accredited specialists, understanding and law interpreting

Brian Wi l l iamson & Adrian Barwick Accredi ted Specia l i s ts , Employment & Indust r ia l Law of : Wi l l iamsonBarwick, formerly: Wi l l iamsonLegal 2O October 2017

UNDERSTANDING AND INTERPRETING MODERN AWARDS

PRESENTATION FOR TAPS CONFERENCE 2017

© WilliamsonBarwick 2017 - Training Purposes Only

Mo d e r n a wa r d c o ve r a g e

I n t e rp re t i ng

m o d e rn a wa r d s I n t e rac t i o n

b e t we e n a wa r d s a n d e n t e rp r i s e a g r eeme nts , NES , l e g i s l a t i o n a n d c o n t rac t s W he n d o e s a

m o d e rn a wa r d a p p l y? I n t e rp re t i ng

p e n a l t y c l a u s e s I n d i v i d u a l

f l e x i b i l i t y a r r an g ements G u a ra n tee o f

a n n u a l e a r n i ng s

Agenda

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Modern award coverage Interpreting modern awards

Interaction between awards and enterprise

agreements, NES, legislat ion and contracts When does a modern award apply?

Interpreting penalty clauses

Individual f lexibi l i ty arrangements

Guarantee of annual earnings

ROAD MAP

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122 modern awards which apply on either industry or

occupation lines The Fair Work Act 2009 (Cth) (FW Act) addresses many

aspects of what a modern award can and cannot contain and how an award operates in practice

Why is compliance with modern awards so important? strict obligation for employers to comply with awards in their

entirety since a breach of an award is a contravention of s. 45 of the FW Act accessorial liability risk for anyone ‘involved in a contravention of

a civil remedy provision’ (s. 550 FW Act)

MODERN AWARD COVERAGE(1)

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agreements, NES, legislat ion and contracts

When does a modern award apply? Interpreting penalty clauses in modern

awards



ROAD MAP

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The courts apply a range of sensible principles to interpret the meaning of particular award provisions including: unless there is an express definition to the contrary in the award,

words must be given their ordinary meaning if the terms of an award are clear and unambiguous, then the award

must be interpreted in accordance with that clear and unambiguous meaning what did the framers of the document intend, bearing in mind that

such framers were likely to have a practical mindset the framers may have been more concerned with expressing an

intention in ways likely to have been understood in the relevant industry and industrial relations mindset, rather than with legal niceties or jargon. The award is to be read to give effect to its evident purposes, having regard to the context, rather than a strict legal interpretation of the words

INTERPRETING MODERN AWARDS (1)

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the court should strive to give effect to the intention of the authority which made the award, provided the words in the award can reasonably be interpreted to mean that which was intended the words in the award should not be interpreted in a strict,

technical fashion, because those who framed it were often non-lawyers drafting words in the context of custom and practice the meaning of particular words should be read in the context of

the award as a whole, and in the context of the particular clause/section the court’s recourse to extrinsic material in the interpretation of

awards is not dependent upon the existence of ambiguity in the award.

INTERPRETING MODERN AWARDS (2)

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agreements, NES, legislation and contracts

When does a modern award apply?




ROAD MAP

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where an enterprise agreement applies, it usually (but not always) entirely displaces an otherwise applicable award, resulting in the award not applying to the relevant employees (s 57 FW Act)

as a general rule, an award prevails over a State or Territory law to the extent of any inconsistency (s 29) except in relation to anti-discrimination laws and ‘non-excluded’ matters (s 27)

INTERACTION BETWEEN AWARDS AND ENTERPRISE AGREEMENTS, NES, LEGISLATION AND CONTRACTS (1)

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awards must be consistent with the NES (s 136) and cannot exclude a NES term (s 55(1)).

awards can include terms dealing with the following specific NES related issues: averaging of hours of work over a specified period (s 63) cashing out and taking annual leave and paid personal/carer’s leave (ss 93,

101) providing evidence in relation to taking paid or unpaid personal/carer’s leave

(s 107(5)) notice of termination by employees (s 118)

awards can include terms that ‘supplement’ a NES term, so long as “the effect of those terms is not detrimental to an employee in any respect”.

the parties may negotiate terms and conditions in an employment contract that are more beneficial to an employee

INTERACTION BETWEEN AWARDS AND ENTERPRISE AGREEMENTS, NES, LEGISLATION AND CONTRACTS (2)

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ROAD MAP

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Industry awards apply to the industry in which the employer operates. For example: “employers that operate airports and their employees” Having determined the industry applies to the employer, for the award to apply to the employee concerned, the employee’s function must also fall within one of the award classifications

Occupation awards cover an employee by virtue of their occupation. For example: “employers of air pilots and those employees”

WHEN DOES A MODERN AWARD APPLY? (1)

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(Scenario A) One industry award applies and the employee’s occupation might fit within a classification in the award resulting in the employee being award covered, or it might not, resulting in the employee being award-free. Pointers include: ‘indicative jobs” within award classifications are exactly that – they

are indicative only Consider factors including the employee’s job description,

remuneration, actual time occupied in different duties, status/level, qualifications and supervisory responsibilities, to determine the ‘principal purpose’ of the employee’s function


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(Scenario B) One industry award clearly applies, but the employee’s function spans across two different classifications so their classification and consequently their pay rate is unclear consider if there is a ‘mixed functions’ clause in the award and, if

so, pay the employee accordingly if there is no such clause, make a careful assessment

(Scenario C) Two industry awards both seemingly apply If the awards include ‘multiple coverage’ provisions, select the

award classification which is the most appropriate to the work performed by the employee and the work environment If only one award has a ‘multiple coverage’ provision, the situation

is unclear


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(Scenario D) One industry award and one occupation award both seemingly apply easily resolved where the occupation award includes an “exclusion

clause” which states that the award does not apply to an employee bound by another award with applicable classifications if there is no “exclusion clause”, the awards may include multiple

coverage provisions, as discussed earlier, which allow for determination of the “most appropriate” award

(Scenario E) Hybrid industries with different industry awards a ‘hybrid business’ is effectively operating 2 distinct businesses in 2

different industries. For example, a business that operates a hair salon within a retail store, is arguably in the hairdressing industry and also in the retail industry. No easy answers for this scenario.


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ROAD MAP

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Generally, where there is uncertainty, it can be implied into an award that an employee is not entitled to receive a penalty calculated on a penalty

Example: An employee works a permanent night shift (for which a night shift

penalty of say 25% is paid) and also works overtime (for which, say time and a half is paid) Typically, the employee is not entitled to have their overtime rate

calculated on top of the night shift penalty rate. Instead the employee receives: 25% night shift penalty for ordinary hours worked on night shift, and 150% ordinary pay rate for overtime hours worked

INTERPRETING PENALTY CLAUSES (1)

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The exception is where the award specifies that the rate is calculated on an employee’s “all-purpose rate”. This requires a penalty to be paid on a penalty.

Example: Clause 13.1 of the Food, Beverage and Tobacco Manufacturing

Award 2010 states that the 25% casual loading is part of a casual employee’s “all-purpose rate”. The relevant overtime rate is time and a half. When calculating the pay rate for any overtime worked by a

casual, the casual hourly rate including the 25% loading must be used i.e. overtime will be paid at 150% x 125% of ordinary pay rate (187.5%).

INTERPRETING PENALTY CLAUSES (2)

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Individual flexibility arrangements


ROAD MAP

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Each modern award includes an “individual flexibility arrangement” (IFA) clause which allows an employer and an employee to agree to an IFA.

When an IFA is in place, the award has effect in relation the employee as if it were varied by the IFA. The IFA is taken to be a term of the award. However, the IFA can only impact on the individual employee who has agreed to it

Very limited use in practice because an IFA: can only relate to issues outlined in the IFA clause in the relevant

award – typically the time at which work is performed, overtime and penalty rates, allowances and leave loadings can only be entered into after employment has commenced cannot be a condition of accepting employment can be terminated either by mutual consent or by either party

providing 13 weeks’ notice

INDIVIDUAL FLEXIBILITY ARRANGEMENTS (1)

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ROAD MAP

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An award does not apply to an employee while the employee is a ‘high income employee’. ‘High income employees’ are employees: with annual earnings that exceed the ‘high income threshold’ - currently

$142,000 but indexed each year – bonuses and compulsory superannuation payments are excluded from this threshold, and who have entered into a guarantee of those annual earnings for the

guarantee period A guarantee is only effective if: accepted by the employee, and the guarantee undertaking and acceptance were either given before the

employment commenced or within 14 days after employment commenced, or within 14 days after the parties agreed to vary the terms of employment, for example after a pay increase

Technically the employee is sti l l covered by the award but the award does not apply to them. However, the employee sti l l has unfair dismissal protection.

GUARANTEE OF ANNUAL EARNINGS (1)

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Today’s presentation has been intended to cover the basic principles involved in understanding and interpreting modern awards

These principles are largely common sense because awards are intended to be common sense, practical documents that apply in everyday work contexts.

In addition to understanding these principles, you will have seen how critical it is to comply strictly with awards.

CONCLUSION

Level 10 47 York St reet Sydney 02 9251 4900 w i l l i a m s o n b a r w i c k . c o m

Brian Williamson & Adrian Barwick of WilliamsonBarwick

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accredited specialists, understanding and law interpreting

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