Australia - No Longer Award-Free? Fair Work Commission Casts Award Net Wider.

Legal News & Analysis - Asia Pacific - Australia - Labour & Employment

15 April, 2020

 

What you need to know

 

  • From 1 July 2020, the coverage of the Miscellaneous Award will expand to cover some employees who were not previously covered by an award
  • Roles that were previously excluded from the coverage of the Miscellaneous Award because they were not covered by the classifications in a relevant industry award will no longer be award-free eg cleaners, security guards who were previously not covered by an industry award. 
  • Managerial and professional employees not historically covered by an award will continue to not be covered by the Miscellaneous Award.

 

What you need to do

 

  • Check whether employees in your business who are currently award-free will be covered by the Miscellaneous Award from 1 July 2020.
  • Ensure that you are meeting the minimum entitlements for employees who will be covered by the Miscellaneous Award, including pay rates and penalty rates.

 

Purpose of the Miscellaneous Award

 

Modern awards were introduced as part of the transition to the Fair Work Act 2009 (Cth), replacing a complex patchwork of federal and state industrial awards.

 

Modern awards generally cover those working in a particular industry (such as the Black Coal Mining Industry Award) or an occupation (such as the Clerks – Private Sector Award).  

Working out which award covers a particular employee depends on: 

 

  1. the coverage clause of the relevant award, including its exclusion rules; and 
  2. whether the employee's role falls within a classification set out in that award.

 

The Miscellaneous Award is unique.  It operates as a catch-all award covering "employers throughout Australia and their employees in the classifications listed in clause 14—Minimum wages who are not covered by any other modern award", subject to a number of exceptions listed in clause 4.  The classifications are expressed in very general terms.

 

Current exceptions 

 

Currently, the Miscellaneous Award excludes from its coverage:

 

  • those classes of employees who, because of the nature or seniority of their role, have not traditionally been covered by awards including managerial employees and professional employees such as accountants and finance, marketing, legal, human resources, public relations and information technology specialists" (clause 4.2)
  • employees "in an industry covered by a modern award who are not within a classification in that modern award" (clause 4.3(a); and
  • employees "in a class exempted by a modern award from its operation" (clause 4.3(b)).

 

This means, for example, that security guards employed by a construction company would not be covered by any award, since the Building and Construction Industry Award does not include security guard classifications and the Security Services Industry Award 2010 only applies to security guards employed by contract security businesses.

 

Start of a new approach: Gold Coast Kennels

 

The Commission's approach to the Miscellaneous Award began to change with the Full Bench decision in United Voice v Gold Coast Kennels Discretionary Trust t/a AAA Pet Resort [2018] FWCFB 128.  

 

The employer seeking approval of its enterprise agreement had argued that the Queensland pet grooming and boarding industry was award-free as it had not traditionally been covered by an award in Queensland, even though pet grooming and boarding had been covered by awards in other states.  This was consistent with 2010 advice from the Fair Work Ombudsman and a number of earlier Fair Work Commission decisions, and was accepted at first instance.  

 

However, the Full Bench disagreed, and held that the employer and its employees were covered by the Miscellaneous Award.  The Full Bench noted that dog groomers in other states had been covered by state awards and the purpose of modern awards was to "set a nationally consistent minimum safety net for terms and conditions of employment throughout Australia".  

 

This decision established that employees would not be excluded from coverage of the Miscellaneous Award merely because they were in roles not traditionally covered by awards in that particular state.

 

Full Bench review

 

On 6 June 2019 FWC President Iain Ross initiated a review of the Miscellaneous Award and its coverage provisions to ensure it was meeting the modern award objective of providing a "fair and relevant safety net of minimum terms and conditions".  

 

After hearing submissions from unions and employer organisations, on 12 February 2020 the Full Bench issued a decision in which it expressed the provisional view that clauses 4.2 and 4.3 of the Miscellaneous Award should be removed and replaced with a new clause 4.2, which provides:

 

"The award does not cover managerial employees and professional employees such as accountants and finance, marketing, legal, human resources, public relations and information technology specialists."

 

The Full Bench reasoned that clauses 4.2 and 4.3 were not required given section 143(7) of the Fair Work Act, which bans awards from covering employees who:

 

  • due to the seniority and nature of their role have not been traditionally covered by awards (with managerial employees given as an example); and
  • perform work that is not of a similar nature to work traditionally regulated by awards.

 

In relation to clause 4.3, the Full Bench observed:

 

It seems to us that the current and practical effect of clause 4.3 is to exclude from the coverage of the Miscellaneous Award employees who are permitted to be covered by a modern award, but who work in an industry covered by a modern award which either expressly excludes them from its coverage or does not contain a classification applicable to them. However the rationale for the exclusion of such employees from the coverage of the Miscellaneous Award, which as earlier explained only covers employees performing lower-skilled, semi-skilled or trades-qualified work, is not clear.

 

The Full Bench invited further submissions about these proposed changes.

 

On 25 March 2020 the Full Bench determined to implement the proposed changes with effect from 1 July 2020. The Full Bench noted that none of the submissions it had received identified any class of employees that would be inappropriately covered by the Miscellaneous Award as a result the proposed changes.

 

What will it mean for employers?

 

Once the changes to the coverage clause of the Miscellaneous Award take effect, it will cover classes of employees who were previously award free because they are in an industry covered by a modern award but are not within the classifications in that modern award, such as security guards in the construction industry.  

 

If your business is covered by an industry award, but you have employees who:

 

  • are not covered by the classifications in that award; and 
  • are not covered by an occupational award (such as the Clerks-Private Sector Award 2010), then consider whether those employees will be covered by the Miscellaneous Award from 1 July 2020.

 

Managerial and professional employees will continue to be excluded from coverage of the Miscellaneous Award so this change will primarily impact lower skilled, semi-skilled or trade-qualified employees.

Employers that have employees who are covered by the Miscellaneous Award will need to ensure that those employees are provided with their minimum entitlements under the award, including in relation to pay rates, allowances, overtime and penalty rates.  The Miscellaneous Award also includes standard award provisions in relation to consultation and dispute resolution that must be complied with.

 

Employers seeking approval of an enterprise agreement will also need to consider whether the Better Off Overall Test should be applied for relevant employees using the Miscellaneous Award as the benchmark.

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For further information, please contact:


Stephen Woodbury, Partner, Ashurst

stephen.woodbury@ashurst.com