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

4 yearly review of modern awards - common issue - award flexibility - time off instead of payment for overtime – award specific issues

1. Introduction

[1] The July 2015 Award Flexibility decision 1 (the July 2015 decision) dealt with a number of claims to vary certain modern awards in respect of make up time and time off instead of payment for overtime (TOIL). The make up time claim was rejected. At paragraphs [279] and [309] of that decision the Full Bench expressed some provisional views about the type of TOIL term to be inserted into the 113 modern awards set out in Attachment F to the July 2015 decision. The remaining nine modern awards make no provision for paid overtime and accordingly the model TOIL term will not be inserted into those awards. The nine awards in question are:

● Air Pilots Award 2010
● Higher Education Industry-Academic Staff-Award 2010
● Hydrocarbons Field Geologists Award 2010
● Maritime Offshore Oil and Gas Award 2010
● Professional Employees Award 2010
● Road Transport (Long Distance Operations) Award 2010
● Seagoing Industry Award 2010
● Building and Construction General On-site Award 2010
● Joinery and Building Trades Award 2010

(Note: the insertion of a TOIL provision in the last two awards is to be the subject of further consideration during the Award stage of the Review, see paragraph [4] below.)

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

[3] A decision issued on 6 October 2015 2 (the October 2015 decision) dealt with the submissions concerning the content of the model term. Decisions issued on 24 April 20163 (the April 2016 decision) and 8 July 20164 (the 8 July 2016 decision) made further changes to the form and content of the model TOIL term. The model term was varied to reflect plain language principles and the redrafted term (the model TOIL term) and a template TOIL agreement were appended to the 8 July 2016 decision and are set out at Attachment A to this decision. A further decision issued on 11 July 20165 (the 11 July 2016 decision) dealt with a number of award specific issues.

[4] In the July 2015 decision 6 the Full Bench decided that the insertion of any TOIL provision in two construction industry modern awards (the Building and Construction General On-site Award 2010 and the Joinery and Building Trades Award 2010) would be dealt with in the award stage of the Review. Similarly, in the April 2016 decision it was determined that the proposed variation of the Higher Education Industry – General Staff – Award 2010 to include the April 2016 model TOIL term has been referred to the Full Bench constituted to deal with the substantive claims in the higher education sector. The April 2016 decision also determined that the TOIL term in the Vehicle Manufacturing, Repair Services and Retail Award 2010 (the RS&R Award) would be dealt with once the coverage of that award had been determined. On 16 August 2016 a decision7 was issued confirming that the vehicle manufacturing stream will be removed from the RS&R award and transferred to the Manufacturing and Associated Industries and Occupations Award 2010. The Full Bench dealing with the other issues in the RS&R award will now also deal with the TOIL term in the modified RS&R award and, if necessary, in the Manufacturing and Associated Industries and Occupations Award 2010.

[5] In accordance with the 11 July 2016 decision, 72 draft determinations 8 were published on the Commission website inserting the Model TOIL term in 26 awards that provide overtime but do not contain a TOIL provision and replacing the existing TOIL term in 46 awards that provide for TOIL at ordinary rates, that is one hour off for each hour of overtime worked. No submissions objecting to the draft determinations were received and the determinations were signed on 22 August 2016. Draft determinations for the three awards for which a provisional view was expressed in the 11 July 2016 decision were not opposed. No submissions were received in relation to the Book Industry Award 2010. In correspondence dated 5 August 2016 ABI and NSWBC responded to the opportunity to comment on the draft variation determinations proposed in the Children’s Services Award 2010 and the Supported Employment Services Award 2010, as follows:

‘Having regard to the previous determinations of the Full Bench in these proceedings and the Full Bench’s provisional view, our clients do not intend to pursue a further opportunity to be heard in relation to these Awards.’

[6] Accordingly, 72 of the 113 modern awards which provide for overtime have now been varied to insert the model TOIL term and template agreement. The TOIL provisions in two of the remaining 41 modern awards will be determined in the award stage of the Review, leaving some 39 modern awards in which the insertion of the model TOIL term is yet to be determined.

[7] This decision deals with whether the TOIL model term should be inserted in 10 of the remaining modern awards:

(i) two awards for which a provisional view was expressed in the 11 July 2016 decision;
(ii) four awards in the Resources sector; and
(iii) four awards in the Maritime industry.

2. Awards subject of provisional views

[8] In the 11 July 2016 decision we expressed a provisional view that the model TOIL term should be inserted in two modern awards, the Mobile Crane Hiring Award 2010 and the Amusement, Events and Recreation Award 2010.

[9] Live Performance Australia, in a submission dated 17 August 2016, agreed with the proposition that the existing TOIL provision in the Amusement, Events and Recreation Award 2010 does not achieve the modern awards objective and they do not oppose the variation of the award to insert the model TOIL provisions. The AWU adopted a similar position and did not oppose the model TOIL term being inserted into this award.

[10] Ai Group and the CFMEU did not oppose the Full Bench’s provisional view with respect to the variation of the Mobile Crane Hiring Award 2010 to insert the model TOIL provisions.

[11] The awards were listed for hearing on 24 August 2016 to hear any objections to the provisional view expressed by the Full Bench in the 11 July 2016 decision. No objections were received and no parties appeared at the hearing to oppose the insertion of the model TOIL term. Accordingly, these awards will be varied to insert the model TOIL term and associated schedule containing the template TOIL agreements.

3. The Resources Sector and Maritime Industry awards

[12] In November 2015 the Australian Mines and Metals Association (AMMA) submitted that certain Resources Sector awards should not be varied to insert the model TOIL term. 9 Those awards are:

● Hydrocarbons Industry (Upstream) Award 2010 [MA000062]
● Mining Industry Award 2010 [MA000011]
● Oil Refining and Manufacturing Award 2010 [MA000072]
● Salt Industry Award 2010 [MA000107]

[13] Each of these awards contains an existing TOIL provision. 10 The relevant provisions are extracted at Attachment B. The TOIL provisions in these awards are in substantially the same terms and provide as follows:

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

(b) The employee may take one hour of time off for each hour of overtime, paid at the employee’s ordinary hourly base rate of pay.’

[14] AMMA submits that the model TOIL term deviates substantively from the provisions already contained within these awards, which are said to be simple to understand and to have met the modern awards objective since their commencement.

[15] AMMA and Maritime Industry Australia Limited (MIAL) jointly submitted that certain maritime industry awards should also not be varied to insert the model TOIL term. 11 These awards are:

● Marine Towage Award 2010 [MA000050]
● Ports Harbours and Enclosed Water Vessels Award 2010 [MA000052]
● Professional Diving Industry (Industrial) Award 2010 [MA000108]
● Dredging Industry Award 2010 [MA000085]

[16] Each of these four awards provides for overtime, but only the Ports, Harbours and Enclosed Water Vessels Award 2010 contains a TOIL provision. 12 The overtime provisions in Professional Diving Industry (Industrial) Award 2010 apply only to inshore divers (as opposed to offshore divers).13

[17] Conferences of interested parties were held before Deputy President Kovacic in March 2016 and 25 May 2016 in relation to the Resources sector and Maritime industry awards. There was no agreement regarding the inclusion of the model TOIL term in the Resources Sector awards. AMMA submitted that the current provisions in these awards should not be altered. The Australian Workers’ Union (AWU) stated that there were no industry specific reasons for not including the model TOIL term in these awards and the Australian Manufacturing Workers’ Union (AMWU) endorsed the AWU’s view.

[18] As to the Maritime awards, Maritime Industry Australia Limited (MIAL), AMMA, the Maritime Union of Australia (MUA) and the AWU agree that the model term should not be inserted in those awards. At the conference of 25 May 2016, the Deputy President highlighted that the Ports, Harbours and Enclosed Water Vessels Award 2010 currently includes a provision dealing with time off instead of overtime and inquired as to why in those circumstances it should not be replaced by the model term determined by the Full Bench. In short, both MIAL and the MUA contended that the existing award provision was operating effectively, with the MIAL also contending that the model term carried with it an additional regulatory burden which was not necessary in this case

[19] In a Statement 14 issued on 15 June 2016 we invited interested parties to make further submissions and to indicate whether they wished to be heard on their submissions.

[20]     AMMA and the MIAL indicated that they would not be providing any further submissions and would rely on the submissions already made.

[20] The AWU filed a further submission on 30 June 2016 in which it supported the inclusion of the model TOIL term in the Resource Sector awards and in the Ports Harbours and Enclosed Water Vessels Award 2010 (the Ports Award), but not in the Dredging Industry Award 2010 or the Professional Diving Industry (Industrial) Award 2010. The AWU does not have an interest in the Marine Towage Award 2010. The essence of the AWU’s submission in support of the variation of the Resource Sector awards and the Ports Award is that existing TOIL provisions in these awards are deficient in that they lack a number of the safeguards that form part of the model TOIL term and are not consistent with the modern awards objective and, further, no compelling reason has been advanced by AMMA and MIAL for not providing these safeguards for the employees covered by these awards.’

[21] In correspondence of 23 March 2016, the Maritime Union of Australia (MUA) stated its opposition to the insertion of the model TOIL term in the Maritime industry awards. The submission of the MUA was supported by AWU. 15

[22] It is convenient to deal first with the Resources Sector awards.

(i) The Resources Sector Awards

[23] As we have mentioned, AMMA relies on its previous submissions. AMMA’s written submission of 9 November 2015 advanced a number of arguments in support of its contention that the Resources Sector awards should not be varied to replace the existing TOIL terms. The points advanced may be summarised as follows:

(i) The existing TOIL provisions in these awards are simple to understand, have been meeting the modern awards objective and have not caused substantive difficulties for employers or employees since they commenced in January 2010.
(ii) The model TOIL term departs from the existing TOIL provisions in a number of respects and the additional provisions of the model TOIL term are variously characterised as ‘increased prescription’ and as imposing a ‘regulatory burden on employers’. In this context it is observed that:

‘employers are currently required to keep overtime and leave information in an employee’s record under the Fair Work Act 2009 (the Act). A cross-reference in the model term could be made to s.535 of the Act and the relevant Fair Work Regulations 2009.’

(iii) Where the Commission or a party is proposing to replace an existing term in a modern award ‘there needs to be probative and cogent evidence which demonstrates that such a change is necessary to achieve the modern awards objective’. No such industry specific evidence has been advanced in these proceedings.
(iv) The Commission should take into account previous Full Bench decisions relevant to any contested issue. In this context AMMA submits that the existing TOIL provisions in the Resource Sector awards ‘were subject to extensive submissions and consideration during the Part 10A award modernisation process’.

[24] It is convenient to deal with the last point (i.e. point (iv)), first.

[25] Contrary to AMMA’s assertion the existing TOIL provisions in the Resources Sector awards were not the subject of ‘extensive submissions and consideration during the Part 10A award modernisation process’. This issue received some, albeit limited, attention in the proceedings which led to the creation of the Hydrocarbons Industry (Upstream) Award 2010 (the Hydrocarbons Award) but, as far as we have been able to ascertain, was not the subject of any debate in the other three Resource Sector awards with which we are presently concerned.

[26] In relation to the Hydrocarbons Award clause 25.4 of the Exposure Draft provided as follows:

25.4 Time off instead of payment for overtime
(a) An employee may elect, with the consent of the employer, to take time off instead of payment for overtime at a time or times agreed with the employer.
(b) The employee may take one hour of time off for each hour of overtime, paid at the employee’s ordinary hourly base rate of pay.

[27] A clause in the same terms as clause 25.4 of the Exposure Draft was incorporated in the draft award proposed by AMMA (as clause 20.4) in its written submission in the award modernisation proceedings in respect of the Hydrocarbons Award, 16 but that submission did not address the TOIL term proposed.17

[28] The AWU and AMWU made submissions in respect of the clause. In a submission dated 13 June 2009 the AMWU submitted that the proposed TOIL provision gave ‘the employer the ultimate authority over … whether they are paid overtime or required to take additional leave’. 18 The AWU makes a similar point in its submission dated 18 June 2009:

‘2. The AMWU makes the point at paragraph 22 of their submission that the exposure draft provides the employer with ultimate authority over whether they are paid overtime or required to take additional leave …

[The submission then canvasses the overtime provisions in a range of related awards.]

17. However, none of these above provisions allow for time in lieu at the election of the employer …
19. For this reason, in the AWU submission, if an election for time in lieu is to be available, it should be at the discretion of the employee.’

[29] During the course of oral submissions dealing with the exposure draft AMMA made a short submission dealing with this issue:

‘…We don’t frankly understand why the unions are so opposed to time off in lieu arrangements. What the exposure draft does with one exception, which I will deal with in a moment, what the exposure draft does is simply provide this as a flexibility at the election of the employee.
It’s not something that an employer can impose. It’s something an employee may ask to do and then it has to be agreed and this simply reflects that some people would prefer to have time off rather than to be paid more money and it’s a sensible flexibility in my submission.
In respect of one further issue there's a challenge to the provisions concerning hand over for emergency work and it's said that maintenance employees are not and I think expressions beholden to their employer to continue working until such time as they're released. My primary submission in relation to that is in fact that's not right and if you look at the Bass Strait Maintenance Award in particular, if you ignore the Engineering Oil Companies Award for the reasons I've said, but if you look at the Bass Strait Platform Drilling Maintenance Award at clause 9.1.2 it actually contains a provision that says people will work as directed to perform emergency work such to safety which is exactly what the current exposure draft does.
It reflects an existing benefit and it shouldn't be changed. It's a practicality reality of this industry that we're dealing with remote locations where there's a finite group of people and if someone doesn't show up we can't have the whole thing shutting down. Similar provisions exist in the Hydrocarbons Award where people will continue to work until they're replaced and an employer is obliged to find a replacement as soon as practicable. Now, this is where the toil issue arises because in the exposure draft it's provided that a person who is required to work at the end of their cycle because they're not replaced gets time off at another time. So effectively their off duty period is extended by the period that they're required to remain on duty, or at the election of the employer overtime can be paid and that's said to be objectionable and it should be up to the employee as to what they should do.
The difficulty with that is that it poses real practicable problems and we're dealing with sites where it's simply not possible to schedule an additional flight because an employee wants to stay for an extra day or what have you. We need the practical arrangements for us to be able to decide based on travel from employers to be able to decide based on travel which way that should work given the particular rostering arrangements. So we maintain that the current arrangements are appropriate ones. We are very nearly there, your Honours. I can see the time and I will be only a couple more minutes.’ 19

[30] It is apparent from a consideration of the submissions put that the real issue in contest regarding the TOIL provision in the exposure draft was whether TOIL was accessed at the employee’s request or whether it would be directed by the employer. The consideration of this issue by the Award Modernisation Full Bench was brief, it said (at [179]):

‘ We have considered the AWU and AMWU submissions about the time off instead of payment for overtime clause but are not persuaded it will operate in the manner contended for by those unions. As we read the award it does not allow employers full discretion about whether to pay an employee overtime or require the employee to take time off instead. We have not varied the clause. If in practice this proves to be wrong a variation of the modern award may be considered.’ 20

[31] Contrary to the suggestion in AMMA’s submission, no detailed submissions or consideration was given to the existing TOIL term in the Hydrocarbons Award, or in respect of any of the other Resources Sector awards. The issue raised in the award modernisation proceedings simply focussed on whether the employer could direct an employee to take TOIL. This may be contrasted with the detailed consideration given to the issue of an appropriate TOIL provision in the Award Flexibility Decision of 16 July 2015 ([2015] FWCFB 4466) and in the subsequent decisions which have refined the content of the model TOIL term. The July 2015 Award Flexibility Decision canvassed the previous Test Case standards dealing with TOIL as well as the current legislative context, including s.65 of the Fair Work Act 2009 (the FW Act). No consideration was given to these matters in the award modernisation process.

[32] The simplicity of the existing TOIL provisions and the issue of regulatory burden (points (i) and (ii) advanced by AMMA) were thoroughly canvassed in the 6 October 2015 Award Flexibility decision ([2015] FWCFB 6847) and further modifications were made to the model TOIL term as a result of the April 2016 decision ([2016] FWCFB 2602) and the 8 July 2016 decision ([2016] FWCFB 4258). To place our consideration of AMMA’s submissions into context it is necessary to say something about the proceedings to date.

[33] These proceedings were initiated by an Ai Group claim to insert a model TOIL term into a number of modern awards. The proposed model TOIL term (as initially formulated) was in the following terms:

(a) An employee may elect, with the consent of the employer, to take time off in lieu of payment for overtime at a time or times agreed with the employer.
(b) Overtime taken as time off during ordinary time hours shall be taken at the ordinary time rate, that is an hour for each hour worked.
(c) An employer shall, if requested by an employee, provide payment, at the rate provided for the payment of overtime in the award, for any overtime worked under paragraph (c) of this subclause where such time has not been taken within four weeks of accrual. 21

[34] During the course of the hearing on 5 May 2015 the Full Bench raised a number of issues concerning Ai Group’s proposed model clause. These issues primarily related to the payment of untaken time off instead of overtime upon termination of employment and the need to address the potential for the indefinite accrual of such time off. Ai Group addressed these issues in its supplementary written submission of 18 May 2015 and proposed the addition of the following paragraphs to its proposed model clause:

(d) Subject to an employee’s right under (c), where the employee and employer are unable to reach agreement within 12 months as to when the time off in lieu will be taken, the employer may require the employee to take time off in lieu at a time of its choosing. This will be subject to the employer providing the employee with at least 4 weeks’ notice of the need to take such time off.
(e) If, upon termination of employment, an employee has an accrued entitlement to take time off in lieu which the employee has not yet accessed, the employee will be paid at the overtime rates applicable under the award for the corresponding overtime worked.’

[35] Ai Group submitted that the additional paragraphs, (d) and (e) above, were necessary to ensure that the relevant modern awards met the modern awards objective as contemplated by s.138. In respect of proposed paragraph (d), Ai Group submitted that it was intended to ensure that ‘employers retain some influence over the level of TOIL accruals beyond the initial decision to agree to this flexibility’ while ‘not removing the right of an employee to have his or her accrued entitlements paid out at overtime rates’. 22 It was also submitted that proposed paragraph (d) would be likely to ‘ensure employees are incentivised to access TOIL in a timely manner, rather than accruing it for an extended period or indefinitely’.23

[36] In the July 2015 proceedings Ai Group conceded that the merits of its claim relied ‘very heavily on the logic and findings’ 24 of the Family Leave Test Case. Ai Group also submitted that the context of the Family Leave Test Case decisions ‘remain salient in current context and they give great force to our claim’25 and that the model TOIL term proposed replicated the TOIL facilitative provision determined in the Family Leave Test Case.26

[37] As the Full Bench observed in the July 2015 decision:

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

“ ... In conducting the Review it is appropriate that the Commission take into account previous decisions relevant to any contested issue. The particular context in which those decisions were made will also need to be considered. Previous Full Bench decisions should generally be followed, in the absence of cogent reasons for not doing so.”  27

The above observation is particularly relevant in the present proceedings as Ai Group’s claims are said to be based on model clauses determined by a Full Bench of the AIRC in the 1994 Family Leave Test Case decisions (the Family Leave Test Case).’ 28

[38] However, contrary to Ai Group’s submission an examination of the Family Leave Test Case and the relevant arbitral history 29 demonstrated that the Ai Group claim departed from the Family Leave Test Case standard in terms of the safeguards incorporated into the proposed model term.30

[39] The July 2015 decision addresses the 1994 Family Leave Test Case decision at paragraphs [25]–[42] and [249]–[255]. The Full Bench acknowledged that ‘there are similarities and some significant differences between the current statutory context and the context at the time the Family Leave Test Case was decided’ 31 and concluded:

‘We have had regard to these contextual differences in our consideration of the Family Leave Test Case. Despite the differences in the statutory framework we have concluded that some aspects of the Family Leave Test Case TOIL provision retain their cogency in the current statutory context.’ 32

[40] The Full Bench noted at paragraph [264] of the July 2015 decision that the test case standard includes three safeguards which do not feature in Ai Group’s claim:

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

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

(iii) no provision is made in respect of recording the introduction of such facilitation.’ 33

[41] In the July 2015 decision the Full Bench was not persuaded that safeguards (i) and (ii) were necessary to achieve the modern awards objective:

‘The nature of the flexibility which is the subject of a TOIL provision only affects the employer and the individual employee concerned and the utilisation of the provision will depend on individual preference. It may be contrasted with a facilitative provision relating to a change to the spread of hours or an annual close down, which will affect most or all employees. In such cases a majority agreement safeguard may be appropriate.

In support of safeguard (ii), it is submitted that access to union advice will ensure that employees are aware of their rights before using the provisions. In our view it is more appropriate to provide clear decision rules regulating TOIL in the award clause itself. We propose to incorporate a number of safeguards which will provide clear rules about the taking and recording of TOIL.’ 34

[42] In relation to safeguard (iii) in paragraph [40], the Family Leave Test Case standard provided that once the employer and the majority of employees in an enterprise had agreed to establish a TOIL system then the terms of that arrangement were required to be set out in the time and wages records kept pursuant to the relevant regulations. 35

[43] In the July 2015 decision the Full Bench formulated a provisional model TOIL term, set out at paragraph [267] of that decision. The Full Bench expressed a provisional view only ‘because we are conscious that the scope and content of the variations we propose were not fully canvassed during the proceedings’. 36 Interested parties were provided with an opportunity to make further submissions about the content of the model TOIL term.

[44] The provisional model TOIL term included a requirement that a TOIL agreement between an employee and employer be in writing and be retained as an ‘employee record’ (within the meaning of the Fair Work Regulations 2009 (the FW Regulations)). These safeguards were intended to replace safeguard (iii) from the Family Leave Test Case standard. Safeguard (iii) was no longer appropriate in its previous form as the July 2015 Full Bench had decided to remove the requirement for a majority of employees in an enterprise to agree before a TOIL system could operate at that enterprise.

[45] The October 2015 decision dealt with submissions concerning the content of the provisional model TOIL term and accepted a number of amendments proposed by employer parties, in particular:

● the requirement in subclause 1.2(c) that, within four weeks of the overtime being worked, the employee and employer must agree on when TOIL will be taken, was deleted; 37 and

● the requirement in subclause 1.2(d) to take TOIL within 12 weeks of the overtime being worked was amended, the reference to ‘12 weeks’ was replaced with ‘six months’. 38

[46] As we have mentioned, the April 2016 decision and the 8 July 2016 decision made a number of changes to the model TOIL term and the template TOIL agreement, to provide greater clarity and to reduce regulatory burden.

[47] The model term requires that each agreement be in writing and be retained as an employee record. AMMA submits that the requirement for a separate written agreement ‘appears overly bureaucratic’.

[48] It is important to appreciate that a TOIL term is a facilitative provision – the underlying entitlement to the payment of additional remuneration for working overtime is retained but by individual agreement an employee may take time off instead. It is a self-executing provision which, unlike enterprise agreements, comes into effect without Commission scrutiny. Given the nature of the provision it is entirely appropriate that agreements to take time off instead of payment for overtime be in writing and retained as employee records.

[49] The requirement that an agreement be in writing ensures that both parties are aware of their rights and obligations, and provides an important safeguard for employees. As the Full Bench observed in the October 2015 decision:

‘In circumstances where TOIL is taken at the ordinary time rate, that is an hour TOIL for each hour of overtime worked, employers have a financial incentive to encourage such arrangements. It is important that such a financial incentive not result in employees being pressured into entering into TOIL arrangements. The requirement for a separate written agreement both evidences the consensual nature of the arrangement which has been entered into and provides an important safeguard for employees.’ 39

[50] The template agreement referred to earlier reduces the regulatory burden associated with the requirement that agreements be in writing. Further, as stated in the October 2015 decision, while the template agreement is in the form of a signed hard copy, an agreement under the model term can be made through an exchange of emails between an employer and employee or by other electronic means.

[51] It is also important that these agreements be retained as employee records. Such a requirement is consistent with the Family Leave Test Case standard and forms part of the model term. The requirement that such an agreement be in writing also provides a safeguard for employers should a dispute subsequently arise regarding the payment of overtime to an employee. Contrary to AMMA’s submission it would not be sufficient to include a cross reference to s.535 of the Fair Work Act 2009 (Cth) and the relevant Fair Work Regulations 2009. This is so because the relevant Fair Work Regulations dealing with overtime (reg 3.34) does not require a record to be kept of an agreement to take time off instead of payment for overtime. There is also considerable doubt as to whether reg 3.36 (dealing with leave entitlements) covers TOIL agreements.

[52] AMMA also points to three other aspects of the model TOIL term that are absent from the existing TOIL terms in the Resources Sector awards, namely:

● when TOIL must be taken;

● allowing an employee to unilaterally revoke a TOIL agreement and if TOIL has not been taken the employee must be paid for the overtime worked; and

●requiring unused TOIL to be paid out on termination;

●deeming a request for TOIL made pursuant to s.65 to be a request under the model term;

● and specifically prohibiting employers from exerting undue influence or undue pressure on an employee in relation to a decision by the employee to make, or not make, an agreement to take time off instead of payment for overtime.

[53] The reasons for including these elements in the model TOIL term have been fully canvassed in the previous decisions which have dealt with the content of the model term. In our view it is appropriate to provide such safeguards for all award covered employees, absent a sound reason for not doing so. Other than pointing out that these safeguards do not form part of the existing TOIL provisions in the Resources Sector awards AMMA advanced no cogent merit argument as to why these protections were not necessary in the context of these particular awards.

[54] As to the requirement in the model TOIL term for a separate written argument, AMMA submits:

‘To introduce a new requirement in resource industry modern awards for a separate written agreement per occasion, will likely lead to fewer employers either implementing TOIL arrangements in their workplace or agreeing to employee requests for TOIL, due to the increased prescription and regulatory burden imposed on employers.’ 40 (emphasis added)

[55] AMMA’s characterisation of the model term – as requiring a separate written agreement per occasion – while accurate at the time it was made, does not account for subsequent changes made to the model TOIL term. In the October 2015 decision we accepted that the requirement for a separate written TOIL agreement ‘on each occasion’ that overtime is to be worked gives rise to a regulatory burden. 41 The April 2016 decision made a number of changes to the form and content of the model TOIL term including an amendment to clause 1.2(b) of the October 2015 model TOIL term so that multiple amounts of overtime that have been worked in a particular pay period could be the subject of a single written agreement.42 Further, as made clear in the October 2015 and April 2016 decisions43 awards varied to include the model TOIL term will also have a schedule added, setting out a template TOIL agreement. The template agreement is intended to assist in reducing the regulatory burden associated with the introduction of the model TOIL term. The template agreement is included by way of example, there is no requirement to use it. While the template agreement is in the form of a signed hard copy document, a TOIL agreement may be made through an exchange of emails between the employer and employee or by other electronic means.

[56] We also note that AMMA provided no evidence to support its assertion that the introduction of the model term will reduce the availability of TOIL arrangements. AMMA’s submission may have been more persuasive had it been accompanied by evidence from employers actually covered by the awards in question.

[57] While the position of an interested party – such as AMMA – in respect of the content of a modern award remains a relevant consideration, such views are accorded less weight than in the past. In this regard it is important to appreciate that the nature of modern awards under the FW Act is quite different from the awards made under previous legislative regimes. 44 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.

[58] 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).

[59] Nor are there any 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. 45 

[60] At point (iii) in paragraph [22] above AMMA contends that where the Commission is proposing to replace an existing term in a modern award ‘there needs to be probative and cogent evidence which demonstrates that such a change is necessary to achieve the modern awards objective’. In our view AMMA’s contention overstates the position. In the Jurisdictional Issues decision the Full Bench made the following observations:

‘The need for a ‘stable’ modern award system suggests that a party seeking to vary a modern award in the context of the Review must advance a merit argument in support of the proposed variation. The extent of such an argument will depend on the circumstances. We agree with ABI’s submission that some proposed changes may be self evident and can be determined with little formality. However, where a significant change is proposed it must be supported by a submission which addresses the relevant legislative provisions and be accompanied by probative evidence properly directed to demonstrating the facts supporting the proposed variation.

In conducting the Review the Commission will also have regard to the historical context applicable to each modern award…

Although the Commission is not bound by principles of stare decisis it has generally followed previous Full Bench decisions…
These policy considerations tell strongly against the proposition that the Review should proceed in isolation unencumbered by previous Commission decisions. In conducting the Review it is appropriate that the Commission take into account previous decisions relevant to any contested issue. The particular context in which those decisions were made will also need to be considered. Previous Full Bench decisions should generally be followed, in the absence of cogent reasons for not doing so.’ 46

[61] In these proceedings we have taken into account previous Full Bench decisions dealing with TOIL provisions and have modified the outcome of those decisions having regard to the existing legislative framework. It seems to us that, as a matter of industrial merit, it is clear on their face that the existing TOIL provisions in the Resource Sector awards do not provide a fair and reliant safety net. In such circumstances it is unnecessary to identify by probative industry specific evidence in support of the proposed variations.

[62] These existing TOIL provisions are deficient in the following respects:

(i) they do not require TOIL agreement to be in writing and nor do they require employers to retain a record of TOIL agreements;
(ii) they do not specify a time period within which TOIL is to be taken;
(iii) they do not provide employees with an express right – exercisable at any time – to be paid for overtime which is the subject of a TOIL agreement but is not taken as time off;
(iv) they make no provision for the payment of unused TOIL upon termination of employment;
(v) they do not provide that an employer must not exert undue influence or undue pressure on an employee to make, or not make, a TOIL agreement; and
(vi) they contain no reference to s.65 of the Fair Work Act 2009 (FW Act).

[63] We have concluded that the TOIL provisions in these modern awards do not provide a fair and relevant safety net.

[64] We are satisfied that the variation of these modern awards to incorporate the model TOIL term is necessary to ensure that each of these modern awards provides a fair and relevant minimum safety net, taking into account the s.134 considerations (insofar as they are relevant). We are also satisfied that such variations would be consistent with the objects of the FW Act. We rely on the reasons set out in the Award Flexibility decisions to which we have referred.

[65] We acknowledge that these variations will, to some extent, increase the regulatory burden on business. In particular, agreements to take time off instead of payment for overtime will have to be in writing and be retained as employee records. However, in our view, fairness requires that such safeguards be included in these TOIL provisions. We now turn to deal with the Maritime awards.

(ii) The Maritime awards

[66] Three of the four Maritime awards provide for overtime but not for TOIL: Marine Towage Award 2010, Professional Diving Industry (Industrial) Award 2010, Dredging Industry Award 2010. The other Maritime award – the Ports, Harbour and Enclosed Water Vessels Award 2010 contains an existing TOIL clause. AMMA and the MIAL submit that none of these awards should be varied to insert the model TOIL term. The submissions advanced broadly replicated the points advanced by AMMA in respect of the Resources Sector awards. We adopt the observations we have already made about these submissions.

[67] As to the three Maritime awards which presently provide for payment of overtime but make no provision for TOIL we note the observation in the April 2016 decision in relation to 26 other modern awards that provided for payment for overtime but did not contain a TOIL provision:

‘[36] We are satisfied that the variation of these 26 modern awards (set out at Attachment D) to incorporate the April 2016 model TOIL term is necessary to ensure that each of these modern awards provides a fair and relevant minimum safety net, taking into account the s.134 considerations (insofar as they are relevant). We are also satisfied that such variation would be consistent with the objects of the Fair Work Act 2009 (Cth) (the FW Act).

[37] Flexible working arrangements, such as TOIL, may encourage greater workforce participation, particularly by workers with caring responsibilities. The insertion of an appropriate TOIL facilitative provision in these 26 modern awards is consistent with the objective of promoting social inclusion through increased workforce participation (see s.134(1)(c)).

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

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

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

[68] Consistent with the above observation we are satisfied that one of these three Maritime awards (the Professional Diving Industry (Industrial) Award 2010 should be varied to insert the model TOIL term, subject to the comments made below.

[69] We do not propose to insert the Model TOIL term in the Dredging Industry Award 2010 or the Marine Towage Award 2010. All interested parties opposed the variation of these awards and they both contain aggregate salary provisions which are frequently used in practice.

[70] In the April 2016 decision we determined that the model TOIL term would not be inserted in the Maritime Offshore Oil and Gas Award 2010 and the Seagoing Industry Award 2010 as they include an aggregate salary provision only and do not contain a separate entitlement to overtime. 47 The Marine Towage Award 2010 provides an option for payment of an aggregate wage or annual salary which incorporates payment for overtime as an alternative to the payment of minimum wages plus overtime. The Dredging Industry Award 2010 provides an aggregate salary incorporating an overtime component to employees on a fully operational dredge. We also note that employment under the Dredging Industry Award 2010 and the Marine Towage Award 2010 is frequently project based and involves rostering up to 12 hours or, under the Marine Towage Award 2010, 16 hours per day over seven days per week.

[71] Having regard to this combination of circumstances we see little utility in inserting the model TOIL provisions in these two awards.

[72] The Professional Diving Industry (Industrial) Award 2010 only provides payment for overtime for inshore divers in clause 24. There is no provision for overtime for offshore divers in the award. The model TOIL term will be varied to clarify that the entitlement to TOIL only applies to inshore divers.

[73] The Ports Award currently contains a TOIL provision which suffers from the same deficiencies identified at paragraph [55] in respect of the existing TOIL provisions in the Resources Sector awards. We have concluded that the TOIL provision in this award does not provide a fair and relevant safety net.

[74] We are satisfied that the variation of the Professional Diving Industry (Industrial) Award 2010 and the Ports Award to incorporate the model TOIL provisions (with the modification noted above) 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 would be consistent with the objects of the FW Act. We rely on the Award Flexibility decisions to which we have referred.

4. Conclusion

[75] The Mobile Crane Hiring Award 2010 and the Amusement, Events and Recreation Award 2010 will be varied to insert the model TOIL term and the associated schedule containing the template TOIL agreement.

[76] As to the Resources Sector and Maritime industry awards we propose to vary the six modern awards identified earlier to either replace the existing term with the model term, or, in the case of the Professional Diving Industry (Industrial) Award 2010 to insert the model TOIL term with the modifications noted in paragraph [71]. The associated schedule containing the template TOIL agreement will be inserted into the six awards. 48

[77] Draft determinations will be published shortly. Parties will have seven days to comment on the form of the determinations but this should not be viewed as an opportunity to re-agitate issues already determined by this decision.

5. Next steps

[78] After today’s decision, only 28 of the 113 modern awards which make provision for paid overtime remain outstanding. Twenty-one of these 28 awards currently provide for TOIL at overtime rates. The remaining eight awards for which award-specific submissions were filed are as follows:

● Live Performance Award 2010

● Journalists and Published Media Award 2010

● Broadcasting and Recorded Entertainment Award 2010

● Medical Practitioners Award 2010

● Clerks – Private Sector Award 2010

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

●Horticulture Award 2010

●Pastoral Award 2010

[79] A Statement will be issued later this week setting out our provisional view as to the proposed model TOIL term to be inserted into those awards that currently provide for TOIL at overtime rates and the process for determining the issues in respect of the remaining eight awards.

PRESIDENT

Attachment A—Final model term and template agreement

(extract from Attachment A to July 2016 decision)

A.1 Time off instead of payment for overtime

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

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

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

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

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

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

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

Note: An example of the type of agreement required by this clause is set out at Schedule [x]. There is no requirement to use the form of agreement set out at Schedule [x]. Agreement under clause A.1 can also be made by an exchange of emails between the employee and employer, or by other electronic means.

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

EXAMPLE: By making an agreement under this clause an employee who worked 2 overtime hours is entitled to time off 2 hours’ time off.

(e) Time off must be taken:

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

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

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

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

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

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

(j) An employee may, under section 65 of the Act, request to take time off, at a time or times specified in the request or to be subsequently agreed by the employer and the employee, instead of being paid for overtime worked by the employee. If the employer agrees to the request then clause A.1 will apply, including the requirement for separate written agreements for overtime that has been worked.

Note: If an employee makes a request under section 65 of the Act for a change in working arrangements, the employer may only refuse that request on reasonable business grounds (see section 65(5) of the Act).

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

Note: Under section 345(1) of the Fair Work Act, a person must not knowingly or recklessly make a false or misleading representation about the workplace rights of another person under clause A.1.

AGREEMENT FOR TIME OFF INSTEAD OF PAYMENT FOR OVERTIME

Name of employee: _____________________________________________

Name of employer: _____________________________________________

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

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

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

Amount of overtime worked: _______ hours and ______ minutes

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

Signature of employee: ________________________________________

Date signed: ___/___/20___

Name of employer
representative: ________________________________________

Signature of employer
representative: ________________________________________

Date signed: ___/___/20___

Attachment B—TOIL terms in Resource and Ports awards (see para [13])

 1   [2015] FWCFB 4466

 2   [2015] FWCFB 6847

 3   [2016] FWCFB 2602

 4   [2016] FWCFB 4258

 5   [2016] FWCFB 4579

 6   See [2015] FWCFB 4466 at paragraph [307]

 7   [2016] FWCFB 4418 at paragraph [49]

 8   Including the three determinations discussed in paragraph [5]

 9   AMMA submission 9 November 2015 at paragraph 27

 10   See Mining Industry Award 2010 (cl. 20.4), Oil Refining and Manufacturing Award 2010 (cl. 24.4), Hydrocarbons Industry (Upstream) Award 2010 (cl. 26.4), Salt Industry Award 2010 (cl. 23.4)

 11   MIAL and AMMA submission 9 November 2015 and MIAL and AMMA correspondence 24 May 2016

 12   See Ports, Harbours and Enclosed Water Vessels Award 2010 (cl. 20.2)

 13   Professional Diving Industry (Industrial) Award 2010 (cl. 24)

 14   [2016] FWCFB 3857

 15   MUA and AWU correspondence 23 March 2016

 16   AMMA submission in AM2008/44 dated 6 March 2009

 17   Other than a very brief mention at paragraph 124(g)

 18   AMWU submission AM2008/44 Oil and Gas Industry 13 June 2009 at paragraph 22

 19   Transcript 24 June 2009 at paragraphs 1471-1474

 20   [2009] AIRCFB 826 at [179]

 21   Ai Group submission 13 November 2014 at para [7]

 22   Ai Group supplementary submission 18 May 2015 at paras 53–54

 23   Ibid at para. 54

 24   Transcript 5 May 2015 at para. 200

 25   Ibid

 26   Ai Group submission in reply 23 April 2015 at para. 2

 27   [2014] FWCFB 1788 at para. [27]

 28   [2015] FWCFB 4466 at paras [23]–[24]

 29   Set out at paras [26]–[38] of [2015] FWCFB 4466

 30   Ibid at para. [205]

 31   Ibid at para. [249]

 32   Ibid at para. [255]

 33   Ibid at para. [264]

 34   Ibid at paras [266]–[267]

 35   See clause 8.5 of the variation order to the Laundry Industry (Victoria) Interim Award 1993 set out at [2015] FWCFB 4466 at paragraph [38]

 36   [2015] FWCFB 4466 at para. [281]

 37   [2015] FWCFB 6847 at para. [50]

 38   Ibid

 39   Ibid at para. [34]

 40   AMMA written submissions, 9 November 2015 at paragraph 19

 41   [2015] FWCFB 6847 at paragraph [35]

 42   [2016] FWCFB 2602 at paragraphs [18]-[22]

 43   [2015] FWCFB 6847 at paragraph [35]; [2016] FWCFB 2602 at paragraph [5]

 44   National Retail Association v Fair Work Commission [2014] FCAFC 118 at [18]

 45   The Australian Industry Group re Manufacturing and Associated Industries and Occupations Award 2012  [2012] FWA 2556

 46   [2014] FWCFB 1788 at paragraphs 23, 24, 25 and 27

 47   [2016] FWCFB 2602 at paragraph [50] (see also [2015] FWCFB 4466 at para [308])

 48   [2016] FWCFB 2602 at paragraph [5] (see also [2015] FWCFB 6847 at para [35])

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