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Matter No.: AM2014/1 (4 Yearly Review of Modern Awards) Re: Issues Paper, published 24 January 2014
Lodged by: Victoria Gilmore, Department of Employment On behalf of the Australian Government Address for Service: GPO Box 9880 CANBERRA ACT 2601
Telephone: (02) 6240 4988
1. Introduction 1.1. On 24 January 2014 the Fair Work Commission published an Issues Paper dealing with issues related to the first 4 yearly review of modern awards (the Review). The paper is to assist in the facilitation of a conference being convened by the Commission on 5 February 2014. The conference will commence the initial stage of the Review. 1.2. Senator the Hon Eric Abetz, Minister for Employment, indicated in correspondence of 9 December 2013 to the President of the Commission, Justice Ross, that the Coalition Government would participate in the Review, including the initial stage. 1.3. The Government makes the following submissions at the outset of the Review and in response to the draft propositions contained in the Issues Paper. 2. Contrast with Two Year Review of Modern Awards (Transitional Review) 2.1. The Government agrees with the Commission’s first draft proposition – the 4 yearly review is broader in scope than the Transitional Review of modern awards completed in 2013 – for the reasons outlined in the Issues Paper. 2.2. In the decision about the scope of the Transitional Review the Full Bench advised parties that “awards made as a result of the award modernisation process are now deemed to be modern awards for the purpose of the Fair Work Act 2009 (see Item 4 of Schedule 5 of the Transitional Provisions Act). Implicit in this is a legislative acceptance that the terms of the existing modern awards are consistent with the modern awards objective”. 1 2.3. While the current modern awards were consistent with the modern awards objective in 2008-09 when they were drafted, the Commission must use this Review to ensure modern awards remain consistent with the modern awards objective and consider whether the practical effect of modern awards over the previous four years has adequately reflected the objective. 2.4. The second reading speech to the Fair Work Bill 2008 makes it clear that awards should be responsive to the changing needs and expectations of the community.
 FWAFB 5600 at para 85.
2.5. The Government submits that 4 yearly reviews are to be a comprehensive examination of the minimum terms and conditions of employment in modern awards, and their relevance to modern workplaces. The 4 yearly reviews are also an opportunity to re-align or dis-amalgamate awards, where necessary. 2.6. The Government acknowledges the potential for significant changes to modern awards to occur as a result of this Review. With education being one of its core functions, the Fair Work Ombudsman will play an important role in ensuring that the community is made aware and has access to information about significant changes to modern awards arising from this process. The Fair Work Ombudsman can also provide the Commission with information about difficulties in the community in understanding modern awards. 3. Modern Awards Objective 3.1. The Government agrees with the draft proposition that the modern awards objective, set out in s.134 of the Fair Work Act is relevant to the conduct of the Review. 3.2. The Government submits that modern awards should support job creation and therefore significant weight should be given to paragraphs (c), (d), (f), (g) and (h) of the modern awards objective. 3.3. The softening economic environment and labour market should be carefully considered by the Commission during the Review. In particular, the Commission should consider the impact of employment costs on employers’ decision to hire workers over the next four years. 3.4. The Government also submits that the Commission should take into account the need to ensure a simple, easy to understand modern awards system when setting and varying modern awards. Due to the limited timeframes of the award modernisation process, current modern awards contain a high degree of detail and can be difficult to interpret. They can be particularly confusing for small business operators and individual employees who generally do not have specialist workplace relations experience.
3.5. In the Issues Paper, the Commission specifically asked parties for submissions on the impact of new paragraph (da) in the modern awards objective – the need to provide additional remuneration for employees working at particular times. The Government submits, consistent with evidence of the then Department of Education, Employment and Workplace Relations to the Senate Education, Employment and Workplace Relations Legislation Committee on 22 April 2013, that this paragraph merely requires the Commission to consider the existence of entitlements rather than requiring the addition of new clauses in modern awards which currently do not contain such clauses. 3.6. Paragraph (da) should not be read in isolation. It is an element of the modern awards objective. The Commission must balance paragraph (da) against other elements of the objective when considering whether modern awards provide a fair and relevant minimum safety net. The Commission is also responsible for determining whether the additional remuneration and the hours and/or days in which it is provided in modern awards are appropriate in a particular industry. 4. Division 3 – Terms of Modern Awards (s.136-155) 4.1. The Government agrees with the draft proposition that the Commission’s powers under Division 3 of Part 2-3 of the Fair Work Act are relevant to the Review and any variation to a modern award arising from the Review must comply with this division. 4.2. The Government submits that s.138 is especially relevant to the Review. The Explanatory Memorandum to the Fair Work Bill 2008 describes this section as providing that “the scope and effect of permitted matters and mandatory terms of a modern award must be directed at achieving the modern awards objective of a fair and relevant safety net that accords with community standards and expectations” [emphasis added]. 4.3. This section imposes a significant obligation on the Commission to ensure modern awards do not contain clauses beyond what was envisaged by the legislature. It is also a means by which modern awards should be kept relatively succinct. The Government encourages the Commission during this Review to carefully and critically work through the provisions of each award.
4.4. Ensuring modern awards are concise and provide only minimum terms and conditions of employment will encourage parties to bargain for enterprise agreements that suit the particular needs of their workplace – consistent with paragraph (b) of the modern awards objective and for small businesses to grow, prosper and employ – consistent with paragraph (h). 5. Division 5 – Exercising Modern Award Powers Outside the 4 Yearly Reviews and Annual Wage Reviews 5.1. The Government agrees with the draft proposition that the Commission’s powers under Division 5 of Part 2-3 of the Fair Work Act are separate from the Review. 6. Division 6 – General Provisions Relating to Modern Award Powers 6.1. The Government agrees with the draft proposition that there is a degree of overlap between Division 6 of Part 2-3 of the Fair Work Act and s.156. 7. Process 7.1. The Government acknowledges the Commission has broad discretion about how it conducts the Review. 7.2. The Government supports the decision to conduct the Review by way of submissions, rather than applications to vary a modern award. This approach is more accessible to unrepresented employees and employers. 7.3. The Government encourages the Commission to continue to ensure the Review is accessible to and understood by all employers and employees. 7.4. The establishment of a core Full Bench may have a number of benefits, including greater consistency in decision making and consequently greater consistency in clauses between modern awards. The Government also suggests that the Commission consider the potential benefits of ensuring modern awards are reviewed by at least one Member of the Commission that is not on the relevant panel and not in possession of a detailed understanding of the history of a particular award.
7.5. Once the ‘common issues’ are identified the Government will determine which of these it will make submissions in relation to. The Government would not object to the same ‘common issues’ reviewed during the Transitional Review. 7.6. Given that the model transitional arrangements included in most modern awards (designed to allow employers and employees time to adjust to new minimum wages, loadings, penalty rates and shift allowances in modern awards) operate up until 30 June 2014, it would be appropriate to schedule any review of penalty rates after this date. 7.7. The Government notes the Commission’s request at paragraph  of the Issues Paper that parties be mindful of the importance of advancing cogent and probative evidence when presenting submissions throughout the Review. 7.8. Evidence and advice from the Fair Work Ombudsman will be relevant in this regard. The Fair Work Ombudsman will advise the Government and the Commission as necessary throughout the Review, about its functions and available evidence. 7.9. The Government strongly supports the Commission’s intention, set out at paragraph  of the Issues Paper, to allow the Full Bench conducting the Review to propose a number of technical and drafting changes to current modern awards to standardise wording or correct minor errors. 7.10. The Government submits that a concerted effort to standardise and simplify the language of modern awards would improve community understanding of employment conditions. 8. Conclusion 8.1. This Review is an opportunity to test whether modern awards provide a fair and relevant minimum safety net and benchmark for bargaining in light of the needs and expectations of the community four to five years on from award modernisation. 8.2. The Government will be represented at the conference on 5 February 2014 by officials from the Department of Employment. 8.3. The Government will make further submissions throughout the Review as necessary incorporating relevant data and data analysis where possible.
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