4 yearly review of modern awards–Payment of wages [2020] FWC 3157

1 Fair Work Act 2009 s.156 - 4 yearly review of modern awards 4 yearly review of modern awards–Payment of wages (AM2016/8) JUSTICE ROSS, PRESIDENT MELBOURNE, 16 JUNE 2020 4 yearly review of modern awards – common issue – payment of wages – conferences listed [1] On 20 May 2020 the Payment of Wages Full Bench issued a decision1 (the May 2020 Decision) stating that a number of conferences would be convened shortly in respect of the following awards:  Aged Care Award 2010;  Building and Construction General On-site Award 2010;  Business Equipment Award 2010;  Electrical, Electronic and Communications Contracting Award 2010;  Graphic Arts, Printing and Publishing Award 2010;  Food, Beverage and Tobacco Manufacturing Award 2010; and  Manufacturing and Associated Industries and Occupations Award 2010. [2] The subject matter for each conference is set out below. Aged Care Award 2010 [3] The following parties filed submissions:  Australian Business Industrial representing the Australian Childcare Alliance Inc and the New South Wales Business Chamber Limited (ABI) on 21 August 2019 and 19 April 2020  Australian Industry Group (Ai Group) on 21 August 2019 and 19 April 2020  Health Services Union (HSU) on 17 April 2020 [4] The Aged Care Award 2010 provides that wages may be paid by cash or electronic funds transfer. In relation to termination payments clause 17.3 provides as follows: 17.3 Termination 1 [2020] FWCFB 1131 [2020] FWC 3157 STATEMENT -- 1 of 11 -- [2020] FWC 3157 2 When notice of termination of employment has been given by an employee or an employee’s services have been terminated by an employer, payment of all wages and other moneys owing to an employee will be made to the employee by no later than the last day of the formal notice period. [5] ABI and Ai Group sought to replace the current clause 17.3 with the model term. [6] In the May 2020 Decision the Full Bench rejected the Employer applications to vary the Aged Care Award and went on to say: ‘While not a model of clarity it appears that the time period specified in the current clause 17.3 only applies in circumstances where an employees’ employment is terminated by the giving of notice of termination. As acknowledged by the HSU the current term does not apply to cases of summary dismissal and payment in lieu of notice; nor does it appear to apply in circumstances where an employee resigns without providing the requisite notice. The HSU acknowledges that the current term is silent on the timing of termination payments in the case of summary dismissal and payment in lieu of notice and proposes a ‘limited variation’ to clause 17.3, by adding the following paragraph: ‘In all other circumstances, the employer must pay an employee no later than 7 days after the day on which the employee’s employment terminates all wages and other moneys owing to an employee.’ In our view where the scope of a current termination payment term is sought to be extended, either to a broader class of termination or in respect of a broader range of termination entitlements, then the 7 day period in the model term should apply to the areas to which the clause is extended. Other elements of the current term can remain. In that regard we would propose to retain the entitlement to be paid ‘all wages and other moneys owing’ on termination for the reasons given in respect of the Nurses Award. The parties are directed to confer on the form of a draft variation having regard to views expressed above. A conference will be convened in due course.’ 2 [7] The conference date and time is set out in the table below at [35]. Building and Construction General On-site Award 2010 [8] The following parties filed submissions:  Ai Group on 21 August 2019 and 19 April 2020  Housing Industry Association (HIA) on 21 August 2019 and 20 March 2020  Construction Forestry Maritime Mining Energy Union – Construction and General Division (CFMMEU (C & G)) on 25 September 2019 and 23 March 2020 [9] The relevant provision in the Building and Construction General On-site Award 2010 provides as follows: 2 [2020] FWCFB 1131 at [207] – [210] -- 2 of 11 -- [2020] FWC 3157 3 31.4 When notice is given, all monies due to the employee must be paid at the time of termination of employment. Where this is not practicable, the employer will have two working days to send monies due to the employee by registered post (or where paid by EFT the monies are transferred into the employee’s account). [10] Ai Group sought to delete clause 31.4 and replace it with the model term. [11] In the May 2020 Decision the Full Bench rejected Ai Group’s application to vary the Building and Construction General On-site Award 2010 and went on to say: ‘As we have noted in an earlier decision, the current termination payment term in the Building Onsite Award does not address all of the circumstances in which termination payments may be required: ‘Some of the existing terms do not cover all of the circumstances resulting in termination of employment. For example, clause 31.4 of the Building and Construction General On-Site Award 2010 provides: ‘When notice is given, all monies due to the employee must be paid at the time of termination of employment. Where this is not practicable, the employer will have two working days to send monies due to the employee by registered post (or where paid by EFT the monies are transferred into the employee’s account).’ Clause 31.4 does not make provision for termination without notice, abandonment or payment in lieu of notice.’3 The CFMMEU (C&G) submits that there is merit, consistent with the objective of the model term, in modifying the model term to accommodate the existing award provisions and proposes that the Building On-site Award be varied in accordance with the draft clause set out in Appendix B of its submission (see below). 31.4 Payment on termination of employment (a) If the employment of an employee terminates, Tthe employer must pay an employee the following amounts in accordance with this clause no later than 7 days after the day on which the employee’s employment terminates: (i) the employee’s wages under this award for any complete or incomplete pay period up to the end of the day of termination; and (ii) all other amounts that are due to the employee under this award and the NES. (b) The amounts described at clause 31.4(a) must be paid to the employee at the time of termination of employment, provided that where this is not practicable, the employer will have two working days to send monies due to an employee by registered post or, where the employee is paid by EFT, transfer the monies into the employee’s account. 3 [2016] FWCFB 3177 at paras [60] and [61]. -- 3 of 11 -- [2020] FWC 3157 4 (c) The requirement to pay wages and other amounts under paragraph (a) is subject to further order of the Commission and the employer making deductions authorised by this award or the Act. Note 1: Section 117(2) of the Act provides that an employer must not terminate an employee’s employment unless the employer has given the employee the required minimum period of notice or “has paid” to the employee payment instead of giving notice. Note 2: Paragraph (b) allows the Commission to make an order delaying the requirement to make a payment under clause X. For example, the Commission could make an order delaying the requirement to pay redundancy pay if an employer makes an application under section 120 of the Act for the Commission to reduce the amount of redundancy pay an employee is entitled to under the NES. Note 3: State and Territory long service leave laws or long service leave entitlements under s.113 of the Act, may require an employer to pay an employee for accrued long service leave on the day on which the employee’s employment terminates or shortly after. We do not propose to make the variation proposed. The proposed amendment appears to seek to expand both the class of termination payments to be subject to the clause (to include all other amounts due to the employee under the award and the NES) and the circumstances to which the clause applies. As to the latter point, the current term only applies to termination by notice and the CFMMEU (C & G) proposed variation would extend the term to termination without notice. In our view where the scope of a current termination payment term is extended in the manner proposed the 7-day period in the model term should apply to the areas to which the clause is extended. Hence, in this instance, in circumstances of summary dismissal a 7-day payment period would apply. Similarly, a 7-day payment period would apply to NES payments and ‘other amounts due’ under the award. These issues require further examination. A conference of interested parties will be convened shortly.’ 4 [12] The conference date and time is set out in the table below at [35]. Business Equipment Award 2010 and Electrical, Electronic and Communications Contracting Award 2010 [13] The following parties filed submissions:  ABI on 21 August 2019 and 19 April 2020  Ai Group on 21 August 2019 and 19 April 2020  Communications, Electrical and Plumbing Union of Australia (CEPU) on 25 September 2019 [14] The termination payment provisions in these two awards are similar and were dealt with together in the May 2020 Decision. 4 [2020] FWCFB 1131 at [238] – [242] -- 4 of 11 -- [2020] FWC 3157 5 [15] ABI and Ai Group sought to delete clause 25.4 from the Business Equipment Award and clause 22.3 from the Electrical Contracting Award and insert the model term instead. [16] The CEPU opposed the applications to vary these awards submitting that no evidence is provided in support of the proposed variations and the Commission cannot be satisfied there is merit to the applications. In particular, the CEPU notes that the employer groups have not provided any evidence of employers not being able to make the payment of wages within the timeframe in the relevant industries. [17] In relation to Ai Group’s concern about the limitation on the amount of cash that can be made via post5 the CEPU notes that the relevant modern awards all contemplate other methods such as providing a cheque or bank transfer.6 On this basis the CEPU contended that any amounts exceeding $2007 can be paid via an alternate method. In the May 2020 Decision the Full Bench said: ‘The difficulty with the CEPU’s response is that the current clauses provide that in circumstances where termination payments are not paid on the day of termination they must be forwarded by post the next working day. It seems to us that in this context ‘forwarded by post’ means to send cash or a cheque ‘by post’. As mentioned earlier, there has been an overall increase in the reliance on EFT transactions as a means of processing wage payments by employers and a marked decrease in the use of cheques and cash to make such payments. In these circumstances it seems to us that the termination payment clauses in these awards require amendment to add the following: ‘Provided that where payment is normally made by electronic funds transfer all monies due to an employee may be transferred into the employee’s account on the next working day’. A conference of interested parties will be convened shortly to discuss this issue.’8 [18] The conference date and time is set out in the table below at [35]. Graphic Arts, Printing and Publishing Award 2010 [19] The following parties filed submissions:  ABI on 21 August 2019 and 19 April 2020  Ai Group on 21 August 2019 and 19 April 2020  Australian Manufacturing Workers’ Union (AMWU) on 25 September 2019 5 See [27]-[29] Ai Group’s submission. 6 See clause 25.1 of the Business Equipment Award 2010 & clause 22.2 of the Electrical, Electronic and Communications Contracting Award 2010. 7 Ai Group’s position is that cash exceeding $200 in value cannot be sent by post. See [27] of Ai Groups submissions. 8 [2020] FWCFB 1131 at 249] – [251] -- 5 of 11 -- [2020] FWC 3157 6 [20] The Graphic Arts Award provides that wages may be paid in cash, cheque or by electronic funds transfer, at the employer’s discretion. In relation to termination payments clause 28.5 provides as follows: 28.5 Payment on termination On termination of employment, all monies due to an employee must be paid on the day of termination. When an employee is dismissed without notice all monies are to be forwarded to the employee by post or electronic funds transfer by the end of the next business day following the termination. [21] ABI and AI Group sought to vary the award by deleting clause 28.5 and inserting the model term. [22] We agree with Ai Group that we are not ‘constrained’ by Senior Deputy President Hamberger’s decision. It was a decision of a single member in the context of the Transitional Review, and that review was narrower in scope than the current 4 yearly review. However, the Senior Deputy President’s decision forms part of the broader context to our consideration of the claims in the present proceeding. [23] The AMWU opposed the ABI and Ai Group applications and proposed the draft determination below which it submits ‘better reflects the current entitlements in the award’.9 The AMWU’s draft determination seeks to replace clause 28.5 with the following (Notes omitted): ‘28.5 Payment on termination of employment (a) The employer must pay an employee the following amounts in accordance with this clause: (i) the employee’s wages under this award for any complete or incomplete pay period up to the end of the day of the termination; and (ii) all other amounts that are due to the employee under this award and the NES. (b) The amounts described at clause 28.5 (a) must be paid to the employee: (i) on the day of termination; or (ii) By electronic funds transfer the next working day after the day on which the employee’s employment terminates. (c) When an employee is dismissed without notice, the amounts described in 28.5(a) are to be forwarded to the employee electronic funds transfer by the end of the next working day. (d) The requirement to pay wages and other amounts under clause 34.3 is subject to further order of the Commission and the employer making deductions authorised by this award or the Act.’ 9 AMWU submission 25 September 2019 at [33] -- 6 of 11 -- [2020] FWC 3157 7 [24] In reply, Ai Group submitted that the AMWU’s proposed variation does not address ‘the many concerns raised by Ai Group regarding the extant provision’ and that the proposal advanced ‘would only exacerbate our concerns’.10 Further, Ai Group submits: ‘The AMWU’s proposals seek to ‘have the best of both worlds’ by closing any regulatory gap left by the current provisions in respect of the timeframe within which certain payments must be made, without consideration for the need to ensure that the provisions strike an appropriate balance between the interests of employees and employers. The Model Clause better achieves that balance and should therefore be adopted instead of the union’s proposals.’ [25] In the May 2020 Decision, the Full Bench said: ‘We agree, in part, with Ai Group’s observation about the AMWU’s proposed variation. The proposed amendment seeks to expand the class of termination payments (to include all amounts due under the NES). As we decided in relation to the Building On-Site Award, where the scope of a current termination of payment term is extended in the manner proposed by the AMWU, the 7 day period in the model term should apply to the areas to which the clause is extended.’ As to the ABI and Ai Group claims, we acknowledge that the applicants have failed to advance probative evidence demonstrating that the existing term is impractical and operates unfairly to the employers and employees covered by the award. That said, we have earlier adopted the following general proposition: ‘Existing terms that require termination payments to be made ‘immediately’ or on the day of termination, with no alternative means available are impracticable and invite scrutiny.’ This is such a case. The existing requirement that all monies due to an employee must be paid ‘on the day of termination’ is unreasonable (save where an employee is dismissed without notice). As we have mentioned earlier, we accept that a fair and reasonable time period must be permitted to process termination payments. What is ‘fair and reasonable’ depends on the context, which includes the current terms of the award and the different means by which employment may be terminated. The current clause would require payment on the day of termination in circumstances where the employer has no control over the timing of the termination, for example where an employee resigns. It is our provisional view that the current clause be varied and that an appropriate balance between the competing considerations would be as follows: 1. The following amounts must be paid by the end of the next business day after the day on which the employee’s employment terminates:  wages for any complete or incomplete pay period up to the end of the day of termination; and  all other monies due to the employee under the award. 10 Ai Group submission 19 April 2020 at [25] – [26] -- 7 of 11 -- [2020] FWC 3157 8 2. The following amounts must be paid no later than 7 days after the day on which the employee’s employment terminates:  all amounts due to the employee under the NES.’ 11 [26] In the May 2020 Decision, ABI, Ai Group, PIAA and AMWU were directed to confer on the form of a draft variation having regard to views expressed above. [27] The conference date and time is set out in the table below at [35]. Food, Beverage and Tobacco Manufacturing Award 2010 and the Manufacturing and Associated Industries and Occupations Award 2010 [28] The following parties filed submissions:  ABI on 21 August 2019 and 19 April 2020  Ai Group on 21 August 2019 and 19 April 2020  AMWU on 25 September 2019 [29] ABI and Ai Group seek to vary these awards by deleting the payment on termination clauses and inserting the model terms. [30] The AMWU (and other unions) oppose the ABI and Ai Group applications and the AMWU proposed draft determinations in respect of these awards which ‘retain the existing entitlements’. Curiously, despite the similarities in the current terms, the AMWU appears to propose different variations in respect of each award. [31] In relation to the FBT Award the AMWU proposed a variation in the following terms: 28.3 Payment on termination of employment (a) The employer must pay an employee the following amounts in accordance with this clause: (i) the employee’s wages under this award for any complete or incomplete pay period up to the end of the day of the termination; and (ii) all other amounts that are due to the employee under this award and the NES. (b) The amounts described at clause 28.3 (a) must be paid to the employee: (i) on the day of termination; or (ii) By electronic funds transfer the next working day after the day on which the employee’s employment terminates. 11 [2020] FWCFB 1131 at [278] – [282] -- 8 of 11 -- [2020] FWC 3157 9 (c) The requirement to pay wages and other amounts under clause 28.3 is subject to further order of the Commission and the employer making deductions authorised by this award or the Act. Note 1: Section 117(2) of the Act provides that an employer must not terminate an employee’s employment unless the employer has given the employee the required minimum period of notice or “has paid” to the employee payment instead of giving notice. Note 2: Paragraph (d) allows the Commission to make an order delaying the requirement to make a payment under clause 26.3. For example, the Commission could make an order delaying the requirement to pay redundancy pay if an employer makes an application under section 120 of the Act for the Commission to reduce the amount of redundancy pay an employee is entitled to under the NES. Note 3: State and Territory long service leave laws or long service leave entitlements under s.113 of the Act, may require an employer to pay an employee for accrued long service leave on the day on which the employee’s employment terminates or shortly after. [32] In respect of the Manufacturing Award, the AMWU proposed the following terms: 34.3 Payment on termination of employment (a) The employer must pay an employee the following amounts in accordance with this clause: (i) the employee’s wages under this award for any complete or incomplete pay period up to the end of the day of the termination; and (ii) all other amounts that are due to the employee under this award and the NES. (b) The amounts described at clause 34.3 (a) (i) must be paid to the employee: (i) on the day of termination; or (ii) By electronic funds transfer the next working day after the day on which the employee’s employment terminates. (c) The amounts described at clause 34.3(a)(ii) must be paid to the employee: (i) on the day of termination; or (ii) forwarded by electronic funds transfer by no later than 7 days after the day on which the employee’s employment terminates. (d) The requirement to pay wages and other amounts under clause 34.3 is subject to further order of the Commission and the employer making deductions authorised by this award or the Act. Note 1: Section 117(2) of the Act provides that an employer must not terminate an employee’s employment unless the employer has given the employee the required minimum period of notice or “has paid” to the employee payment instead of giving notice. Note 2: Paragraph (d) allows the Commission to make an order delaying the requirement to make a payment under clause 26.3. For example, the Commission could make an order -- 9 of 11 -- [2020] FWC 3157 10 delaying the requirement to pay redundancy pay if an employer makes an application under section 120 of the Act for the Commission to reduce the amount of redundancy pay an employee is entitled to under the NES. Note 3: State and Territory long service leave laws or long service leave entitlements under s.113 of the Act, may require an employer to pay an employee for accrued long service leave on the day on which the employee’s employment terminates or shortly after. [33] In the May 2020 Decision, the Full Bench assumed that the omission of paragraph 34.3(c) from the draft determination for the FBT Award was simply an error and went on to say: ‘While these proposed variations do not suffer from the same vice we have identified in respect of the AMWU’s proposed variation of the Graphic Arts Award, we are not persuaded to vary the awards in the manner proposed. It is our provisional view that the current clauses be varied and that an appropriate balance between the competing considerations would be as follows: 1. The following amounts must be paid by the end of the next business day after the day on which the employee’s employment terminates:  wages for any complete or incomplete pay period up to the end of the day of termination; and  all other monies due to the employee under the award. 2. The following amounts must be paid no later than 7 days after the day on which the employee’s employment terminates:  all amounts due to the employee under the NES. The parties are directed to confer on the form of a draft variation having regard to views expressed above. A conference will be convened in due course.’12 [34] The conference date and time is set out in the table below at [35]. Next steps [35] The conferences will be held before me on Wednesday, 8 July 2020 as follows: Award Interested parties Time (AEDT) Aged Care Award 2010  ABI  Ai Group  HSU 9:00 am Building and Construction General On-site Award 2020  Ai Group  HIA  CFMMEU (C & G) 10:30 am 12 [2020] FWCFB 1131 at [295] – [297] -- 10 of 11 -- [2020] FWC 3157 11 Award Interested parties Time (AEDT) Business Equipment Award 2010 and the Electrical, Electronic and Communications Contracting Award 2010  ABI  Ai Group  CEPU 12 Noon Graphic Arts, Printing and Publishing Award 2020  ABI  Ai Group  PIAA  AMWU 1:30 pm Food, Beverage and Tobacco Manufacturing Award 2010 and Manufacturing and the Associated Industries and Occupations Award 2010  ABI  Ai Group  AMWU 3:00 pm [36] Interested parties wishing to attend the above conferences are to provide the name of the person attending, their direct contact number and the organisation name to [email protected] by no later than 12noon on Tuesday 7 July 2020. PRESIDENT Printed by authority of the Commonwealth Government Printer <PR720248> -- 11 of 11 --