notice of the time when such leave is to be taken if:

(a) at the time the direction is given, the employee has eight weeks or more of annual leave accrued; and

(b) the amount of annual leave the employee is directed to take is less than or equal to a quarter of the amount of leave accrued.’ 76

[130] As to ‘leave in advance’, the provision in each of these awards is also in the same terms, that is:

‘By agreement between an employer and an employee a period of annual leave may be taken in advance of the entitlement accruing. Provided that if leave is taken in advance and the employment terminates before the entitlement has accrued, the employer may make a corresponding deduction from any money due to the employee on termination.’ 77

[131] It is convenient to deal first with the leave in advance issue.

[132] The Employer Group’s claim sought a provision in substantially the same terms as the existing clauses in the Agriculture Awards. As we have mentioned, the main differences between the revised model term and the Employer Group’s claim are the requirements regarding the content and form of any agreement to provide leave in advance and the employer’s obligation to keep such agreements as an employee record. In the June 2015 decision the Full Bench noted that: ‘These requirements are consistent with an employer’s existing obligations under Regulation 3.36 of the Fair Work Regulations 2009’. 78

[133] The submissions in the September 2015 proceedings were directed at subclause 1.1(c) of the provisional model term. ACCI submitted that on the whole it had no significant concerns with the form of the model term but that it could be enhanced by removing subclause 1.1(c) on the basis that record keeping requirements regarding leave are already set out in Regulation 3.36. Submissions to similar effect were advanced by a number of other employer organisations. 79 In the September 2015 decision the Full Bench rejected ACCI’s submission and finalised the model term.80

[134] There are two limbs to the NFF’s submission in these proceedings. The first is that no claim was made to vary the leave in advance provisions in the Agriculture Awards.

[135] A number of the submissions in the present proceedings, including the submission advanced by the NFF, make the point that no claim was made to vary the particular award to include the type of model term which we have determined. 81 To the extent it is submitted that the Commission can only, or should only, proceed to vary an award in response to a claim by an interested party, such a submission is misconceived. We make three points in this regard.

[136] First, s.156 imposes an obligation on the Commission to review all modern awards and each modern award must be reviewed in its own right. The Review is conducted on the Commission’s own motion and is not dependent upon an application of a specified party. In that sense the Review may be contrasted with other powers and functions conferred on the Commission by the FW Act, which can only be exercised or performed on the application of a specified party (e.g. see the approval and variation of enterprise agreements: ss.186(1) and 211(3); majority support determinations: s.243(1); and equal remuneration orders: s.302(3)).

[137] Second, the nature of modern awards under the FW Act is quite different from the awards made under previous legislative regimes. 82 In times past awards were made in settlement of industrial disputes and the respondent parties to such awards were the parties to the relevant industrial dispute. Modern awards perform a very different function to that performed by awards of the past.

[138] Modern awards are not made to prevent or settle industrial disputes between particular parties. Rather, the purpose of modern awards, together with the National Employment Standards and national minimum wage orders, is to provide a safety net of fair, relevant and enforceable minimum terms and conditions of employment for national system employees (see ss.3(b) and 43(1)). The Commission may make, vary or revoke a modern award in a 4 yearly review (such as the Review), or if it is satisfied that making, varying or revoking a modern award outside the system of 4 yearly reviews is necessary to achieve the modern awards objective (s.157).

[139] Third, there are no named respondents to modern awards. Modern awards apply to, or cover, certain persons, organisations and entities (see ss.47 and 48), but these persons, organisations and entities are not ‘respondents’ to the modern award in the sense that there were named respondents to awards in the past. The nature of this shift is made clear by s.158 which sets out who may apply for the making of a determination making, varying or revoking a modern award. Under previous legislative regimes the named respondents to a particular award would automatically have the requisite standing to make such applications; that is no longer the case. 83

[140] The fact that no claim has been made to vary the leave in advance clause in the Agriculture Awards is of little consequence and is certainly not an impediment to varying the awards to insert the leave in advance model term. All interested parties were informed of the Commission’s provisional view – namely that it was necessary to vary all modern awards to insert the model term in order to achieve the modern awards objective – and were provided with an opportunity to advance a contrary view.  84

[141] The second limb of the NFF’s submission concerns the operative effect of the model term. At paragraphs 24–26 of its written submissions the NFF submits:

‘24. The key difference between the term set out in paragraph 21 and the proposed model term is that the right to deduct overpayment of annual leave from an employee's final pay will now be contingent on there being a written and signed agreement between the employer and employee in place before the period of leave in advance was taken.

25. In our submission, this is an impractical approach to the administration of leave arrangements in agriculture sector. The current terms are simple and easy to understand, and adequately deal with the situation where an employee takes more annual leave than they have accrued. There is no evidence that the existing terms are not meeting the modem awards objective.

26. In the absence of any persuasive evidence to the contrary, the presumption that the existing annual leave terms met the modem awards objective at the time they were made should not be displaced.’ 85

[142] The NFF submits that if the model term means that deductions may only be made from termination payments in circumstances where there is a written agreement to take leave in advance (in accordance with subclause 1.1 of the model term), then the model term is ‘an impractical approach to the administration of leave arrangements in the agricultural sector’. Central to the NFF’s concern is that absent a written agreement providing for the taking of paid annual leave in advance an employer will not be able to deduct an amount, equal to the difference between the amount of the employee’s accrued leave and the leave taken in advance, from any monies due to the employee on termination.

[143] We agree that the revised model term operates in the manner described. So much is clear from the opening words of subclause 1.1(d) of the model term: ‘This subclause applies if an employee takes a period of paid annual leave in advance under an agreement made in accordance with this clause’ (emphasis added). But it is not clear to us why such a provision constitutes ‘an impractical approach to the administration of leave arrangements’. Other than making that bald assertion, the NFF provided little amplification of the point and advanced no evidence in support of its contention. During the course of oral argument the NFF confined its submissions to the following observation:

‘Because if that is the case (i.e. if the model term has the meaning we have set out, at [139] above, for many people the capacity to deduct leave termination will be negated because there will be a fluid arrangement about the taking of leave periodically and agreements will be reached periodically. But if they are not signed as a matter of sort of technicality before the leave period is taken in advanced, that means then it cannot be deducted.’ 86

[144] It seems to us that a requirement that there be an agreement in writing to take leave in advance before an employer can make any related deduction from a termination payment, is entirely reasonable. We note that absent such a provision there may be no requirement to keep an employee record of any leave taken in advance. 87 By ensuring that such arrangements are reduced to writing, the model term may prevent subsequent disputes about deductions from termination payments. The existing clauses in the Agriculture Awards are deficient in that they do not provide that agreements to take leave in advance are to be in writing and nor do they provide that such agreements are to be retained as employee records.

[145] We are satisfied that the variation of the Agriculture Awards to delete the existing leave in advance terms and to insert the revised model term is necessary to meet the modern awards objective. The provision allows employees to take paid annual leave at a time when they may be faced with circumstances obliging them to take a period of leave, but where they have no accrued entitlement to such leave. The requirement that any such agreement be in writing, be signed and be retained as an employee record, ensures certainty as to the terms of such agreements and may prevent subsequent disputes about deductions from termination payments. As to the matters in s.134(1)(a)–(h), insofar as they are relevant, we are satisfied that the insertion of the model term in these awards assists low paid employees by providing them with enhanced access to paid leave (s.134(1)(a)); promotes flexible modern work practices (s.134(1)(d)) and is simple and easy to understand (s.134(1)(g)).

[146] We now turn to the NFF’s submissions regarding the variation of the Agricultural Awards to insert the excessive leave model term.

[147] In its submissions in the present proceedings the NFF says:

‘15. Research tendered in the proceedings by Skinner and Pocock was relied on by the Commission in explaining the reasons for a proposed model excessive leave term for all modern awards. In our submission, that research cannot be relied upon to demonstrate the experience of either employers or employees in the agriculture sector. Firstly, the research relies on the account of employees alone (not employers). Secondly, the findings in Section 7 of the research report dealing with the taking of leave are not made by reference to the industry in which the employee works, and expressly exclude part-time, casual and self-employed persons.

16. The agriculture, forestry and fishing sector employs approximately 323,000 employees, including owner managers (174,800) and non-managerial employees (148,300) (Attachment A).

17. Labour needs change regularly, depending on seasonal conditions, weather events and fluctuating commodity prices. As the table at Attachment A shows, approximately
54 per cent of persons employed in the sector are self-employed. Of the remaining
46 per cent:

a. part-time employees account for 10 per cent; and
b. only 24 per cent have paid leave entitlements.

18. At best, this means that a small but undisclosed proportion of less than a quarter of
employed persons in the sector are represented in the data used by Skinner and Pocock in connection with holidays and work-life interference. The research is of limited relevance to the agriculture sector and is not a sound basis for inferring that there are problems with the taking of annual leave in the sector.

19. In the absence of persuasive evidence to the contrary, the presumption that the existing annual leave terms met the modem awards objective at the time they were made should not be displaced.’

[148] As mentioned earlier, the Employer Group sought to insert a standard ‘excessive annual leave’ model term in 70 modern awards, including 31 modern awards which already contained provisions regarding excessive leave (the existing clause group). In support of its claim the Employer Group tendered the results of a joint employer survey about matters relating to annual leave (the Employer Survey) and a number of research papers, including the paper by Skinner and Pocock,  88 to which the NFF refers.

[149] It is important to appreciate that the NFF is a member of the Employer Group and that the Agriculture Awards were among the 31 awards in the existing clause group which were the subject of the Employer Group claim. In its written submission of 20 June 2014 the NFF supported the variation of the existing excessive leave clauses in the Pastoral Award 2010 and the Horticulture Award 2010, to insert the Employer Group’s clause. 89

[150] The NFF’s submission of 20 June 2014 was advanced on the basis that the variations proposed were necessary to ensure that the two awards achieved the modern awards objective. Implicit in such a submission is the proposition that the current excessive leave clauses in these awards did not meet the modern awards objective. Further, in the same submission the NFF supported the variation of the excessive leave clauses in these two awards in order ‘to ensure that as far as possible, annual leave terms in modern awards provide nationally uniform terms and conditions’. 90

[151] It is difficult to reconcile the NFF’s position in the present proceedings with its previous submissions. The NFF was part of the Employer Group which tendered and relied upon the Skinner and Pocock research. At that time there was no suggestion that the research could not be relied upon in relation to any particular sector. Further, the NFF now submits that the existing excessive leave clauses meet the modern awards objective, having previously submitted, at least by necessary implication, that they did not.

[152] The NFF’s position is inconsistent with its previous position and lacks merit.

[153] The NFF contends that the article by Skinner and Pocock cannot be relied upon in relation to these awards as the article is not representative of those working within the agricultural sector.

[154] The Skinner and Pocock paper examined, among other things, the utilisation of paid leave and the reasons why employees did not utilise their full paid entitlement. It presents data which is a subset of the Australian Work and Life Index 2010 (AWALI 2010) survey. The AWALI 2010 survey is a national stratified random survey of 2803 Australian workers conducted using computer assisted telephone interviews over four weekends in March and April 2010. The survey asked questions about the use of paid annual leave in 2009. The authors’ study replicates and extends a study conducted by The Australia Institute in 2002 (TAI 2002) on Australian’s uptake of paid leave. The AWALI collects industry data by ANZSIC industry division includes the Agriculture, forestry and fishing decision. 91 The Skinner and Pocock findings are also consistent with three other research papers tendered during the course of the proceedings.92

[155] As we have mentioned, Ai Group, ACCI and other employer bodies conducted a joint employer survey in May 2014 about matters relating to annual leave (the Employer Survey).⁹³ The Employer Survey provided a basis for the finding made in the June 2015 decision that a significant proportion of employees have six weeks or more accrued annual leave. 94 The data from the Employer Survey showed that some 2552 employers (about 68 per cent of all responses) had at least one employee with an accrued paid annual leave balance of six weeks or more. Of these employers, 683 reported that over 20 per cent of their employees had accrued paid annual leave balances of six weeks or more.95 The respondents to the Employer Survey included those from the ANZSIC industry division ‘Agriculture, forestry and fishing’.96

[156] The essence of the NFF’s contention is that the existing excessive leave term meets the modern awards objective. Implicit in this contention is the proposition that the existing provisions are effective in dealing with the issue of excessive paid annual leave accruals. On the basis of the material presently before us, we are not satisfied that this is so.

[157] One of the research papers which was consistent with the Skinner and Pocock findings is the paper by Wooden and Warren. 97 The Wooden and Warren paper relies on Household, Income and Labour Dynamics in Australia (HILDA) Survey data.98 Wooden and Warren reported on the extent of usage of paid annual leave in Australia using new data collected in Wave 5 of the HILDA survey, and concluded that the majority of employees do not take their full annual leave entitlement each year.99 The HILDA survey collects data by ANZSIC industry, including the Agriculture, forestry and fishing industry.100

[158] Table 1 below uses HILDA survey data and shows the usage of paid annual leave by non-casual employees in the Agriculture, forestry and fishing industry compared with all industries between 2010 and 2014.

Table 1: Usage of paid annual leave by non-casual employees in Agriculture, forestry and fishing, 2010–2014

		Agriculture, forestry and fishing	All industries
2010	Taken a period of paid annual leave (%)	53.8	80.6
	Average leave days taken by those who took leave (no.)	14.9	18.4
2011	Taken a period of paid annual leave (%)	39.5	79.8
	Average leave days taken by those who took leave (no.)	17.1	18.1
2012	Taken a period of paid annual leave (%)	67.4	79.8
	Average leave days taken by those who took leave (no.)	13.6	18.2
2013	Taken a period of paid annual leave (%)	62.4	81.3
	Average leave days taken by those who took leave (no.)	13.0	18.1
2014	Taken a period of paid annual leave (%)	56.6	82.2
	Average leave days taken by those who took leave (no.)	13.1	18.0

Source: Household, Income and Labour Dynamics in Australia Survey, Waves 10–14. 101

[159] While the data fluctuates over the period, it consistently shows that relative to ‘all industries’, a lower proportion of non-casual employees in Agriculture, forestry and fishing took a period of paid annual leave over the previous 12 months and a lower average number of paid annual leave days was taken by those who took paid leave.

[160] Hence, in each year over the period 2010–2014 a significant proportion of non-casual employees in the agriculture, forestry and fishing sector did not take any paid annual leave. Further, of those who did take paid annual leave, the average leave days taken was less than the annual accrued entitlement for full-time employees and less than the average leave taken for all industries. We infer from this data that, contrary to the NFF’s contention, there is an issue with excessive annual leave accruals in this sector.

[161] The NFF also seeks to rely on the Australian Bureau of Statistics (ABS) data at Attachment A to its written submission in support of the proposition that the Agriculture Awards should not be varied to insert the excessive leave model term. This data does not support the NFF’s contention. It simply shows that a substantial number of persons in the agriculture, forestry and fishing sector are self-employed. Self-employed persons are not covered by the Agriculture Awards. For example, the Pastoral Award 2010 applies to ‘employers throughout Australia in the pastoral industry and their employees in the classifications set out in [the] award’.

[162] The excessive leave terms in the Agriculture Awards set out at paragraph [129] above differ from the revised model term in a number of respects, including:

(i) They do not provide a mechanism, subject to appropriate limitations, for employees to require their employer to give them a period of paid annual leave. These modern awards make no provision for the circumstance where an employee accrues excessive paid annual leave but no employer direction is made.

(ii) They provide that an employer can direct an employee to take a period of accrued paid annual leave by giving the employee four weeks’ notice. The model term requires that employees be given eight weeks’ notice of the commencement of employer directed leave. The provision of eight weeks’ notice ensures that the employee has a reasonable amount of time to make arrangements for activities during the leave period and/or to coordinate their leave with family members.

(iii) They do not contain a requirement that the minimum length of any period of employer directed paid annual leave be one week. Such a provision would avoid the circumstance where an employee may be required to take their paid annual leave in a series of single days or small clusters of single days – thereby denying the employee the benefits associated with taking a longer period of leave. As the Full Bench said in the September 2015 decision:

‘It is desirable that some minimum period of leave be prescribed in circumstances where the employee concerned has an excessive leave accrual and may not have had the benefit of any paid annual leave for a period of more than two years.’ 102

(iv) They do not provide that an employer direction to take a period of paid annual leave be in writing. Such a procedural safeguard assists in ensuring that the employee is aware of his or her obligations to comply with the direction and of the limitations on such a direction.

[163] Based on the matters set out above we have reached the provisional view that the excessive leave terms in the Agriculture Awards do not provide a fair and relevant minimum safety net of terms and conditions of employment and therefore the existing terms do not satisfy the modern awards objective. We have also reached the provisional view that these existing excessive leave terms do not meet the requirements of s.93(3) of the FW Act. The basis of this provisional view is that the existing award terms provide that an employee may be required to take paid annual leave in particular circumstances and, having considered the terms of each of these provisions, our provisional view is that that requirement is not reasonable.

[164] Interested parties will have until 5pm (AEST) on 1 June 2016 to notify the Commission (at [email protected]) if they wish to contest the Full Bench’s provisional views in respect of this issue. If any expressions of interest are received we will issue directions for the filing of further submissions and evidence. If no expressions of interest are received by the specified date we will vary the Agriculture Awards to insert the revised excessive annual leave accruals model term.

(ii) Black Coal Mining Industry Award 2010

[165] The Coal Mining Industry Employer Group (CMIEG) supports the variation of the Black Coal Mining Industry Award 2010 to incorporate the annual leave model terms, except for the excessive leave model term. This award is one of the awards which has been referred to a conference as part of the process sought by Ai Group. Accordingly, at this time, we do not propose to deal with the question of whether the excessive leave model term should be inserted into this award. We will revisit this issue after the conference process.

[166] The Construction, Forestry, Mining and Energy Union (Mining and Energy Division) (CFMEU (M&E)) submits that the award should not be varied to insert the EFT and paid annual leave model term. The essence of the union’s submission is that the current clause 25.8 meets the modern awards objective and in such circumstances there is no reason to insert the model term.

[167] Clause 25.8 of the award deals with payment for annual leave:

‘25.8 When payment will be made for annual leave

An employee will be paid for a period of annual leave in accordance with the employee’s normal pay period(s), unless an employee requests that payment of the entire period of annual leave be made prior to the employee commencing leave.’

[168] The union submits that clause 25.8 is a fair and relevant minimum provision which ‘provides a reasonable balance between the interests of the employers and employees’. 103 As to the matters specified in s.134(1) the union submits that clause 25.8 provides a flexible work practice (s.134(1)(d)), is not likely to impose a regulatory burden on business (s.134(1)(f)) and is simple and easy to understand (s.134(1)(g)). As to the proposition that the current provision is fair and reasonable, the union submits:

‘It is submitted that it is inherently fair and reasonable that where an award makes provision for payment by electronic funds transfer that by request an employee may seek to be, and be, paid in advance. It is reasonable to conclude that an employee who takes the necessary administrative action under the Award to be paid in advance has a valid reason for doing so. It is submitted that employees to whom the method of payment makes no difference are unlikely to seek payment in advance.’ 104

[169] It is common ground that the terms and conditions of employment of employees covered by the award are largely regulated by enterprise agreements. 105 The union provided some information concerning the incidence of provisions dealing with the payment of annual leave in 106 coal industry enterprise agreements.106 Of those 106 agreements:

● 61 excluded the operation of the award and did not make any provision for the payment of annual leave;
● 37 provide for payment in advance, in one way or another (13 refer to the award; 15 refer to payment as per the normal cycle unless requested otherwise; 8 refer to payment as per the normal cycle unless otherwise agreed and 1 agreement provided for payment in advance unless other arrangements are made); and
● 8 provide for payment on a weekly or fortnightly basis or as per the normal pay arrangements at the mine.

[170] The union submits that an analysis of the agreement data supports its contention that the award should not be varied to insert the EFT and paid annual leave term. In this regard the union submits:

‘9.1 Less than 10% of the enterprise agreements provide for a method of payment at odds with the Award. If we take into account the 8 agreements that provide for payment in advance by agreement rather than request, the percentage increases to 15%.
9.2 Some 35% of enterprise agreements provide for a method of payment that explicitly provides for payment other than on the basis of the usual pay period.
9.3 Whilst the majority of enterprise agreements are silent on the issue, they do not prevent the same method of payment as it provided in the Award.
9.4 The fact that less than 10% of the enterprise agreements considered provide a method of payment that does not allow for payment in advance suggests that the current Award provision is not seen as a problem to be circumvented by enterprise agreements.’ 107

[171] Ai Group and CMIEG submit that there is no reason to distinguish the circumstances of the Black Coal Mining Industry Award 2010 and the black coal industryfrom other modern awards and other industries especially in circumstances where there is no factual material supporting the contention. 108 Ai Group contends that the retention of the current provision would result in greater regulatory burden on businesses than the model term.109

[172] We note at the outset that this award was one of the 51 modern awards which were the subject of the Employer Group claim in relation to EFT and paid annual leave. Further, in the June 2015 proceedings the CMIEG filed a submission in support of Ai Group’s claim to vary this award to provide employers with the right to pay annual leave as part of the employer’s normal pay cycle, rather than in advance of leave being taken. The CFMEU (M&E) made no submissions in those proceedings.

[173] The essence of the union’s submissions is that clause 25.8 currently provides a right for an employee to be paid for a period of annual leave prior to commencing leave, upon request, and that right should not be taken away. 110 The union was unable to identify how often the right in clause 25.8 was exercised in practice.111 For our part we doubt that the award provision is utilised much in practice.

[174] As we have mentioned, the terms and conditions of the employees covered by the award are largely regulated by enterprise agreements. We earlier set out some information regarding the incidence of provisions dealing with the payment of annual leave in 106 coal industry agreements (see paragraph [169]). We do not agree with the union’s characterisation of this data. It seems to us that the data shows that only 28 out of 106 agreements (about 26%) provided for payment in advance in the terms provided in clause 25.8. The balance of the agreements (or the vast majority of them) either make no provision in respect of the payment of annual leave (and exclude the operation of the award) or expressly provide that payment is to be made in accordance with the normal pay cycle at the time. We acknowledge that eight agreements refer to payment in accordance with the normal pay cycle unless otherwise agreed and one agreement provides for payment in advance unless other arrangements are made. A proper analysis of the 106 agreements does not support the contention that the current award provision is ‘not seen as a problem to be circumvented by enterprise agreements’. To the contrary, the majority of agreements exclude the operation of clause 25.8.

[175] Nor do we agree with the union’s characterisation of clause 25.8 as ‘fair and reasonable’. The union’s characterisation is based on the proposition that an employee who takes the step of requesting to be paid in advance has a valid reason for doing so. Clause 25.8 imposes no such requirement. An employee who wishes to be paid in advance need merely submit a request to that effect, there is no requirement to state the reason for the request, much less provide a ‘valid reason’.

[176] Contrary to the union’s submissions, the variation of the award to incorporate the model term will ensure that the award, together with the NES, provides a fair and relevant minimum safety net of terms and conditions. In so deciding we have taken into account the s.134 considerations, insofar as they are relevant, and we are satisfied that such a variation is necessary to achieve the modern awards objective.

[177] The variation of the award to insert the model term will ensure that the award is relevant to the needs of the modern workplace and will promote flexible work practices, consistent with s.134(1)(d). We are also satisfied that such a variation will reduce employment costs and the regulatory burden on business (s.134(1)(f)). In this context we note the CMIEG’s submissions that ‘there is considerable administrative cost to employers in the black coal mining industry involved in making such special payments for pre-payment of annual leave’. 112

[178] In its submission of 26 October 2015 the union drew attention to the fact that the draft variation determination did not seek to disturb clause 25.8, and submitted:

‘As such we read the inclusion of a new subclause 25.12 as providing that although an employee may seek to be paid in advance pursuant to subclause 25.8, an employee, pursuant to subclause 25.12, is under no legal obligation to do so in circumstances where electronic funds transfer is the method of payment. On the other hand, under the existing BCMI Award provision the employer would be obligated to pay in advance upon request by an employee.’ 113

[179] Clause 16.5 of the award provides that wages are to be paid by cheque or electronic funds transfer. Consistent with the Employer Group claim, the model term does not seek to change the status quo (such as in clause 25.8), in respect of employees who are paid by cash or cheque. 114 To avoid any confusion between the operation of the model term and clause 25.8 we propose to vary clause 25.8, as follows:

‘25.8 When payment will be made for annual leave for employees paid by cheque.

An employee who is usually paid by cheque will be paid for a period of annual leave in accordance with the employee’s normal pay period(s), unless an employee requests that payment of the entire period of annual leave be made prior to the employee commencing leave.’

(iii) Health group

[180] The submissions received were directed at the following modern awards:

Aboriginal Community Controlled Health Services Award 2010

Aged Care Award 2010

Ambulance and Patient Transport Award 2010

Health Professionals and Support Services Award 2010

Medical Practitioners Award 2010

Nurses Award 2010

Pharmacy Industry Award 2010

Social, Community, Home Care and Disability Services Industry Award 2010

[181] The Health Services Union’s (HSU) submission was made in respect of each of these modern awards and was directed at two aspects of subclause 1.2(c) of the excessive leave model term. The first concerns when an employee may give written notice to their employer that they wish to take a period or periods of paid annual leave. Subclause 1.2(c)(i) of the model term provides that such written notice may be given ‘if an employee has had an excessive annual leave accrual for more than six months and the employer has not given a direction under subclause 1.2(b) that will eliminate the employee’s excessive leave accrual’. 115 Subclause 1.2(c)(iv) provides that the employer must grant the employee paid annual leave in accordance with such a notice.

[182] The HSU submits that employees should be able to trigger access to excessive leave at the same time as an employer is able to require an employee to take leave. We have taken the HSU as seeking a variation to subclause 1.2(c)(i) of the model term, in the terms set out below:

(c) Employee may require that leave be granted

(i) This subclause applies if an employee has had an excessive leave accrual. for more than six months and the employer has not given a direction under subclause 1.2(b) that will eliminate the employee’s excessive leave accrual.

[183] The second variation sought by the HSU concerns the restriction on the quantum of leave which may be the subject of an employee’s written notice under subclause 1.2(c). Subclause 1.2(c)(iii) of the model term provides as follows:

The maximum amount of leave that an employee can give notice of under this subclause is: 4 weeks’ leave in any 12 month period if the employee is not a shiftworker, and five weeks’ leave in any 12 month period if the employee is a shiftworker.

[184] The HSU submits that an employee should be able to give written notice to take such an amount of paid leave as is necessary in order to reduce their accrued annual leave entitlement to six weeks. In other words, it is proposed that the current cap in subsection 1.2(c)(iii) be removed and that the only limitation on the period of leave which may be specified in an employee’s notice would be that after taking such leave they retain an entitlement to six weeks’ accrued annual leave.

[185] No evidence was advanced in support of the variations proposed and in the course of oral argument the HSU conceded that the issues it raised were put as issues of principle or general merit, rather than issues which turned on the circumstances pertaining to the particular awards. 116

[186] The variations proposed by the HSU were opposed by Ai Group and the Pharmacy Guild of Australia.

[187] As we have mentioned, the June 2015 decision sets out a model excessive annual leave term which reflected the Commission’s provisional view as to the type of term which may be suitable for insertion into modern awards. Interested parties were provided with an opportunity to make further submissions in relation to the terms of the provisional model term. Among the 42 submissions received, the “Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union” known as the Australian Manufacturing Workers’ Union (AMWU) submitted that the provisional model term to varied to provide as follows:

(i) to give employees the power to direct in the first instance, once an excessive amount of leave has accrued;
(ii) to give the employer the power to direct 6 months after an excessive amount of leave has accrued; and
(iii) to remove the limit on the amount of leave an employee can direct.

[188] In the September 2015 decision the Commission considered, and rejected, the variations proposed by AMWU. The Commission said:

‘We do not propose to make the changes sought by the AMWU. In our view the management of excessive annual leave accruals should remain primarily an employer responsibility. Under the model term and employee’s right to issue a notice in relation to the taking of annual leave only arises where they have had an excessive leave accrual for more than six months and their employer has not issued a direction to reduce or eliminate their excessive leave accrual. In our view this sequencing of rights is an appropriate response to the issue of excessive annual leave accruals and appropriately balances the interest of employers and employees.’ 117

[189] The imposition of a limitation on the amount of leave that could be the subject of an employee notice under subclause 1.2(c) was also canvassed during the course of the proceedings which led to the September 2015 decision. 118 The Commission decided to cap the amount of leave which could be the subject of an employee notice, as follows:

‘We are also satisfied that limiting the period of annual leave which may be the subject of a notice under subclause 1.2(c) will assist in ameliorating any adverse effects on business. We will amend the model term such that the maximum period of paid annual leave that may be the subject of a notice by an employee in any 12 month period will be four weeks’ leave if the employee is not a shiftworker and five weeks’ leave if the employee is a shiftworker. If an employee could not take paid annual leave except by giving a notice under subclause 1.2(c), this would at least allow the employee to take their yearly leave accrual so that their excessive leave accrual does not continue to grow from year to year.’

[190] It is apparent from the above extracts from the September 2015 decision that the general issues raised by the HSU have already been considered, and determined, in that decision. In these circumstances, and absent any submission based on the circumstances pertaining to a particular modern award, we do not propose to vary the model term in the manner sought.

[191] The HSU submission also drew attention to the quantum of leave provided by the Nurses Award 2010 and contended that the higher leave entitlement exacerbated the impact of the issues raised in its general submission.

[192] Clause 31.3 of the Nurses Award 2010 provides that an employee who is not a shiftworker is entitled to 5 weeks’ paid annual leave for each year of service and shiftworkers are entitled to 6 weeks’ paid leave. The Nurses Award 2010 is one of the modern awards which are to be the subject of further consideration following the conference referred to at paragraph [124] of this decision. However we would observe that the higher level of paid annual leave entitlement provided by this award would warrant some modification to the provisions of the model term in the event that the award was varied to insert the model term.

[193] The Australian Salaried Medical Officers Federation (ASMOF) sought a variation to the excessive leave term to be inserted into the Medical Practitioners Award 2010. ASMOF submitted that the excessive leave accumulation of annual leave amongst salaried medical practitioners in the public health system is a significant issue and that there are particular sectorial and occupational distinctions which necessitate certain variations to the excessive leave model term. The variations sought concern subclause 1.2(a) of the model term which provides as follows:

‘1.2 Eliminating excessive leave accruals

(a) Dealing with excessive leave accruals by agreement

Before an employer can direct that leave be taken under subclause 1.2(b) or an employee can give notice under subclause 1.2(c), the employer or employee must seek to confer and must genuinely try to agree upon steps that will be taken to reduce or eliminate the employee’s excessive leave accrual.’

[194] ASMOF states that many of its members report being ‘too busy’ to take annual leave when it falls due and submits as follows:

‘The taking of leave by doctors necessitates an intense period of preparation, with the cancellation or handing over to colleagues of the running of clinics, surgical tests, attendance at meetings, managerial duties, teaching and supervision of junior staff and so on.

Most hospital departments do not maintain sufficient staff to enable doctors to take their full complement of annual leave entitlement when it falls due.

In those cases where there is no one to do a doctor’s work while they are on leave, the doctor faces a huge backlog and long working hours when they return. Many members also report to the Federation that they continue to perform some work functions, such as taking calls from patients and other hospital staff, whilst they are on leave.’ 119

[195] It is on this basis that ASMOF submits that the draft determination in respect of the Medical Practitioners Award 2010 should be varied to provide that in any discussions which precede a direction to take leave, the employer will have genuine regard to the employee’s workload and will use their best endeavours to make arrangements for adequate and suitable relief staffing during any period or periods of annual leave taken by the employee.

[196] ASMOF also submitted that doctors in training faced a particular set of circumstances which made it difficult to take annual leave and that ‘granting an employer the ability to direct a doctor in training to take annual leave may present a real risk to the ability of that doctor to progress through either prevocational or specialist training in an orderly fashion’.  120 On that basis ASMOF submits that the draft variation be varied to provide that in any discussion preceding a direction to take leave, where the employee concerned is a doctor in training, the employer will give genuine consideration to the capacity of the doctor to meet the training requirements of the relevant College or other regulatory body.

[197] The HSU supported the variations sought by the ASMOF.

[198] During the course of the hearing on 8 December 2015 we indicated that as no employer interests had made any submission in relation to ASMOF’s proposal we would give consideration to the proposal and if minded, on a provisional basis, to adopt it, or a variant of it, we would publish a draft variation determination and provide interested parties with an opportunity to comment on the variation proposed.

[199] ASMOF’s proposed variation has two elements. The first seeks to ensure that certain matters are discussed and given genuine consideration before any direction is given to an employee to take leave. The second element is more substantive. It would require an employer to ‘use their best endeavours to make arrangements for adequate and suitable relief staffing during any period or periods of annual leave taken by the employee’. In our view the second element of ASMOF’s proposal may have broader implications in the context of this award and would be more appropriately dealt with in the Award stage of the review of this award. As to the first matter our provisional view is that the draft determination be varied as follows:

1.4 Excessive leave accruals: direction by employer that leave be taken

(a) If an employer has genuinely tried to reach agreement with an employee under clause 1.3(b) but agreement is not reached (including because the employee refuses to confer), the employer may direct the employee in writing to take one or more periods of paid annual leave. Any discussions should take into account the employee’s workload, the availability of suitable relief staff, and in the case of a doctor in training, the doctor’s training requirements. (emphasis added)

[200] Interested parties will have until 5.00pm (AEST) 1 June 2016 to notify the Commission (at [email protected]) if they wish to contest the Full Bench’s provisional views in respect of this issue. If any expressions of interest are received we will issue directions for the filing of further submissions and evidence. If no expressions of interest are received by the specified date we will vary the Medical Practitioners Award 2010 to insert the term as amended in paragraph [199].

(iv) Hospitality group

[201] Various employer organisations oppose the insertion of the excessive leave model term into the Hospitality Industry (General) Award 2010, Registered and Licensed Clubs Award 2010,and Restaurant Industry Award 2010 (collectively, the Hospitality Awards). These submissions are advanced on the basis that the awards already contain provisions dealing with excessive leave and that such terms are consistent with the modern awards objective. In each of the Hospitality Awards the provision in relation to excessive leave is in the same terms, that is:

‘An employer may require an employee to take annual leave by giving at least four weeks’ notice in the following circumstances:

(a) as part of a close-down of its operations; or

(b) where more than eight weeks’ leave is accrued.’ 121

[202] The excessive leave terms in the Hospitality Awards differ from the revised model term in a number of respects, including:

(i) The existing excessive leave terms do not provide a mechanism, subject to appropriate limitations, for employees to require their employer to give them a period of paid annual leave. These modern awards make no provision for the circumstance where an employee accrues excessive paid annual leave but no employer direction is made.
(ii) The terms in the Hospitality Awards do not place any limitation on the amount of accrued paid annual leave that an employer may direct an employee to take. The model term provides that an employer direction must not result in the employees’ remaining accrued entitlement to paid annual leave being less than six weeks. As the Full Bench said in the June 2015 decision:

‘Maintenance of a six week minimum is consistent with s.236(6) of the former WR Act and with the majority of current modern award clauses which limit the amount of accrued paid annual leave that an employer can direct an employee to take. It also accommodates the circumstance of an employee seeking to accrue leave so that he or she can take a reasonable extended holiday.’ 122

(iii) Each of the existing terms provides that an employer can direct an employee to take a period of accrued paid annual leave by giving the employee four weeks’ notice. The model term requires that employees be given eight weeks’ notice of the commencement of employer directed leave. The provision of eight weeks’ notice ensures that the employee has a reasonable amount of time to make arrangements for activities during the leave period and/or to coordinate their leave with family members.
(iv) The Hospitality Awards do not require an employer to enter into any dialogue with an employee before directing them to take part of their annual leave. In these awards the employer is under no obligation to discuss the issue of excessive annual leave accrual with the employee or to seek to reach an agreement with the employee about the time when such leave will be taken. The model term includes such a provision on the basis that it is plainly preferable that these matters be resolved by agreement between the employer and employee, without the need for a direction.
(v) The Hospitality Awards do not contain a requirement that the minimum length of any period of employer directed paid annual leave be one week. Such a provision would avoid the circumstance where an employee may be required to take their paid annual leave in a series of single days or small clusters of single days – thereby denying the employee the benefits associated with taking a longer period of leave. As the Full Bench said in the September 2015 decision:

‘It is desirable that some minimum period of leave be prescribed in circumstances where the employee concerned has an excessive leave accrual and may not have had the benefit of any paid annual leave for a period of more than two years.’ 123

(vi) The existing leave terms do not provide that an employer direction to take a period of paid annual leave be in writing. Such a procedural safeguard assists in ensuring that the employee is aware of his or her obligations to comply with the direction and of the limitations on such a direction.

[203] The Australian Hotels Association (AHA) opposes the excessive leave model term being inserted into the Hospitality Industry (General) Award 2010 submitting that the current provision in the award was the subject of consideration in the award modernisation process; is consistent with the modern awards objective, has not been the subject of contention in proceedings and works well within the industry. They contend that the model term is more complex than the current provision and small businesses will be impacted by the greater administrative and regulatory processes required. 124

[204] The AHA also submits:

‘The inclusion of the model term in modern awards beyond those 70 modern awards sought by the Employer Group for this aspect of the proceedings will deny a fair hearing for interested persons who may have otherwise participated in this aspect of the proceedings.’ 125

[205] There is no substance to the proposition that the insertion of the revised model term into the Hospitality Awards would deny interested persons a fair hearing. The basis of AHA’s proposition is that the Hospitality Awards were not part of the cohort of 70 modern awards which were the subject of the Employer Group’s excessive leave claim.

[206] We accept that the Hospitality Awards were not the subject of the Employer Group’s excessive leave claim. But as mentioned earlier (see paragraphs [134]–[140]) the fact that no claim has been made to vary the excessive leave clauses in certain awards is no impediment to the insertion of the model term. Contrary to the AHA’s contention, in the June 2015 decision all interested parties were informed of the Full Bench’s provisional view, namely that it was necessary to vary all modern awards to insert the model term in order to achieve the modern awards objective, and they were provided with an opportunity to advance a contrary view. 126 Further, the September 2015 decision also makes it clear that parties were put on notice regarding the proposition that the model term be inserted into all modern awards. At paragraphs [173] and [213] of that decision the Commission said:

‘[173] Subject to what may be put about the circumstances pertaining to a particular modern award our general 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 objects of the Act. …

[213] We have now finalised the terms of the various model terms. The next phase of these proceedings will deal with the insertion of the model terms into modern awards. We propose to provide all interested parties with an opportunity to make submissions and adduce evidence in relation to whether the various model terms we have determined should now be inserted into particular modern awards. Directions in relation to the next phase of these proceedings will be issued shortly. The matter will be listed for further hearing before the Full Bench at 9.30 am on 23 November 2015 in Sydney.’

[207] It is plain from the June and September 2015 decisions that the Commission had not reached a concluded view as to the insertion of the excessive leave model term into particular modern awards – including the Hospitality Awards – and that interested parties were invited to make submissions and to adduce evidence in respect of this issue. A number of interested parties, including the AHA accepted that invitation. We have considered all of those submissions on their merits and have had regard to the particular terms and circumstances pertaining to each modern award. In some instances we have acceded to submissions that the model term not be inserted into a particular modern award, and, in others we have not. The AHA has been afforded a fair hearing in respect of this issue.

[208] We deal later with the AHA’s contention that the existing provision is ‘working well in the industry’, but it is convenient to now deal with the AHA’s submission that the existing excessive leave clause was considered in the award modernisation process and accordingly it should not be varied.

[209] This issue was the subject of a further submission by the AHA, dated 24 December 2015. We have considered that submission and the documents to which it refers. We are not persuaded that that issue of excessive paid annual leave accruals was the subject of particular consideration by the Award Modernisation Full Bench at the time it created the Hospitality Industry (General) Award 2010.

[210] There is nothing in the submissions made, the transcript of the relevant proceedings or in the decision of the Award Modernisation Full Bench which would lead us to conclude that this issue was the subject of detailed consideration during the Part 10A process.

[211] In its decision of 19 December 2008 the Award Modernisation Full Bench made a decision dealing with the making of priority modern awards – which included the Hospitality Awards and the Mining Industry Award (which we deal with later). In the course of that decision the Full Bench made the following observations about annual leave:

‘As we noted in our statement of 12 September 2008, it has not been possible to develop a single model clause for annual leave. While some parties have sought greater uniformity in the area, there is a wide range of differing provisions in the awards and NAPSAs that we are dealing with. In many cases the provisions are more generous to employees than the provisions of the NES. Areas in which this can be observed are the quantum of holiday pay, leave loading and the definition of shift worker. In considering what should be included in the modern award on each of these matters we have attempted to identify or formulate a standard entitlement in the area covered by the modern award rather than preserving a range of differing entitlements. This involves a degree of rationalisation at the award level only and will not result in standard provisions across all awards.
There are also some issues concerning the time of taking leave. The time of taking leave is referred to in para.33 of the consolidated request and s 36(1)(b) of the NES. Section 36(1)(b) reads:

‘36 Modern awards may include certain kinds of provisions
(1) A modern award may include provisions of any of the following kinds:
…

(b) provisions requiring an employee (or allowing for an employee to be required) to take paid annual leave in particular circumstances;...’

The provisions in awards and NAPSAs governing annual close-downs vary significantly. It is preferable that we do not alter provisions which have been specifically developed for particular industries. We have adopted the approach of attempting to identify an industry standard in each case. This means there may be some variation in the close-down provisions.
One issue that has arisen repeatedly, and is provided for in the NES, is the right of an employer to require that an employee take arrears of annual leave. We think that an employer should have the ability to reduce annual leave liability by compelling employees to take annual leave provided appropriate notice is given. While there may be different approaches to this question, in each of the awards there will be some provision which will give the employer the ability to take action to reduce arrears.’ 127

[212] The Award Modernisation Request was varied on 18 December 2008 (including in respect of annual leave) but that variation was not referred to in the 19 December 2008 decision of the Award Modernisation Full Bench. A subsequent decision issued on 3 April 2009, did address the variation to the Award Modernisation Request, insofar as it related to annual leave, in the following terms:

‘We turn now to the annual leave issue. The National Employment Standards (NES) deal, among other things, with the manner in which annual leave is to be taken. They provide that leave is to be taken at a time which is agreed between the employer and the employee. Despite that provision, the consolidated request allows the Commission to make a modern award which, in some circumstances, permits an employer to compel an employee to take annual leave. The relevant provision is in cl.33 of the consolidated request. We set out the provision as it stands following the 18 December 2008 amendment:

“33 The NES provides that particular types of provisions are able to be included in modern awards even though they might otherwise be inconsistent with the NES. The Commission may include provisions dealing with these issues in a modern award. The NES allows, but does not require, modern awards to include terms that:

“…

Although the structure of the provision has altered, it is the last few words of the provision, “but only if the requirement is reasonable,” which require attention. Some of the priority modern awards made on 19 December 2008 permit an employer to require an employee to take annual leave in specified circumstances. The circumstances are mainly of two kinds. The first kind deals with annual close down. The second kind deals with excessive accumulations of annual leave. A number of the exposure drafts for the Stage 2 modern awards also contain such provisions.
It was not suggested that any provision, either in the modern awards already made or in the exposure drafts, allowed an unreasonable requirement to take leave or should be altered as a result of the 18 December 2008 amendment. In particular it was not suggested that any of the provisions should be altered to include a general requirement for reasonableness in relation to the exercise of the rights given to employers. In the circumstances we have decided not to alter any of the existing modern award provisions and we have included similar provisions in a number of the Stage 2 modern awards.’ 128

[213] It is apparent from the above quote that while a provision in the same terms as now appears in s.93(3) of the FW Act was alluded to by the Award Modernisation Full Bench, it was not the subject of any submissions or detailed consideration in the Part 10A process.

[214] Restaurant and Catering Australia (RCA) also support the retention of the existing excessive leave provision in the Hospitality Industry (General) Award 2010 and oppose the insertion of the model term.

[215] RCA also opposes the variation of the Restaurant Industry Award 2010 to insert the model term. It submits that the model term is overly complex and that it would replace a simply and easily understood provision which is achieving the modern awards objective. RCA also contends that there are industry specific reasons which justify the retention of the existing provision:

‘The hospitality industry has high levels of literacy and numeracy problems and the existing clause has been understood with the Association reviewing very few enquiries about its application in the workplace …

Staffing levels fluctuate constantly in the hospitality industry and therefore rostering beyond four weeks can be difficult to administer for small business employers and this is particularly so in businesses with seasonal operations.’ 129

[216] During the course of oral argument the RCA expressed particular concern about the requirement in the model term for an employee to be given eight weeks’ notice of a requirement to take a period of accrued paid annual leave:

‘We have found that the four weeks' notice period has worked well in the industry, however we are concerned that by moving it to eight weeks it may have the effect that by the time that it comes to those employees to actually take their leave, because of skill shortages and unavailability of particular staff, it may then be cancelled and so it creates those issues on a rostering basis for the industry.

Pretty much, the industry operates on a fortnightly roster, so the four weeks' notice works well. The difficulty is once you get into the issue of eight weeks it does create operational problems. So we're putting that out to the Bench as our grounds which we believe are particular to this industry.

We also note that there is evidence from the Fair Work Ombudsman that the industry has low levels of compliance with award provisions and we're conscious that although we do our best as an employer organisation to educate and inform our members, there is a high number of operators in this industry not members of employer associations and it may have that impact that there is again not an understanding of what the provisions are, so it encourages, potentially, for non-compliance to occur.

In response to the United Voice submissions that were filed last night, I just want to hand up to the Bench some information from Service Skills Australia which I don't think will be too controversial because United Voice sits on that organisation.’ 130

[217] The document relied on by RCA (Exhibit RCA 1) states:

‘Skilled labour shortages are evident in both major and niche occupations, but are disruptive in every instance. The most severe shortages in the service industries are found among chefs and cooks, which have now been in shortage continuously for over a decade …

… literacy and numeracy skills in both retail trade and accommodation and food services are below the all-industry average.’

[218] RCA submitted that Exhibit RCA 1 supported its contention ‘about managing rosters and making sure that you actually have people on the ground at the given time’. 131 We note here that, contrary to RCA’s submissions, it does not appear to us that Exhibit RCA 1 says anything in support of the proposition that the provision of eight weeks’ notice would create difficulties for the management of rosters in the hospitality industry. We return to this later.

[219] Clubs Australia Industrial (CAI) contends that the model excessive leave term should not be inserted into the Registered and Licensed Clubs Award 2010 as this award already contains a provision for excessive leave management. CAI asserts that the insertion of the model term would not be consistent with the modern awards objective as it is likely to create confusion amongst the industry. 132 During the course of oral argument CAI also submitted that in the event that an employer unreasonably refused to grant an employee’s request to take a period of paid annual leave then the employee could activate the dispute resolution procedure in the award.

[220] Clause 9 of the Registered and Licensed Clubs Award 2010 deals with dispute resolution. We agree that an employee could refer a dispute about access to paid annual leave to the Commission under clause 9.2. But the Commission’s power to deal with the dispute is limited by the terms of clause 9. Subclause 9.4 states:

‘Where the matter in dispute remains unresolved, the Fair Work Commission may exercise any method of dispute resolution permitted by the Act that it considers appropriate to ensure the settlement of the dispute.’

[221] Subclause 9.3 states:

‘The parties may agree on the process to be utilised by the Fair Work Commission including mediation, conciliation and consent arbitration.’

[222] It follows that under this modern award the Commission can only deal with a dispute about access to paid annual leave by arbitration, if the parties to the dispute consent (see
ss. 595(3) and 739).

[223] The AHA, RCA and CAI each contend that the existing excessive leave provisions in the Hospitality Awards meet the modern awards objective. Implicit in this contention is the proposition that the existing provisions are effective in dealing with the issue of excessive paid annual leave accruals. Or as the AHA puts it, the existing clause ‘works well within the industry’. On the basis of the material presently before us we are not satisfied that this is so.

[224] Table 2 shows the usage of paid annual leave by non-casual employees in the ANZSIC Accommodation and food services division compared with all industries between 2010 and 2014.

Table 2: Usage of paid annual leave by non-casual employees in Accommodation and food services, 2010–2014

		Accommodation and food services	All industries
2010	Taken a period of paid annual leave (%)	56.1	80.6
	Average leave days taken by those who took leave (no.)	14.3	18.4
2011	Taken a period of paid annual leave (%)	60.8	79.8
	Average leave days taken by those who took leave (no.)	13.5	18.1
2012	Taken a period of paid annual leave (%)	59.8	79.8
	Average leave days taken by those who took leave (no.)	20.4	18.2
2013	Taken a period of paid annual leave (%)	59.0	81.3
	Average leave days taken by those who took leave (no.)	14.3	18.1
2014	Taken a period of paid annual leave (%)	56.2	82.2
	Average leave days taken by those who took leave (no.)	13.0	18.0

Source: Household, Income and Labour Dynamics in Australia Survey, Waves 10–14. 133

[225] Table 2 shows that, relative to ‘All industries’, a lower proportion of non-casual employees in accommodation and food services took a period of paid annual leave over the previous 12 months. It also shows that a lower average number of paid annual leave days was taken by those who took paid leave (except in 2012).

[226] Hence in each year over the period 2010–2014 a significant proportion of non-casual employees in the accommodation and food services sector did not take any paid annual leave. Further, of those who did take paid annual leave, the average leave days taken was less than the annual accrued entitlement for full-time employees and less than the average leave taken for all industries (except in 2012). We infer from this data that, contrary to the contentions advanced by the AHA, RCA and CAI, there is an issue with excessive annual leave accruals in this sector.

[227] Based on the matters set out above we have reached the provisional view that, save for two matters we shall mention shortly, the excessive leave terms in the Hospitality Awards do not provide a fair and relevant minimum safety net of terms and conditions, and therefore the existing terms do not satisfy the modern awards objective. We have also reached the provisional view that these existing excessive leave terms do not meet the requirements of s.93(3) of the FW Act. The basis for this provisional view is that the existing award terms provide that an employee may be required to take paid annual leave in particular circumstances and, having considered the terms of each of these provisions, our provisional view is that that requirement is not reasonable.

[228] The first reservation to the provisionally expressed views above concerns the requirement in the model term that an employee be given 8 weeks’ notice of employer directed leave. It has been contended that such a requirement would create practical difficulties given the rostering arrangements in the hospitality industry. As yet no evidence has been advanced in support of this proposition. We propose to provide a further opportunity for interested parties to make submissions and adduce evidence in respect of this issue. However it should be noted that the current provision of eight weeks’ notice in the model term applies to both employer directed leave and employee directed leave. It would seem to follow that a variation in one would apply to the other.

[229] The second reservation relates to that part of the existing excessive leave terms in the Hospitality Awards which provide that ‘An employer may require an employee to take annual leave by giving at least four weeks’ notice … as part of a close down of its operations’. In our view employers covered by the Hospitality Awards should retain the capacity to direct employees to take annual leave as part of a close down of their operations. The content of such a clause will be given further consideration during the Award stage of the Review.

[230] Interested parties will have until 5.00pm (AEST) 1 June 2016 to notify the Commission (at [email protected]) if they wish to contest the Full Bench’s provisional views in respect of this issue. If any expressions of interest are received we will issue directions for the filing of further submissions and evidence. If no expressions of interest are received by the specified date we will vary the Hospitality Awards to insert the excessive annual leave model term.

(v) Maritime group

[231] The Australian Mines and Metals Association (AMMA) and the Maritime Industry Association Ltd (MIAL) opposed the insertion of the model terms relating to excessive leave, annual leave in advance and cashing out of annual leave in the following awards: Dredging Industry Award 2010; Marine Towage Award 2010; Maritime Offshore Oil and Gas Award 2010; Ports, Harbours and Enclosed Water Vessels Award 2010; Professional Diving Industry (Industrial) Award 2010; and Seagoing Industry Award 2010 (collectively, the Maritime Awards).

[232] In the November Statement we expressed a provisional view that the draft determinations inserting annual leave provisions dealing with excessive leave, leave in advance and cashing out will not be issued in relation to the Maritime Awards. Interested persons objecting to that provisional view were invited to file a written submission no later than 4.00 pm on Thursday 3 December 2015. We also stated that if no submissions were made to the contrary we would adopt AMMA/MIAL’s position.

[233] We dealt with this issue in the December Statement, noting

‘No submissions were received in relation to this issue. Accordingly, at this time we do not propose to vary the six modern awards set out at paragraph [4] above in respect of the model terms referred to earlier. Any interested party may seek to vary one or more of these modern awards during the 4 yearly review to include these model terms. We will deal with any such application should it be made.’ 134

[234] On reflection, we have decided to give further consideration to the view expressed in the December Statement, for the reasons set out below.

[235] As mentioned earlier, the Employer Group sought to insert a standard ‘cashing out of paid annual leave’ term in 120 modern awards – including all of the Maritime Awards. The Employer Group submission in the June 2015 proceeding was advanced on the basis that the variations would ensure that the awards subject to the claim achieved the modern awards objective. Implicit in such a submission is the proposition that those awards did not meet the modern awards objective.

[236] Similarly, four of the Maritime Awards (Dredging Industry Award 2010; Maritime Offshore Oil and Gas Award 2010; Professional Diving Industry (Industrial) Award 2010; and Seagoing Industry Award 2010) (see Attachment H to the June 2015 decision) were among the modern awards which were the subject of the Employer Group claim to insert a standard leave in advance term. Further, three of the Maritime Awards (Dredging Industry Award 2010; Maritime Offshore Oil and Gas Award 2010; and Professional Diving Industry (Industrial) Award 2010) were among the modern awards which were the subject of the Employer Group claim to insert a standard excessive leave term (see Attachment D to the June 2015 decision).

[237] AMMA is a member of the Employer Group. It is difficult to reconcile AMMA’s opposition to the insertion of the cashing out, leave in advance and excessive leave model terms in those awards which were the subject of the Employer Group claims, with its previous submission (as part of the Employer Group) that these awards be varied to include standard terms dealing with these issues.

[238] We are conscious that we have previously indicated that the Maritime Awards would not be varied to insert the three model terms to which we have referred. For the reasons given we have decided to give further consideration to whether these awards should be varied to insert these revised model terms. We propose to list this issue for further hearing on 1 July 2016. The purpose of the hearing is to provide AMMA/MIAL and any other interested parties to make submissions and adduce evidence directed to the question of whether or not the Maritime Awards should be varied to insert the revised excessive leave; annual leave in advance and cashing out of annual leave model terms. Directions in relation to that hearing will be issued shortly.

(vi) Passenger Vehicle Transportation Award 2010

[239] The Australian Public Transport Industrial Association (APTIA) opposes the insertion of the excessive accrued paid leave and leave in advance model terms into the Passenger Vehicle Transportation Award 2010 (the PVT Award). This submission is advanced on the basis that the PVT Award already contains provisions dealing with these matters.

[240] Clause 24.4 of the PVT Award deals with leave in advance:

‘By agreement between an employer and an employee a period of annual leave may be taken in advance of the entitlement accruing. Provided that if leave is taken in advance and the employment terminates before the entitlement has accrued the employer may make a corresponding deduction from any money due to the employee on termination.’

[241] Clause 24.5 of the PVT Award deals with ‘excessive’ paid annual leave accruals:

‘An employer may direct an employee to take paid annual leave if the employee has accrued more than eight weeks’ paid annual leave, and the employer and employee are unable to reach agreement on the taking of the leave. An employer must give an employee at least 28 days’ notice prior to the date the employee is required to commence the leave.’

[242] It is convenient to deal first with the leave in advance issue.

[243] The main differences between clause 24.4 of the PVT Award and the revised model term are the requirements regarding the content and form of any agreement to provide leave in advance and the employer’s obligation to keep such agreements as an employee record.

[244] At paragraphs 4.1 to 4.3 of its written submission APTIA advances the following submission in support of its contention that the existing clause 24.4 be retained, and model term not be inserted:

‘4.1 The PVTA currently has a provision which allows for the taking of annual leave in advance. The view which APTIA takes is that the proposed template clause should be in line with the current award provision and that in circumstances where a modern award has an existing mechanism then no change should occur especially when neither the employer or employee representatives were party to the substantive annual leave applications before the Fair Work Commission.

4.2 It is a suggestion however in circumstances where the Commission is mindful to incorporate into all modern awards a new template clause that such leave agreements be limited to no more than the statutory notice period to which an employee would be entitled to under the National Employment Standards on termination or to the extent to which an employee has contingent employee entitlements on termination or resignation.

4.3 What is needed to be avoided is a circumstance where an employer cannot readily recover from an employee the amount of the advance annual leave payments on termination or resignation.’

[245] The point raised in paragraph 4.1 of the APTIA’s submission is similar to the submissions advanced by the NFF and AHA. We deal with the AHA and NFF submissions elsewhere in this decision (see paragraphs [134]–[140] and [204]–[206]) and for the reasons there given we are not persuaded that there is any substance to the point advanced by APTIA.

[246] We acknowledge that the PVT Award was not the subject of the Employer Group’s claim to insert a leave in advance term in certain modern awards. But the fact that no claim has been made to vary the relevant term in the PVT Award (i.e. clause 24.5) is of little consequence and is certainly not an impediment to varying the PVT Award to insert the leave in advance model term. All interested parties were informed of the Commission’s provisional view – namely that it is necessary to vary all modern awards to insert the model term in order to achieve the modern awards objective – and were provided with an opportunity to advance a contrary view.  135

[247] As to the point made in paragraph 4.2 of the APTIA’s submission we are not persuaded it is necessary, or desirable, to insert any such limitation in the term to be inserted into the PVT Award. The model term is facilitative in nature. It only permits the taking of a period of paid annual leave before the employee has accrued an entitlement to that leave (i.e. leave in advance) by agreement between the employer and employee.

[248] The point made in paragraph 4.3 of the APTIA’s submission is addressed in the model term.

[249] The existing clause in the PVT Award is deficient in that it does not provide that agreements to take leave in advance are to be in writing and nor does it provide that such agreements are to be retained as employee records. As we have mentioned, a requirement that there be an agreement in writing to take leave in advance before an employer can make any related deduction from a termination payment, is entirely reasonable. By ensuring that such arrangements are reduced to writing the model term may prevent subsequent disputes about deductions from termination payments.

[250] We are satisfied that the variation of the PVT Award to incorporate the revised leave in advance model term is necessary to meet the modern awards objective. The provision allows employees to take paid annual leave at a time when they may be faced with circumstances obliging them to take a period of leave, but where they have no accrued entitlement to such leave. The requirement that any such agreement be in writing, be signed and be retained as an employee record, ensures certainty as to the terms of such agreements and may prevent subsequent disputes about deductions from termination payments. As to the matters in s.134(1)(a)–(h), insofar as they are relevant, we are satisfied that the insertion of the model term in these awards assists low paid employees by providing them with enhanced access to paid leave (s.134(1)(a)); promotes flexible modern work practices (s.134(1)(d)) and is simple and easy to understand (s.134(1)(g)).

[251] We now turn to the APTIA’s submissions regarding the variation of the PVT Award to insert the excessive leave model term.

[252] The excessive leave term in the PVT Award differs from the revised model term in a number of respects, including:

(i) It does not provide a mechanism, subject to appropriate limitations, for employees to require their employer to give them a period of paid annual leave. The award makes no provision for the circumstance where an employee accrues excessive paid annual leave but no employer direction is made.
(ii) It does not place any limitation on the amount of accrued paid annual leave that an employer may direct an employee to take. The model term provides that an employer direction must not result in the employees’ remaining accrued entitlement to paid annual leave being less than six weeks. As the Full Bench said in the June 2015 decision:

‘Maintenance of a six week minimum is consistent with s.236(6) of the former WR Act and with the majority of current modern award clauses which limit the amount of accrued paid annual leave that an employer can direct an employee to take. It also accommodates the circumstance of an employee seeking to accrue leave so that he or she can take a reasonable extended holiday.’ 136

(iii) It provides that an employer can direct an employee to take a period of accrued paid annual leave by giving the 28 days’ notice. The model term requires that employees be given eight weeks’ notice of the commencement of employer directed leave. The provision of eight weeks’ notice ensures that the employee has a reasonable amount of time to make arrangements for activities during the leave period and/or to coordinate their leave with family members.
(iv) It does not contain a requirement that the minimum length of any period of employer directed paid annual leave be one week. Such a provision would avoid the circumstance where an employee may be required to take their paid annual leave in a series of single days or small clusters of single days – thereby denying the employee the benefits associated with taking a longer period of leave. As the Full Bench said in the September 2015 decision:

‘It is desirable that some minimum period of leave be prescribed in circumstances where the employee concerned has an excessive leave accrual and may not have had the benefit of any paid annual leave for a period of more than two years.’ 137

(v) It does not provide that an employer direction to take a period of paid annual leave be in writing. Such a procedural safeguard assists in ensuring that the employee is aware of his or her obligations to comply with the direction and of the limitations on such a direction.

[253] At paragraphs 2.1–2.4 of its written submission APTIA advances its submission in support of its contention that the existing clause 24.5 be retained and the model term not be inserted:

‘2.1 The PVTA has an existing excessive leave clause and APTIA considers that there should be no change to the current clause.

2.2 The model template seeks to expand what has been in practice for some time in the industry.

2.3 The draft template seeks to impose another dispute resolution mechanism which is not required.

2.4 Employers need to be able to control when annual leave is taken and it should not, in APTIA’s submission, be delegated to an employee just because an employer hasn’t decided to insist on a reduction of leave. The business requirements need to come first.’

[254] We accept what is put at paragraph 2.1 and 2.2 of the APTIA’s submission, but for the reasons given above we are not persuaded that these submissions warrant the retention of clause 24.5 of the PVT Award.

[255] The point raised at paragraph 2.3 of the APTIA’s submission was addressed in the September 2015 decision in which the Full Bench was persuaded that it was not necessary to include a detailed dispute resolution provision in the model term. 138

[256] The point raised at paragraph 2.4, in essence, opposes that aspect of the model term whereby an employee can, in effect, determine when they take a period of paid annual leave, subject to appropriate limitations.

[257] In the September 2015 proceedings ACCI, Ai Group and a number of other employer organisations submitted that the excessive leave model term be amended to remove the capacity for employees to effectively direct the taking of paid annual leave. The essence of the arguments put was that an award term giving an employee the right to determine when he or she takes paid annual leave would have an adverse impact on business and may impair the efficient and productive performance of work. The Full Bench was not persuaded to accede to the employer’s submission:

‘In short, the Employer Group claim sought to replicate previous mechanisms to address excessive leave accruals. Such mechanisms have had, at best, limited success in the past in addressing the issues associated with excessive annual leave accruals. The claim did not address a significant factor in the excessive accrual of annual leave – where work pressure prevents an employee from taking all of their paid annual leave. It was on this basis that the Commission concluded that granting the claim would not be sufficient to address the problems of excessive accrued paid annual leave and went on to formulate the provisional model term.

Nothing put in the present proceedings has persuaded us to depart from the view expressed in the June 2015 decision that the model term should make provision for the circumstance where an employee accrues excessive paid annual leave but no employer direction is made. The problem that the model term is seeking to address is the accrual of excessive annual leave and the negative impacts this may have on employees and employers. The Act does not require that this problem only be addressed by way of employer directions to take leave.’ 139

[258] The Full Bench went on to vary the excessive leave model term in a number of respects in order to address the concerns raised by the employer parties, in particular:

● a transitional arrangement would be inserted to provide that the provision dealing with an employee’s capacity to give notice to their employer in relation to the taking of accrued paid annual leave not commence until 12 months after the commencement of the balance of the model term; and
● a maximum period of four weeks’ paid annual leave may be the subject of a notice by the employee in any 12 month period.

[259] We are not persuaded that the point advanced at paragraph 2.4 of the APTIA’s submission warrants the retention of clause 24.5 (as opposed to inserting the model term).

[260] As we have mentioned the revised model term provides that an employee’s right to require that a period of paid annual leave is granted, is subject to a number of limitations. These limitations ensure that the management of excessive leave primarily remains an employer responsibility. Under the revised model term an employee’s right to issue a notice in relation to the taking of annual leave only arises where they have had an excessive leave accrual for more than six months and their employer has not issued a direction to reduce or eliminate their excessive leave accrual. The sequencing of rights inherent in the model term appropriately balances the interests of employers and employees.

[261] Based on the matters set out above we have concluded that the excessive leave term in the PVT Award does not provide a fair and relevant minimum safety net of terms and conditions of employment. On that basis the term does not satisfy the modern awards objective. We are also satisfied that the existing excessive leave term does not meet the requirements of s.93(3) of the FW Act. The award term provides that an employee may be required to take paid annual leave in particular circumstances and, having considered each of the terms of this particular provision, that requirement is not reasonable. As the existing excessive leave terms in this award does not meet the requirements of s.93(3) it follows that it is not a term which may be included in a modern award.

[262] We are satisfied that the variation of the PVT Award to delete the existing excessive leave term and to insert the revised excessive leave model term is necessary to ensure that the award meets the modern awards objective. We rely on the findings set out in the June 2015 decision 140 and the observations we have made above. As to the matters in s.134(1)(a)–(h), insofar as they are relevant, we are satisfied that the insertion of the model term in this award will promote flexible modern work practices and the efficient and productive performance of work (s.134(1)(d)) and will assist business in managing excessive leave accruals (s.134(1)(f)). We are also satisfied that such variations are consistent with the objects of the FW Act. 141

(vii) Resources group

[263] AMMA opposes the insertion of the model terms dealing with excessive leave and leave in advance into the Hydrocarbons Industry (Upstream) Award 2010, Mining Industry Award 2010, Oil Refining and Manufacturing Award 2010, and Salt Industry Award 2010 (collectively, the Resource Sector Awards). The submission is advanced on the basis that these awards already contain provisions dealing with the matters which are the subject of the model terms and that the current provisions should not be varied without probative evidence to demonstrate that they are no longer meeting the modern awards objective.

[264] Should the Commission decide to insert the excessive leave model term AMMA contends that this should be tailored to ensure it does not unnecessarily impose new obligations on employers and restrictions where there are currently none under the modern award.

[265] The AWU opposes AMMA’s submissions stating that it has not been adequately shown that the relevant industries will be negatively impacted by a consistent approach to reducing excessive leave. 142

[266] As to the leave in advance issue, AMMA submits that the additional requirement in the model term for a separate written signed agreement is unnecessary as the existing provisions have operated efficiently without such a requirement.

[267] AMMA also submits that the existing annual leave clauses in the Resources Sector Awards were ‘subject of extensive submissions and consideration during the Part 10A award modernisation process, including through the exposure draft process’. In its ‘Further Submissions’ filed on 15 December 2015 AMMA provided what it submitted were the ‘most relevant and cogent materials which were considered during the Part 10A process’.

[268] Contrary to AMMA’s submission, there is nothing in the submissions made, the transcript of the relevant proceedings or in the decision of the Award Modernisation Full Bench which would lead us to conclude that the existing provisions with respect to excessive leave and leave in advance in the Resource Sector Awards were the subject of detailed consideration during the Part 10A process.

[269] At paragraph 8 of its ‘Further Submissions’ AMMA advances the following submissions:

‘It is also relevant to consider the context of the subsequent two year Transitional review which followed the award modernisation process. As a result of item 6 of Schedule 5 of the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009, the FWC was required to undertake a Transitional review of modern awards as soon as practicable after the second anniversary of their commencement. The resource sector modern awards were the subject of that review. At the completion of that Transitional review in 2013, the extant leave provisions in the resource sector modern awards – the subject of these common issue proceedings - were deemed to be meeting the modern awards objective set out in s.134 of the Act because the Commission’s statutory obligation under the Schedule 5 Transitional Review process was to “consider whether each modern award achieves the modern awards objective set out in s.134 of the Fair Work Act 2009 (the FW Act) and is operating effectively without anomalies or technical problems arising from the award modernisation process” (Appeal by Restaurant and Catering Association of Victoria, [2014] FWCFB 1996, 14 May 2014, at [2]).’

[270] We do not find this submission persuasive and make two points in this regard.

[271] First, the Transitional Review was an application based process. 143 No applications were made in relation to the annual leave provisions in the Resource Sector Awards and accordingly these provisions received no consideration in the Transitional Review.

[272] Second, AMMA’s submission seems to proceed on the basis that as the annual leave provisions in the Resource Sector Awards were not the subject of any variation in the Transitional Review it is to be assumed that the Commission found (either directly or by implication) that these provisions met the modern awards objective. This is fallacious – there was simply no consideration of these provisions in the Transitional Review.

[273] The fact that a particular modern award provision was not considered or amended during the Transitional Review provides no impediment to the variation of that provision during the Review. If AMMA’s position were accepted then the practical effect would be to render the Review largely nugatory.

[274] In each of the Resource Sector Awards the provision in relation to ‘excessive leave’ is in the same terms, that is:

‘An employer may direct an employee to take paid annual leave if the employee has accrued more than eight weeks or, in the case of a continuous shiftworker, 10 weeks paid annual leave, and the employer and employee are unable to reach agreement on the taking of the leave. An employer must give an employee at least 28 days’ notice prior to the date the employee is requested to commence the leave.’ 144

[275] As to the ‘leave in advance’, the provision in each of the awards is also in the same terms:

‘(a) An employee may agree with their employer to take annual leave in advance of an entitlement accruing under the NES. Where this occurs, the employee’s leave balance will be reduced by an amount equivalent to the leave taken in advance as the employee’s entitlement to paid annual leave accrues.

(b) The employer may deduct from the employee’s termination payments, leave taken in advance where the entitlement to that leave has not accrued as at the date of termination.’ 145

[276] It is convenient to deal first with the excessive leave issue.

[277] The excessive leave terms in the Resource Sector Awards differ from the revised model term in a number of respects, including:

(i) The terms in the Resource Sector Awards do not place any limitation on the amount of accrued paid annual leave that an employer may direct an employee to take. The model term provides that an employer direction must not result in the employees’ remaining accrued entitlement to paid annual leave being less than six weeks. As the Full Bench said in the June 2015 decision:

‘Maintenance of a six week minimum is consistent with s.236(6) of the former WR Act and with the majority of current modern award clauses which limit the amount of accrued paid annual leave that an employer can direct an employee to take. It also accommodates the circumstance of an employee seeking to accrue leave so that he or she can take a reasonable extended holiday.’ 146

(ii) The existing excessive leave terms do not provide a mechanism for employees to require their employer to give them a period of paid annual leave. These modern awards make no provision for the circumstance where an employee accrues excessive paid annual leave but no employer direction is made.
(iii) Each of the existing terms provides that an employer can direct an employee to take a period of accrued paid annual leave by giving the employee four weeks’ notice. The excessive leave model term requires that an employer direction to take a period of paid annual leave provide the employee with eight weeks’ notice of the commencement of the directed leave. The provision of eight weeks’ notice ensures that the employee has a reasonable amount of time to make arrangements for activities during the leave period and/or to coordinate their leave with family members.
(iv) The Resource Sector Awards do not require an employer to enter into any dialogue with an employee before directing them to take part of their annual leave. In these awards the employer is under no obligation to discuss the issue of excessive annual leave accrual with the employee or to seek to reach an agreement with the employee about the time when such leave will be taken. The model term includes such a provision on the basis that it is plainly preferable that these matters be resolved by agreement between the employer and employee, without the need for a direction.
(v) The existing leave terms do not provide that an employer direction to take a period of paid annual leave be in writing. Such a procedural safeguard assists in ensuring that the employee is aware of his or her obligations to comply with the direction and of the limitations on such a direction.
(vi) The Resource Sector Awards do not place any limitation on the amount of accrued paid annual leave that an employer may direct an employee to take. The model term provides that an employer direction must not result in the employees’ remaining accrued entitlement to paid annual leave being less than six weeks. As the Full Bench said in the June 2015 decision:

‘Maintenance of a six week minimum is consistent with s.236(6) of the former WR Act and with the majority of current modern award clauses which limit the amount of accrued paid annual leave that an employer can direct an employee to take. It also accommodates the circumstance of an employee seeking to accrue leave so that he or she can take a reasonable extended holiday.’ 147

[278] AMMA contends that the existing excessive leave provisions in the Resource Sector Awards meet the modern awards objective. Implicit in this contention is the proposition that the existing provisions are effective in dealing with the issue of excessive paid annual leave accruals. On the basis of the material presently before us, we are not satisfied that this is so.

[279] Table 3 shows the Resource Sector Awards and their relevant ANZSIC industry divisions.

Table 3: Resource awards and ANZSIC industry divisions

Modern award	Relevant ANZSIC industry division
Hydrocarbons Industry (Upstream) Award 2010		Mining
Mining Industry Modern Award 2010		Mining
Oil Refining and Manufacturing Award 2010		Manufacturing
Salt Industry Award 2010		Mining and Manufacturing 148

[280] Table 4 shows the usage of paid annual leave by non-casual employees in the Mining industry compared with all industries between 2010 and 2014. Relative to all industries over the period, it shows that among non-casual employees in Mining:

● a similar proportion took a period of paid annual leave over the previous 12 months in 2010–2012, a lower proportion in 2013 and a higher proportion in 2014; and
● a lower average number of paid annual leave days was taken by those who took paid leave (except in 2013). 149

Table 4: Usage of paid annual leave by non-casual employees in Mining, 2010–2014

		Mining	All industries
2010	Taken a period of paid annual leave (%)	79.1	80.6
	Average leave days taken by those who took leave (no.)	14.9	18.4
2011	Taken a period of paid annual leave (%)	79.8	79.8
	Average leave days taken by those who took leave (no.)	15.0	18.1
2012	Taken a period of paid annual leave (%)	79.1	79.8
	Average leave days taken by those who took leave (no.)	15.2	18.2
2013	Taken a period of paid annual leave (%)	76.2	81.3
	Average leave days taken by those who took leave (no.)	18.3	18.1
2014	Taken a period of paid annual leave (%)	86.3	82.2
	Average leave days taken by those who took leave (no.)	16.7	18.0

Source: Household, Income and Labour Dynamics in Australia Survey, Waves 10–14.

[281] Table 5 shows the usage of paid annual leave by non-casual employees in the Manufacturing industry compared with all industries between 2010 and 2014. Relative to all industries over the period, it shows that among non-casual employees in Mining:

● a similar proportion took a period of paid annual leave over the previous 12 months in 2010 and 2011, and a higher proportion in 2013–2014; and
● a lower average number of paid annual leave days was taken by those who took paid leave. 150

Table 5: Usage of paid annual leave by non-casual employees in Manufacturing, 2010–2014

		Manufacturing		All industries
2010	Taken a period of paid annual leave (%)		78.6	80.6
	Average leave days taken by those who took leave (no.)		15.1	18.4
2011	Taken a period of paid annual leave (%)		79.3	79.8
	Average leave days taken by those who took leave (no.)		15.5	18.1
2012	Taken a period of paid annual leave (%)		81.0	79.8
	Average leave days taken by those who took leave (no.)		15.4	18.2
2013	Taken a period of paid annual leave (%)		86.6	81.3
	Average leave days taken by those who took leave (no.)		15.7	18.1
2014	Taken a period of paid annual leave (%)		86.6	82.2
	Average leave days taken by those who took leave (no.)		15.8	18.0

Source: Household, Income and Labour Dynamics in Australia Survey, Waves 10–14.

[282] Hence in each year over the period 2010–2014 a significant proportion of non-casual employees in the ANZSIC industry divisions relevant to the coverage of the Resource Sector Awards did not take any paid annual leave. Further, of those who did take paid annual leave, the average leave days taken was less than the annual accrued entitlement for full-time employees and less than the average leave taken for all industries. We infer from this data that, contrary to the AMMA’s contention, there is an issue with excessive annual leave accruals in respect of the Resource Sector Awards.

[283] Based on the matters set out above we have reached the provisional view that the excessive leave terms in the Resource Sector Awards do not provide a fair and relevant minimum safety net of terms and conditions of employment and therefore the terms do not satisfy the modern awards objective. We have also reached the provisional view that these existing excessive leave terms do not meet the requirements of s.93(3) of the FW Act. The basis of this provisional view is that the award terms provide that an employee may be required to take paid annual leave in particular circumstances and, having considered the terms of each of these provisions, our provisional view is that that requirement is not reasonable.

[284] Interested parties will have until 5pm (AEST) on 1 June 2016 to notify the Commission (at [email protected]) if they wish to contest the Full Bench’s provisional views in respect of this issue. If any expressions of interest are received we will issue directions for the filing of further submissions on evidence. If no expressions of interest are received by the specified date we will vary the Resource Sector Awards to insert the excessive annual leave accruals model term. We acknowledge that the model term will need to be tailored to the circumstances pertaining to these awards. In particular, the definition of ‘excessive leave’ will need to be adjusted where the quantum of annual leave accrued by employees covered by these awards is greater than that provided in the NES.

[285] We now turn to the leave in advance issue.

[286] The Employer Group’s claim sought a provision in substantially the same terms as the existing clauses in the Resource Sector Awards. As we have mentioned, the main differences between the model term and the Employer Group’s claim are the requirements regarding the content and form of any agreement to provide leave in advance (subclause 1.1(a)) and the employer’s obligation to keep such agreements as an employee record (subclause 1.1(c)). In the June 2015 decision the Full Bench noted that: ‘These requirements are consistent with an employer’s existing obligations under Regulation 3.36 of the Fair Work Regulations 2009’. 151

[287] The submissions in the September 2015 proceedings were directed at subclause 1.1(c) of the model term. ACCI submitted that on the whole it had no significant concerns with the form of the model term but that it could be enhanced by removing subclause 1.1(c) on the basis that record keeping requirements regarding leave are already set out in Regulation 3.36. Submissions to similar effect were advanced by a number of other employer organisations. 152 In the September 2015 decision the Full Bench rejected ACCI’s submission.153

[288] It seems to us that a requirement that there be an agreement in writing to take leave in advance before an employer can make any related deduction from a termination payment, is entirely reasonable. We note that absent such a provision there may be no requirement to keep an employee record of any leave taken in advance. 154 By ensuring that such arrangements are reduced to writing the model term may prevent subsequent disputes about deductions from termination payments. The existing clauses in the Resource Sector Awards are deficient in that they do not provide that agreements to take leave in advance are to be in writing and nor do they provide that such agreements are to be retained as employee records.

[289] We are satisfied that the variation of the Resource Sector Awards to incorporate the leave in advance model term is necessary to meet the modern awards objective. The provision allows employees to take paid annual leave at a time when they may be faced with circumstances obliging them to take a period of leave, but where they have no accrued entitlement to such leave. The requirement that any such agreement be in writing, be signed and be retained as an employee record, ensures certainty as to the terms of such agreements and may prevent subsequent disputes about deductions from termination payments. As to the matters in s.134(1)(a)–(h), insofar as they are relevant, we are satisfied that the insertion of the model term in these awards assists low paid employees by providing them with enhanced access to paid leave (s.134(1)(a)); promotes flexible modern work practices (s.134(1)(d)) and is simple and easy to understand (s.134(1)(g)).

(viii) Security Services Industry Award 2010

[290] MSS Security made submissions regarding the insertion of the cashing out model term into the Security Services Industry Award 2010. 155 MSS Security sought to change the wording of two aspects of the draft variation determination (clauses 24.11(b)(i) and 24.11(b)(ii)). To ensure that all interested parties have an opportunity to comment on the MSS Security proposal we propose to list this issue for a further hearing on 1 July 2016.

6.3 Enterprise awards

[291] In the June 2015 decision the Full Bench 156 invited parties to modern enterprise awards to make submissions in accordance with the directions issued as to how this decision should apply to each modern enterprise award. No submissions have been received in relation to modern enterprise awards. We propose to give further consideration to the variation of modern enterprise awards, later this year.

1. Conclusion and Next Steps

[292] For the reasons set out earlier we propose to vary a number of modern awards to insert various annual leave model terms.

(i) Cashing out of annual leave

[293] The revised cashing out model term will be inserted into 112 modern awards for the reasons given in the June 2015 decision 157. We are satisfied that the variation of these 112 modern awards to incorporate the revised cashing out 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). We are also satisfied that such variations are consistent with the objects of the FW Act. The 112 modern awards to be varied are identified in Attachment 6. Draft variation determinations will be published shortly and interested parties will have 7 days to comment. The opportunity to comment only relates to the plain language revisions to the model term and the template agreement. It is not an opportunity to re-agitate the merits of whether particular modern awards should be varied to incorporate a model term dealing with the cashing out of paid annual leave.

[294] We have decided to give further consideration to whether the six Maritime modern awards should be varied to insert the revised model cashing out term for the reasons given at paragraphs [231]–[238] above. We also propose to give further consideration to the form of the cashing out term to be inserted into the Security Services Industry Award 2010. These matters will be listed for further hearing on 1 July 2016.

(ii) EFT and paid annual leave

[295] The 51 modern awards which currently require the employer to pay an employee for annual leave prior to the employee taking the leave will be varied to insert the EFT and paid annual leave model term, for the reasons given in the June 2015 decision. The effect of the variation is that when employees are paid by electronic funds transfer they may be paid in accordance with their usual pay cycle while on paid annual leave. The variations will not change the status quo (i.e. payment for leave being made in advance of taking the leave) in respect of employees who are paid by cash or cheque.

[296] We are satisfied that the variation of these 51 modern awards in the manner described 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 variations are consistent with the objects of the FW Act. We rely on the reasons given in the June 2015 decision (see [2015] FWCFB 3406 at [436]–[457]).

[297] For the reasons given at paragraphs [165]–[179] we will vary the Black Coal Mining Industry Award 2010 to insert the model EFT and paid annual leave model term. To avoid any confusion between the operation of the model term and clause 25.8 of the modern award we will also vary clause 25.8 in the manner described at paragraph [179] above.

[298] The 51 modern awards to be varied are identified in Attachment 6.

(iii) Leave in advance

[299] The revised leave in advance model term will be inserted into 113 modern awards. We are satisfied that the variation of these 113 modern awards will ensure that each of these modern awards meets the modern awards objective. We rely on the reasons given in the June 2015 decision (at [411]–[415]). We are satisfied that the variation of these 113 modern awards in the manner described 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 variations are consistent with the objects of the FW Act.

[300] The 113 modern awards to be varied are identified in Attachment 6. Draft variation determinations will be published shortly and interested parties will have 7 days to comment. The opportunity to comment only relates to the plain language revisions to the model term and the template agreement. It is not an opportunity to re-agitate the merits of whether particular modern awards should be varied to incorporate a model term dealing with the taking of paid annual leave in advance of accrual.

[301] The six Maritime Awards will be listed for a further hearing on 1 July 2016 for the reasons given at paragraphs [231]–[238] above.

(iv) Excessive annual leave

[302] Some 80 modern awards will be varied to insert the revised excessive annual leave model term. These 80 modern awards are identified in Attachment 6. We are satisfied that the variation of these modern awards will ensure that they meet the modern awards objective. We rely on the reasons set out above at paragraphs [89]–[120] and the reasons given in the June 2015 decision (at [87]–[219]) and in the September 2015 decision (at [42]–[178]). We are satisfied that the variation of these 80 modern awards in the manner described 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 variations are consistent with the objects of the FW Act.

[303] The transitional subclause proposed by Ai Group will be inserted into each variation determination (see paragraphs [83]–[88] above).

[304] Six of the 80 modern awards to be varied to insert the revised excessive annual leave model term provide a paid annual leave entitlement for some or all non-shiftworkers that is higher than the standard 4 weeks’ paid annual leave per annum. 158 In some of these awards the definition of ‘excessive’ will be modified to reflect the higher level of annual leave accrual.159

[305] The model term to be inserted into the Medical Practitioners Award 2010 will be varied as set out at paragraph [199] above.

[306] Draft variation determinations will be published shortly and interested parties will have 7 days to comment. As a general proposition the opportunity to comment only relates to the plain language revisions to the model term. The exception to this general proposition relates to those modern awards mentioned in paragraphs [304] and [305] above. In respect of those modern awards, interested parties are invited to comment on the modifications made to the variation determinations to reflect the higher level of annual leave accrual or, in the case of the Medical Practitioners Award 2010, the circumstances pertaining to the particular modern award.

[307] Further consideration will be given to whether the remaining 39 modern awards should be varied to insert the revised excessive annual leave term, as follows:

In relation to the 4 Resource Sector Awards, interested parties will have until 5pm (AEST) on 1 June 2016 to notify the Commission (at [email protected]) if they wish to contest the Commission’s provisional views in respect of this issue. If any expressions of interest are received we will issue directions for the filing of further submissions on evidence. If no expressions of interest are received by 5pm on 1 June we will vary the Resource Sector Awards to insert the revised excessive leave model term. We acknowledge that the model term will need to be tailored to the circumstances pertaining to these awards. In particular, the definition of ‘excessive leave’ will need to be adjusted where the quantum of annual leave accrued by employees covered by these awards is greater than that provided in the NES.

PRESIDENT