MODERN AWARDS – 4 yearly review – ss.134, 156 Fair Work Act 2009 – Full Bench – the Commission must conduct a review of all modern awards every four years (the Review) – the modern awards objective in s.134(1) of the FW Act is central to the Review – the modern awards objective is to ‘ensure that modern awards, together with the National Employment Standards (NES) provide a fair and relevant minimum safety net of terms and conditions’ – as part of the Review, various employer bodies have made application to vary penalty rate provisions in a number of modern awards in the Hospitality and Retail sector – these applications have been heard together – modern awards subject to claims are: the Fast Food Industry Award 2010 (the Fast Food Award); the General Retail Industry Award 2010 (the Retail Award); the Hospitality Industry (General) Award 2010 (the Hospitality Award); the Pharmacy Industry Award 2010 (the Pharmacy Award); the Registered and Licensed Clubs Award 2010 (the Clubs Award); and the Restaurant Industry Award 2010 (the Restaurant Award), (collectively the Hospitality and Retail awards) – in a Statement issued 17 December 2014, further proposals to alter penalty rates in other modern awards will be dealt with on an award-by-award basis in the award stage of the Review [[2014] FWC 9175] – the conduct of these proceedings has been a substantial undertaking – Full Bench heard evidence and submissions over 39 days of hearing in 2015 and 2016 – evidence was given by 143 lay and expert witnesses, of whom 128 were required for cross-examination – over 5,900 submissions were received from the principal parties, State and Territory Governments, Church based organisations, political entities and individual employees and employers – historically, industrial tribunals have expressed the rationale for penalty rates in terms of both the need to compensate employees for working outside ‘normal hours’ (the compensatory element) and to deter employers from scheduling work outside ‘normal’ hours (the deterrence element) – the Full Bench concluded that deterrence was no longer a relevant consideration in the setting of weekend and public holiday penalty rates – the Full Bench accepted that the imposition of a penalty rate may have the effect of deterring employers from scheduling work at specified times or on certain days, but that is a consequence of the imposition of an additional payment for working at such times or on such days, it is not the objective of those additional payments – compensating employees for the disutility associated with working on weekends and public holidays is a primary consideration in the setting of weekend and public holiday penalty rates – s.134(1)(da)(iii) requires that the Commission take into account the ‘need to provide additional remuneration’ for ’employees working on weekends or public holidays’ – the assessment of ‘the need to provide additional remuneration’ to employees working in the circumstances identified required consideration of a range of matters, including: the impact of working at such times or on such days on the 4 employees concerned (which includes an assessment of the impact of such work on employee health and work-life balance, taking into account the preferences of the employees for working at those times); the terms of the relevant modern award, in particular whether it already compensates employees for working at such times or on such days; and the extent to which working at such times or on such days is a feature of the industry regulated by the particular modern award – Saturday penalty rates – generally speaking, no changes were sought in relation to Saturday penalty rates – the Full Bench reviewed the Saturday penalty rates in the Fast Food, Hospitality, Restaurant and Retail Awards and (subject to the observations about the Retail Award) were satisfied that the existing Saturday penalty rates achieved the modern awards objective – the review of Saturday penalty rates in the Clubs and Pharmacy Awards is to be the subject of further proceedings – Sunday penalty rates – the Full Bench decided that the existing Sunday penalty rates in the Hospitality, Fast Food, Retail and Pharmacy Awards did not achieve the modern awards objective – except in the Fast Food Award the Full Bench do not propose to reduce the Sunday penalty rates to the same level as the Saturday penalty rates – for many workers Sunday work has a higher level of disutility than Saturday work, though the extent of the disutility is much less than in times past – implicit in the claims advanced by most of the employer interests that they accept the proposition that the disutility associated with Sunday work is higher than the disutility associated with Saturday work – if this was not the case then they would have proposed that the penalty rates for Sunday and Saturday work be the same, but they did not – the reductions in Sunday penalty rates as determined by the Full Bench are set out in paragraph [55] of the decision – on the material before them, the Full Bench was not satisfied that the variations proposed to the Clubs and Restaurant Awards were necessary to ensure that these awards achieve the modern awards objective – the Full Bench held that the employer organisations concerned had not established a merit case sufficient to warrant the granting of their claims – Public holiday penalty rates – the Full Bench noted that the disutility of working on public holidays was greater than the disutility of working on Sundays (which in turn was greater than Saturday work) – the Full Bench decided to reduce the public holiday penalty rates in the Hospitality and Retail awards (except for the Clubs Award) – the reductions in public holiday penalty rates as determined by the Full Bench are set out in paragraph [63] of the decision – in each of the Sunday and public holiday penalty rates the Full Bench adopted what the Productivity Commission Inquiry Report: Workplace Relations Framework described as the ‘default approach’ to setting the appropriate rate for casual employees – under this approach the rate of pay for casual employees is always 25 percentage points above the rate of pay for non-casual employees: if the Sunday penalty rate for full-time and part-time employees is 150 per cent, the Sunday rate for casuals will be 150 + 25 = 175 per cent – the decision of the Full Bench to reduce Sunday and public holiday penalty rates in these awards was based on conclusions with respect to the common evidence and the assessment of the evidence in relation to each of these particular awards – important to appreciate that the conclusions reached by the Full Bench in relation to the weekend and public holiday penalty rates in the Hospitality and Retail awards was largely based on the circumstances relating to these particular awards – the Hospitality and Retail sectors have a number of characteristics which distinguish them from other industries – the Full Bench concluded that appropriate transitional arrangements were necessary to mitigate the hardship caused to employees whose Sunday penalty rates will be reduced – it is unclear whether take home pay orders are an available option – the Full Bench propose to seek submissions from interested parties as to these issues – interested parties are to file written submissions in relation to the transitional arrangements to apply to the reduction in Sunday penalty rates by 4.00 pm Friday, 24 March 2017, with reply submissions to be filed by 4.00 pm on Friday, 7 April 2017 – the matter will be listed for hearing in early May 2017 – the changes to public holiday penalty rates will take effect on 1 July 2017. 4 yearly review of modern awards – Penalty Rates
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