Fair Work Australia has finalised the timetable for its review of modern awards and employers should consider whether to make submissions as part of the review process.

The modernisation of Australia’s system of industrial awards into a streamlined set of national modern awards was a key component of Labor’s Fair Work Act reforms. The 122 modern awards developed by Fair Work Australia (FWA) have now been operating since 1 January 2010. While the modern awards are undoubtedly more “user friendly” than the previous array of State and Federal industrial awards the awards have been criticised in some industries and have presented compliance and cost challenges for employers.

The Fair Work Act 2009 (Cth) (Fair Work Act) required a review of the modern awards to take place as soon as practicable after the second anniversary of the commencement of the modern awards (i.e. after 1 January 2012). FWA published the final timetable for this review process on 5 July and has started to issue directions for hearings to be conducted as part of the review.

The review process – the story so far

The review requires FWA to address two questions:

  • whether the modern awards achieve the modern awards objective in s134 of the Fair Work Act; and
  • whether modern awards are operating effectively, without anomalies or technical problems arising from the award modernisation process.

On 17 November 2011, FWA issued a statement outlining the initial process for the review. The process involves hearings held by members of FWA to hear applications for proposed variations of modern awards or transitional provisions. Applications to vary modern awards were required to be filed by 8 March 2012. FWA confirmed in a statement released on 27 April 2012 that it had received 283 variation applications.

The applications identified some common issues and single industry issues in respect of 85 modern awards. FWA has decided to constitute separate Full Benches to deal with each common issue and has referred the remainder of the individual issues to single members to hear. The common issues include:

  • penalty rates;
  • apprentices, trainees and junior rates;
  • award flexibility;
  • annual leave;
  • public holidays; and
  • superannuation.

On 29 June 2012 a five member bench of FWA delivered a decision dealing with preliminary issues relating to the review, including the scope of the review. The key issue for determination was whether FWA would conduct a “fresh” or substantive review of modern awards or whether FWA would defer to determinations made on substantive issues by the AIRC in the modernisation process. The Government and unions pushed for a limited review whereas employer/industry groups argued a fresh review was appropriate.

FWA determined that it would not revisit substantive issues dealt with during the award modernisation process unless there were “cogent reasons for doing so such as a significant change in circumstances which warrants a different outcome”. FWA noted it is required to conduct a four yearly review under s 156 of the Fair Work Act and that the current review is intended to be narrower in scope than the 4 year review.

Timetable for the review

The final timetable issued by FWA on 5 July split the review process into four stages as outlined below.

Stage one – will be conducted between 1 July 2012 and 31 October 2012, and will include:

  1. full bench proceedings in relation to:
    1. penalty rates in the retail, hospitality, fast food, restaurant, hair and beauty awards; and
    2. public holidays; and 
  2. single industry issues in 29 modern awards (a full list of the relevant awards is included in the timetable).

FWA has published draft directions in respect of the penalty rates review in the retail, hospitality, fast food, restaurant, hair and beauty awards which require submissions and evidence to be filed during August and September.

Some of the awards which are being reviewed for single industry issues as part of Stage 1 include key awards such as the Banking, Finance and Insurance Award, the Clerks Private Sector Award, the Commercial Sales Award, the Manufacturing Award and the Black Coal Award.

Stage two – will be conducted between 31 October 2012 and 31 January 2013, and will include:

  1. full bench proceedings in relation to apprentices, trainees and junior rates; and
  2. single industry issues in a further 27 modern awards (a full list of the relevant awards is included in the timetable).

FWA has released a statement relating to the process for the review of apprentices, trainees and junior rates. Various meetings have already been held and submissions in reply are due in early August.

Stage three – will be conducted between 31 January 2013 and 31 March 2013, and will include full bench proceedings in relation to:

  1. the Textile, Clothing, Footwear and Associated Industries Award 2010, in respect of outworkers;
  2. annual leave, including annual leave loading; and
  3. award flexibility.

Stage four – will be conducted between 1 April 2013 and 31 May 2013, and will involve hearings relating to superannuation and the remaining single industry issues for 28 modern awards (a full list of the relevant awards is included in the timetable). This stage will occur after the Productivity Commission has released its final report on Default Superannuation Funds in Modern Awards and will be on interest to retail superannuation funds which are not presently named as a default fund in modern awards.

Examples of single industry issues raised in the review process

There have been an extensive number of industry specific issues raised by employers as part of the review process.  These issues should be examined by employers covered by the relevant award. We have provided examples of some of the award specific issues below:

  • Banking, Finance and Insurance Award – employers have applied to vary the classifications structure in the award so that the award does not apply to employees who because of the nature of the work they perform or their seniority have not traditionally been regulated by awards;
  • Black Coal Mining Industry Award – the Australian Industry Group has applied to vary the scope of the industry award to clarify whether suppliers to the coal industry are covered by the award. This issue is being reviewed by Justice Boulton and discussions have already occurred between interested parties;
  • Building and Construction Industry Award – employer groups are seeking to expressly exclude persons covered by the Premixed Concrete Award 2010 and the Asphalt Industry Award 2010 from coverage of the general industry award;
  • Clerks – Private Sector Award – employer groups have applied to vary the definition of shift work and to remove the requirement for part time workers to be paid overtime where they work more than their agreed part time hours;
  • Road Transport and Distribution Award – the TWU have applied to vary the award so that employees are entitled to be paid for any mandatory breaks taken in accordance with fatigue management legislation and to require annual leave loading to be paid on termination of employment. Employers have sought to remove uncertainty from the provisions regulating overtime payments for casual employees;
  • Professional Employees Award – APESMA has applied to vary the award so that its coverage of Information Technology employees is extended to apply to IT employees as an occupation rather than IT employees of companies engaged in the information technology industry. This would be a significant extension of award coverage to an area of the workforce which has traditionally not been regulated by industrial awards.

The above list is not exhaustive. The variation applications and submissions received by FWA in respect of each modern award (if any) can be accessed at the Modern Awards Review page set up by FWA. Employers should review the applications and submissions made for awards which apply to their business and determine whether they should make submissions supporting or opposing the variations being sought.

The review process is already underway and directions have been made in respect of some of the single award issues so employers should review their position as a matter of priority.

We will keep clients informed of developments in this important process and are able to represent employers in the review process. Please contact a member of our Employee Relations and Safety team if you require assistance in this area.