Submission to Fair Work Australia - MODERN AWARDS REVIEW 2012 PUBLIC HOLIDAYS (AM2012/134 AND OTHERS)

 
Submission to Fair Work Australia - MODERN AWARDS REVIEW 2012 PUBLIC HOLIDAYS (AM2012/134 AND OTHERS)
Submission to Fair Work
Australia

              MODERN AWARDS REVIEW 2012
                   PUBLIC HOLIDAYS
                (AM2012/134 AND OTHERS)

                                          17 September 2012
MODERN AWARDS REVIEW 2012
                               PUBLIC HOLIDAYS
                          (AM2012/134 AND OTHERS)

1.     Introduction

1.1.   The Australian Industry Group (Ai Group) makes this submission in response
       to the application by the Australian Council of Trade Unions (ACTU) to vary
       over 100 modern awards in respect of public holiday provisions (ACTU
       Application) and applications by various unions which reflect the terms of the
       ACTU’s application.

1.2.   The ACTU Application seeks the inclusion of model clauses relating to public
       holidays. The clauses would provide the following entitlements:

          •   Full-time employees who do not work a five day Monday to Friday week
              and part-time employees who work on average five days or more per
              week would receive either an additional days wages, an alternative day
              off or an additional day of annual leave if a public holiday falls on a day
              in which they would not ordinarily be rostered to work (the Full-
              time/Part-time Claim).

          •   A prohibition on the scheduling of a rostered day off (RDO) on a public
              holiday, or if an RDO coincides with a public holiday the employee
              would be entitled to take their RDO on an alternate weekday (the RDO
              Claim).

          •   An employee would be entitled to an additional 50% loading for work
              performed on Christmas Day in circumstances where that day falls on
              either a Saturday or Sunday and is not regarded as the public holiday
              (the Christmas Day Claim).

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1.3.     Ai Group opposes all elements of the ACTU Application for the reasons set out
         in this submission.

2.       Jurisdiction and Statutory Provisions

2.1.     On 29 June 2012 a Full Bench of Fair Work Australia (FWA) issued a
         decision1 (Preliminary Decision) concerning the relevant statutory provisions
         and principles applicable to the review of modern awards under Item 6 of
         Schedule 5 of the Fair Work (Transitional Provisions and Consequential
         Amendments) Act 2009 (FW Transitional Act).

2.2.     The Preliminary Decision identified that section 138 of the Fair Work Act 2009
         (FW Act) is relevant to the Modern Award Review 2012 (Review).2 Section
         138 of the FW Act provides:

         “A modern award may include terms that it is permitted to include, and must
         include terms that it is required to include, only to the extent necessary to
         achieve the modern awards objective and (to the extent applicable) the
         minimum wages objective.”

2.3.     The critical principle which flows from the operation of section 138 is that a
         modern award can only include such terms that are “necessary” to achieve the
         modern awards objective. In considering the distinction between “necessary”
         and “merely desirable” the Full Bench endorsed the following analysis of
         Tracey J in Shop, Distributive and Allied Employees Association v National
         Retail Association (No 2 ) [2012] FCA 480 (SDA v NRA (No2)):

         “That which is necessary must be done. That which is desirable does not carry
         the same imperative for action.”3

1
  [2012] FWAFB 5600
2
  [2012] FWAFB 5600; at [33]
3
  [2012] FCA 480; at 46

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2.4.     What is “necessary” to achieve the modern awards objective may vary
         depending on the nature of the application which is before the Tribunal.4
         However, the Full Bench importantly identified that the starting point in
         considering any application is a presumption that the modern award does
         comply with the modern awards objective:

         “[85] Two points about the historical context are particularly relevant. The
         first is that awards made as a result of the award modernisation process are
         now deemed to be modern awards for the purposes of the FW Act… Implicit in
         this is a legislative acceptance that the terms of the existing modern awards
         are consistent with the modern awards objective. The second point to observe
         is that the considerations specified in the legislative test applied by the
         Tribunal in the Part 10A process is, in a number of important respects,
         identical or similar to the modern awards objective which now appears in
         s.136.”5

         (Emphasis added)

2.5.     This is an important proposition given that the ACTU submissions in support of
         their application assert that the modern awards subject to their proposed
         variation are not consistent with the modern awards objectives. Such a
         proposition is inescapable from the submission that “neither Modern Awards
         nor the National Employment Standards provide a comprehensive safety net
         of public holidays”.6

2.6.     Ai Group submits that none of the materials filed by the ACTU support such an
         assertion.

4
  [2012] FWAFB 5600; at [34]
5
  Ibid; at [85].
6
  Submissions of the ACTU relating to public holidays (AM2012/134) 13 August 2012; at 6

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2.7.     Modern awards have been held by a Full Bench of the Tribunal to meet the
         requirements of section 576B of the Workplace Relations Act 1996 and those
         requirements are very similar to section 134 (Modern Awards Objective) of the
         FW Act, a point highlighted above and by FWA in its Preliminary Decision.7

2.8.     The ACTU’s submission argues that their proposed variation “cannot be seen
         as one which seeks a “fresh assessment”, or one in which “the substance of
         the variation sought has already been dealt with by the Tribunal in the Part
         10A process.”8

2.9.     In making this submission the ACTU was clearly conscious of the comments
         made in the Preliminary Decision regarding the public interest considerations
         associated with the Tribunal ensuing consistency with previous Full Bench
         decisions of FWA and the Australian Industrial Relations Commission (AIRC)
         as follows:

         “[88] These policy considerations tell strongly against the proposition that the
         Review constitutes a “fresh assessment” unencumbered by previous Tribunal
         authority.

         [89]      In circumstances where a party seeks variation to a modern award in
         the Review and the substance of the variation sought has already been dealt
         with by the Tribunal in the Part 10A process, the applicant will have to show
         that there are cogent reasons for departing from the previous Full Bench
         decision, such as a significant change in circumstances, which warrant a
         different outcome.”9

         (Emphasis added)

2.10. Ai Group acknowledges that application of the Public Holiday Test Case
         Decisions was not a matter which was widely agitated as part of the Part 10A
         proceedings, even though it was agitated in the proceedings relating to at least

7
  [2012] FWAFB 5600; at [85]
8
  Ibid; at 11
9
  [2012] FWAFB 5600; at [88] and [89].

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one modern award.10 Despite this fact, the approach which the AIRC adopted
            in relation to other test case provisions, in particular claims arising from the
            1984 Termination, Change and Redundancy test case are relevant when
            considering the ACTU’s claims.

2.11. Additionally, an application similar to the ACTU’s Christmas Day claim has
            recently been the subject of a decision of a Full Bench of FWA.11 The Full
            Bench rejected the applications made by various unions to vary a range of
            modern awards. This too is important in considering the ACTU’s Application.

2.12. As for the contention that the ACTU Application does not call for a “fresh
            assessment” but instead relies on the “principles” from the Public Holiday Test
            Case Decisions, this does not stand up to scrutiny.

2.13. Relevant to this contention is whether in fact the ACTU Application is
            consistent with the principles which were reflected in the Public Holiday Test
            Case Decisions, how the decisions were implemented in those awards which
            were varied and whether AIRC decisions made almost two decades ago under
            very different legislation should be relied upon as a basis for varying over 100
            modern awards.

2.14. In conducting its review of modern awards the matters which the Tribunal is to
            have regard are detailed in Item 6(2) of the FW Transitional Act. Whether
            these matters represent an exhaustive expression of the matters relevant to
            the Review was considered by the Full Bench in its Preliminary Decision.
            Whilst refusing to rule out that there may be other relevant considerations, the
            Full Bench identified that caution should be used in relying on any other
            criteria:

10
     [2010] FWAFB 9290 at para [46] re. the Banking, Finance and Insurance Modern Award 2010.
11
     [2010] FWAFB 9290

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“[48] While it is clear that the tribunal must consider the specific matters
            mentioned in subitem 6(2) and those aspects of the FW Act to which we have
            previously referred, it is not clear to us what other matters may be relevant in
            the context of the Review. We are not prepared to determine this issue in the
            abstract, absent any factual context, but it seems to us that a cautious
            approach should be taken to the consideration of matters other than those
            mentioned in subitem 6(2) and those aspects of the FW Act we have referred
            to earlier in this decision. It is an error of law for the Tribunal to rely on
            irrelevant material.”

            (Emphasis added)

2.15. The ACTU submission focuses substantially on the AIRC’s Public Holidays
            Test Case Decisions in support of its application. To the extent that this is
            proffered as an additional consideration beyond those articulated in sub-item
            6(2), Ai Group contends that the decisions were made almost two decades
            ago, under a very different legislative regime with different legislative criteria
            underpinning the terms of awards. As such, the decisions are not relevant to
            the Review and to rely upon them would lead to precisely the “error of law”
            which the Full Bench of FWA cautioned against.

2.16. Ai Group also notes the ACTU submission that:

            “The lack of uniformity in the application of the relevant Public Holiday Test
            Case principles to modern awards generally is an “anomaly” arising from the
            Part 10A Modern Award process within the meaning (of) sic item 6(2)(b) of
            Schedule 5 of the FW(TPCA) Act.”12

2.17. Such a submission is not valid. There is no basis for a submission that
            uniformity of public holiday provisions was an intended outcome of the Part
            10A award modernisation process.

12
     Submissions of the ACTU relating to public holidays (AM2012/134) 13 August 2012; at 4

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2.18. Furthermore we contend that any lack of uniformity in the application of the
            “relevant Public Holiday Test Case principles” were a feature of the federal
            award system well before commencement of the Part 10A award
            modernisation process. AIRC Test Case decisions were never intended to be
            incorporated           within      individual     awards    without   consideration   of   the
            circumstances of the relevant industries and occupations. Commonly, the
            provisions incorporated in awards to implement a test case decision varied
            somewhat from award to award.

2.19. Even if the ACTU was able to establish that there was an anomaly in the pre-
            modern federal award system relating to the Public Holidays Test Case
            Decisions (and we strongly submit that no such anomaly existed) this is not an
            anomaly which is appropriately remedied through application of sub-item
            6(2)(b) of the FW Transitional Act and indeed is beyond the statutory power as
            it is not an anomaly “arising from the Part 10A award modernisation
            process.”13

2.20. To the extent that the ACTU advances its application pursuant to sub-item
            6(2)(a) of the FW Transitional Act, section 134 (Modern Awards Objective)
            articulates the matters which FWA must take into account.

3.          Public Holidays Test Case Decisions

3.1.        A substantial portion of the ACTU submission is directed towards analysis of
            four Full Bench decisions of the AIRC14 collectively referred to as the Public
            Holiday Test Case Decisions.

13
     FW Transitional Act; Sub-item 6(2)(b)
14
     Print L4534, Print L7799, Print L7971 and Print L9178.

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3.2.        The ACTU’s contentions in relation to the relevance of the Public Holidays
            Test Case Decisions rest on the following two arguments:

                 •    that “the incorporation of key principles from the Public Holiday Test
                      Case are necessary to achieve the modern award objective within the
                      meaning or item 6(2)(a);”15 and

                 •    that if the Tribunal accepts that “the principles established in the Test
                      Case are of continuing relevance to the provision of a fair and relevant
                      minimum safety net of terms and conditions, then it will not be
                      necessary nor particularly relevant to examine why the Test Case
                      principles were not more widely applied prior to the modernisation
                      process.”16

3.3.        Ai Group rejects both propositions and submits that there is no basis for
            applying an 18 year old test case to the modern awards system.

3.4.        However, if the Tribunal is prepared to consider the ACTU’s claim then
            consideration of the absence of what the ACTU refers to as “the Test Case
            principles” from federal awards is a necessary and important inquiry because
            to do otherwise would see the Tribunal ignore the reasons why the modern
            awards subject to the ACTU Application are in their current terms.

The Public Holidays Test Case principles are not necessary to achieve the
modern award objective

3.5.        The ACTU asserts that its application and model provisions are consistent with
            the principles emanating from the Public Holidays Test Case Decisions and
            that inclusion of such terms is necessary to achieve the modern awards
            objective.

15
     Submissions of the ACTU relating to public holidays (AM2012/134) 13 August 2012; at 10
16
     Ibid; at 12

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3.6.   This contention is not sustainable. The status of the decisions as a test case
       should have no bearing on the merits of the ACTU Application, as these
       decisions were made under a very different industrial and statutory regime.

3.7.   It is trite to say that FWA’s powers to vary modern awards are limited by the
       terms of the FW Act and the modern awards objective. What is of greater
       significance in the context of the ACTU Application is recognition of the
       manner in which the Tribunal’s award making and variation powers have
       changed in the last two decades. The criteria which were relevant to the Public
       Holidays Test Case Decisions, as reflected in the Industrial Relations Reform
       Act 1993 (1993 Act), are markedly different from the considerations which
       now guide FWA’s functions. The is highlighted through comparison of the
       objects of the respects Acts and those objects which relate specifically to the
       award making powers of the Tribunals.

       Industrial Relations Reform Act Fair Work Act 2009
       1993
       Objects of Act                              Object of this Act

       Section 3 - The principal object of this    Section 3 - The object of this Act is to
       Act is to provide a framework for the       provide a balanced framework for
       prevention     and    settlement      of    cooperative and productive workplace
       industrial disputes which promotes          relations that promotes national
       the economic prosperity and welfare         economic prosperity and social
       of the people of Australia by:              inclusion for all Australians by:
       (a) encouraging and facilitating the        (a) providing workplace relations
       making of agreements, between the           laws that are fair to working
       parties involved in industrial relations,   Australians,     are    flexible     for
       to determine matters pertaining to the      businesses, promote productivity and
       relationship between employers and          economic growth for Australia's future
       employees,     particularly     at    the   economic prosperity and take into
       workplace or enterprise level; and          account     Australia's    international
                                                   labour obligations; and
       (b) providing the means for:
       (i) establishing and maintaining an (b) ensuring a guaranteed safety net
                                           of fair, relevant and enforceable
       effective framework for protecting
       wages and conditions of employment minimum terms and conditions
                                           through the National Employment

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through awards; and                       Standards, modern awards and
                                                 national minimum wage orders; and
       (ii) ensuring that labour standards
       meet       Australia's     international (c) ensuring that the guaranteed
       obligations; and                          safety net of fair, relevant and
       (c) providing a framework of rights enforceable minimum wages and
                                                 conditions can no longer be
       and responsibilities for the parties
       involved in industrial relations which undermined by the making of
                                                 statutory    individual     employment
       encourages       fair   and     effective
       bargaining and ensures that those         agreements    of  any  kind  given that
                                                 such agreements can never be part of
       parties abide by agreements between
                                                 a fair workplace relations system; and
       them; and
                                                 (d) assisting employees to balance
       (d) enabling the Commission to
       prevent and settle industrial disputes: their work and family responsibilities
                                                 by providing for flexible working
       (i) so far as possible, by conciliation; arrangements; and
       and
                                                 (e)      enabling      fairness     and
       (ii) where necessary, by arbitration; representation at work and the
       and                                       prevention of discrimination by
       (e) encouraging the organisation of recognising the right to freedom of
       representative bodies of employers association and the right to be
       and employees and their registration represented, protecting against unfair
       under this Act; and                       treatment       and      discrimination,
                                                 providing accessible and effective
       (f) encouraging and facilitating the procedures to resolve grievances and
       development        of    organisations, disputes and providing effective
       particularly by reducing the number of compliance mechanisms; and
       organisations in an industry or
       enterprise; and                           (f) achieving productivity and fairness
                                                 through an emphasis on enterprise-
       (g) helping to prevent and eliminate level            collective       bargaining
       discrimination on the basis of race, underpinned by simple good faith
       colour, sex, sexual preference, age, bargaining obligations and clear rules
       physical or mental disability, marital governing industrial action; and
       status,      family     responsibilities,
       pregnancy, religion, political opinion, (g)       acknowledging the special
       national extraction or social origin.     circumstances    of small and medium-
                                                 sized businesses.

       Section 88A - The objects of this Section 134 - What is the modern
       Part are to ensure that:          awards objective?

                                                 (1) FWA must ensure that modern
       (a) employees are protected by
                                                 awards, together with the National
       awards that set fair and enforceable
                                                 Employment Standards, provide a fair
       minimum wages and conditions of
       employment that are maintained at a       and relevant minimum safety net of
                                                 terms and conditions, taking into

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relevant level; and                       account:
       (b) awards (other than paid rates         (a) relative living standards and the
       awards) act as a safety net of            needs of the low paid; and
       minimum wages and conditions of
                                                 (b) the need to encourage collective
       employment      underpinning direct
                                                 bargaining; and
       bargaining; and
                                                 (c) the need to promote social
       (c) awards are suited to the efficient
                                                 inclusion through increased workforce
       performance of work according to the
                                                 participation; and
       needs of particular industries and
       enterprises,     while     employees'     (d) the need to promote flexible
       interests are also properly taken into    modern work practices and the
       account; and                              efficient and productive performance
                                                 of work; and
       (d) regard is had, in connection with
       making, reviewing and varying             (e)   the    principle of   equal
       awards, to stable and appropriate         remuneration for work of equal or
       relativities   based     on      skill,   comparable value; and
       responsibility and the conditions         (f) the likely impact of any exercise of
       under which work is performed, and        modern award powers on business,
       on the need for skill-based career        including on productivity, employment
       paths; and                                costs and the regulatory burden; and
       (e) the Commission's functions and (g) the need to ensure a simple, easy
       powers in relation to making and to understand, stable and sustainable
       varying awards are performed and modern award system for Australia
       exercised in a way that both:        that avoids unnecessary overlap of
       (i) gives employees prompt access to modern awards; and
       fair and enforceable minimum wages (h) the likely impact of any exercise
       and conditions of employment, so far of modern award powers on
       as they do not already have them; employment growth, inflation and the
       and                                  sustainability, performance     and
       (ii) encourages the prevention and competitiveness of the national
       settlement of industrial disputes by economy.
       the making of agreements under Part
       VIB.

(Emphasis added)

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3.8.   The emphasised sections clearly reveal a greater focus on flexibility and
       productivity, and also on the National Employment Standards having a
       substantial role to play in establishing the safety net. Indeed, not only was
       there no equivalent nationally legislated minimum conditions for employees
       under the 1993 Act but the federal award system had not undergone award
       simplification to ensure that awards only contained “allowable award matters”.

3.9.   It is open for FWA to draw inferences against the ACTU Application from the
       absence of reference to the principles which emanated from the Public
       Holidays Test Case Decisions within the terms of Part 10A of the Workplace
       Relations   (Forward    with     Fairness)   Act   2008,   the    Minister’s   Award
       Modernisation Request, the terms of the FW Act and the terms of the FW
       Transitional Act. This absence of positive recognition is more telling given that
       in some cases that which is expressed in these statutes and instruments
       represents a direct departure from the test case principles. Indeed section 116
       of the FW Act appears to be directly inconsistent with the ACTU’s Full-
       time/Part-time Claim.

3.10. Similarities can also be drawn between the ACTU’s claims in these
       proceedings and the claim made by the ACTU and other unions as part of the
       Part 10A proceedings for inclusion of small business redundancy provisions in
       all modern awards. In rejecting this claim the observations of the Full Bench of
       the AIRC are apropos:

       “[59] We have decided to deal with this matter by reference to the arbitral and
       legislative history of redundancy pay for employees of small business. The
       Commission’s Termination, Change and Redundancy decisions of 1984 are
       the source of the general standard of redundancy pay in the federal
       jurisdiction. In the second of those decisions the Commission provided an
       exemption for small business employers from the obligation to pay redundancy
       pay. Although the decision was of a test case nature, the small business

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exemption was not included in all federal awards. It was specifically not
      included in some awards because of the nature of the industry covered by the
      award. The award governing the clothing industry was one such award. In the
      Redundancy Case 2004 a Full Bench of the Commission considered
      applications to review the test case standard established in 1984. The Bench
      increased the existing severance pay scale and partially removed the small
      business exemption. Pursuant to the decision small business employees were
      entitled to redundancy pay but the scale of payments was lower than that
      applying to other employees. The Parliament subsequently enacted legislation
      to nullify the removal of the small business exemption in the Redundancy
      Case 2004. Thereafter the position which had been introduced in 1984
      continued to apply. The terms of the NES maintain the exemption for small
      business.

      [60] Seen in the context of the history we have set out, the terms of the NES
      indicate an intention to adopt the Commission’s 1984 decision in relation to
      small business—that employees of employers of fewer than 15 employees
      should not be entitled to redundancy pay. We are obliged by the terms of the
      NES to observe the small business exemption. We therefore conclude that the
      draft provision would exclude a term of the NES contrary to the terms of s.30.
      We also find that it is not necessary to include the provision in modern awards
      generally to ensure the maintenance of the safety net. As a general rule,
      therefore, the small business exemption will be maintained. We shall make an
      exception for federal awards and industries in which there was no small
      business exemption prior to the Redundancy Case 2004. Among the priority
      modern awards the only award in this category is the Textile industry award.
      The terms of the Textile industry award will include the small business
      redundancy pay provisions previously in the Clothing Trades Award 1999. The
      provision will only apply to the clothing industry.”

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3.11. Similarly the terms of the NES reflect no intention to adopt the principles of the
            Public Holidays Test Case Decisions within the modern award system. Public
            Holidays are a matter that is dealt with by the NES and the ability for a modern
            award to also cover this area is tightly constrained. Indeed, the NES only
            recognises eight specific public holidays as compared to the larger number
            recognised in the Public Holidays Test Case Decisions. Also, in respect of
            substitution of public holidays there is only one circumstance where the NES
            provides for substitution beyond the holidays which may be substituted in
            accordance with State or Territory laws;17 that is where an employee and
            employer agree to the substitution.18

3.12. Ai Group submits that it is the legislature’s intention that entitlements as they
            relate to public holidays are to be primarily regulated by the NES. It is for this
            reason that sections 55 and 56 of the FW Act expressly limit the manner in
            which NES matters can be dealt with in modern awards.

3.13. Further, the Award Modernisation Request expressly limited the manner in
            which NES matters could be dealt with in modern awards:

            “Interaction with the National Employment Standards

            28. The NES consist of 10 legislated minimum conditions of employment for all
            employees covered by the federal system. The NES will establish a simple
            legislative framework of minimum entitlements with straightforward application
            or machinery rules that are essential to the operation of each entitlement. The
            NES will operate in conjunction with a relevant modern award to provide a fair
            safety net of minimum entitlements for award covered employees.

            29. A modern award may cross reference a provision of the NES. A modern
            award may replicate a provision of the NES only where the Commission

17
     Section 115(2) of the FW Act
18
     Section 115(3) and 115(4) of the FW Act.

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considers this essential for the effective operation of the particular modern
      award provision. Where a modern award replicates a provision of the NES,
      NES entitlements will be enforceable only as NES entitlements and not as
      provisions of the modern award.

      30. A modern award cannot exclude the NES or any provision of the NES.
      However, a modern award can provide ancillary of incidental detail in relation
      to the operation of an entitlement under the NES but only to the extent that the
      term is not detrimental in any respect, when compared to the NES.

      31. Subject to paragraphs 34 and 35 below, a modern award may include
      industry-specific detail about matters in the NES.

      32. Subject to paragraph 34 below, a modern award may supplement the NES
      where the Commission considers it necessary to do so to ensure the
      maintenance of a fair minimum safety net for employees covered by the
      modern award, having regard to the terms of this request and the existing
      award provisions (including under NAPSAs) for those employees, such as
      small business redundancy entitlements or the rate of pay at which various
      types of leave is taken. The Commission may only supplement the NES where
      the effect of these provisions is not detrimental to an employee in any respect,
      when compared to the NES.

      33. The NES provides that particular types of provisions are able to be
      included in modern awards even though they might otherwise be inconsistent
      with the NES. The Commission may include provisions dealing with these
      issues in a modern award. The NES allows, but does not require, modern
      awards to include terms that:

              •     provide for loadings to be paid to school-based trainees and school-
                    based apprentices in lieu of certain entitlements;
             ----

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•   provide for the substitution of public holidays by agreement between
                   an employer and employee;
               -----
               •   specify further situations in which section 119 (redundancy pay)
                   does not apply to the termination of an employee’s employment.
      ------

      35. Other than expressly authorised under this request, the Commission must
      not include a term in a modern award on the basis that it would be an
      allowable modern award matter where the substance of the matter is dealt
      with under the NES.”

      (Emphasis Added)

3.14. These facts, together with the clear departure within the NES from principles
      contained in the Public Holidays Test Case Decisions, supports Ai Group’s
      submission that the matters identified within the decisions should be given no
      weight in considering whether the modern awards as presently drafted satisfy
      the modern awards objective or require variation.

3.15. Should the Tribunal, despite the foregoing submissions, be minded to afford
      additional weight to the ACTU Application by virtue of the Public Holidays Test
      Case Decisions, Ai Group questions whether the model terms proposed
      actually accord with the principles of the test case decisions as asserted by
      the ACTU. This submission is enlivened when one has regard to the terms of
      pre-modern awards that were varied pursuant to the test case decisions and
      their alignment with that which is sought by the ACTU in its application.

3.16. No pre-modern awards were varied in similar terms to what the ACTU is
      proposing.

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Implementation of the Test Case principles in pre-modern awards

3.17. The process of award modernisation required the AIRC when making modern
         awards to have particular regard to the terms of pre-modern awards to ensure
         that employees were not disadvantaged and that employers’ costs did not
         increase.19 Where there was a prevailing principal federal award in the
         relevant industry the Full Bench of the AIRC often had particular regard to that
         instrument in determining the terms of the modern award.20

3.18. Accordingly, the terms of pre-modern awards, particularly those used as a
         basis for the development of the modern awards, are relevant to the issues
         under consideration during the Review. To ignore the terms of pre-modern
         awards would ignore a key reason why a modern award may be in particular
         terms.

3.19. In this regard the ACTU’s submission that FWA should not be concerned with
         whether the Public Holidays Test Case provisions were reflected in a particular
         pre-modern award, but only whether the principles from the test case “are
         relevant to the provision of a fair and relevant minimum safety net”21 entirely
         disregards the “historical context”22 of the modern award, a matter which the
         Full Bench has decided is “particularly relevant” to the Review.23

3.20. Modern awards created by the Part 10A process are regarded as modern
         awards under the FW Act.24 Accordingly, the reasons for these decisions and
         any constraints or considerations mandated as part of that process cannot be
         ignored.

19
   Minister for Employment and Workplace Relations Award Modernisation Request 9 November 2009
20
   See for example Manufacturing and Associated Industries and Occupations Award 2010
21
   Submissions of the ACTU relating to public holidays (AM2012/134) 13 August 2012; at 12
22
   [2012] FWAFB 5600; at [85]
23
   Ibid; at [85]
24
   Item 4 of Schedule 5 of the FW Transitional Act and [2012] FWAFB 5600; at [85]

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4.     ACTU Claim: “Public holidays falling on non-working days”

4.1.   The ACTU seeks the following “model” award provision:

       “Public Holidays falling on Non Working Days

       1. This section applies to

           a)   full time employees who do not regularly work a five day, Monday to
                Friday week; and

           b)   part-time (non casual) employees who work 5 days or more per week
                averaged over a four week cycle.

       2. When a public holiday falls on a day the employee would not be rostered
           to work in any event, the employee must receive either:

           a)   an additional day’s wages;

           b)   an alternative day off at the base rate of pay, to be taken within 28
                days; or

           c)   an additional day of annual leave.

       3. The rate of pay for part-time employees must be calculated according to
           the number of hours rostered per day, or if this is not fixed, the average
           number of hours worked per day in the preceding 28 days.

       4. The employee is entitled to elect the form of compensation they will
           receive in accordance with the provisions of this clause.”

4.2.   The ACTU’s proposed clause would have the following very costly impacts
       upon employers:

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Full-time employees

       •   A full-time employee who works under a pattern of hours whereby 8, 10 or
           12 hour days or shifts are worked and who, as a consequence has one or
           more week days off each week, fortnight or four week cycle, would be
           entitled to one of the following forms of compensation (at the employee’s
           election) for every public holiday which falls on a non-working day:

              o An additional day’s wages (ie. 8, 10 or 12 hours wages for each
                 day, depending upon the length of the employee’s “day”);

              o an alternative day off at the base rate of pay, to be taken within 28
                 days (ie. 8, 10 or 12 hours off for each day, depending upon the
                 length of the employee’s “day”);

              o An additional day’s annual leave (ie. 8, 10 or 12 hours of extra leave
                 for each day, depending upon the length of the employee’s “day”,
                 together with annual leave loading or any higher shift loading for the
                 day).

       •   A full-time employee who works under a pattern of hours whereby 8, 10 or
           12 hour days or shifts are worked and who, as a consequence has one or
           more week days off each week, fortnight or four week cycle, would be
           entitled to the above compensation for each public holiday which falls on
           the weekend (eg. Easter Saturday and Easter Sunday), regardless of
           whether Saturday and Sunday are ordinary working days for the employee.

       •   A full-time employee whose ordinary hours fall between Monday and
           Friday and who regularly works overtime on a weekend would be entitled
           to an additional day’s wages, day off or day of annual leave for each public
           holiday which falls on the weekend despite the fact that Saturday and
           Sunday are not ordinary working days for the employee.

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•   Given that it is unclear what is meant by the term “a day the employee
           would not be rostered to work in any event”, a full-time employee may be
           entitled to an additional day’s wages, day off or day of annual leave even
           when the employee works overtime on a public holiday and receives public
           holiday penalty rates.

       Part-time employees

       •   A part-time employee who works under a pattern of hours whereby the
           employee works 5 days or more per week averaged over a four week cycle
           would be entitled to an additional day’s wages, day off or day of annual
           leave for each public holiday which falls on a non-working week day for the
           employee.

       •   A part-time employee who works under a pattern of hours whereby the
           employee works 5 days or more per week averaged over a four week cycle
           would be entitled to the above compensation for each public holiday which
           falls on the weekend, regardless of whether Saturday and Sunday are
           ordinary working days for the employee.

       •   A part-time employee who does not work 5 ordinary days or more per week
           but who works some overtime would in many cases be entitled to an
           additional day’s wages, day off or day of annual leave for each public
           holiday which falls on a non-working day for the employee (ie. where the
           ordinary time and overtime added up to 5 days or more).

       •   Given that it is unclear what is meant by the term “a day the employee
           would not be rostered to work in any event”, a part-time employee may be
           entitled to an additional day’s wages, day off or day of annual leave even
           when the employee works overtime on a public holiday and receives public
           holiday penalty rates.

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4.3.   Ai Group strongly opposes the unions’ claim. The ACTU’s clause appears to
       be based somewhat on the clause which was negotiated between Ai Group
       and the Metal Trades Federation of Unions (AMWU, AWU, CEPU, CFMEU,
       LHMU and NUW) during the metal industry award simplification negotiations
       between 1996-98, but many employer protections in the clause have been
       removed. A similar clause to the one negotiated between Ai Group and the
       MTFU is in the Manufacturing and Associated Industries and Occupations
       Award 2010 (Manufacturing Modern Award) at subclause 44.3.

Background to subclause 44.3 of the Manufacturing Modern Award

4.4.   As part of the package of changes to implement the 38 hour week in the early
       1980s the following paragraph (k) was included within Clause 22 – Holidays
       and Sunday Work, of the Metal Industry Award 1984:

       “Rostered day off falling on public holiday

       (k)(i) An   employee who works         continuous work and who by             the
              circumstances of the arrangement of his ordinary hours of work is
              entitled to a rostered day off which falls on a public holiday prescribed
              by this clause shall, at the discretion of the employer, be paid for that
              day 7 hours 36 minutes at ordinary rates or have an additional day
              added to his annual leave. This provision shall not apply when the
              holiday on which he is rostered off falls on a Saturday or Sunday.

       (ii)   In the case of an employee whose ordinary hours of work are arranged
              in accordance with subclauses (b)(iii) or (b)(iv) or (e) of clause 18A, the
              weekday to be taken off shall not coincide with a public holiday fixed in
              accordance with subclauses (a), (b) or (c) hereof. Provided that, in the
              event that a public holiday is prescribed after the employee has been
              given notice of his weekday off in accordance with subclause (g) of
              clause 18A of this award and the public holiday falls on the weekday the

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employee is to take off, the employer shall allow the employee to take
                 the day off on an alternative weekday.

4.5.   During the award simplification negotiations between Ai Group and the Metal
       Trades Federation of Unions (MTFU) in 1996-1998, Ai Group proposed a new
       clause to replace the above clause given that the clause did not adequately
       address:

             •   Situations where 10 or 12 hour shifts were worked;

             •   Flexible working hours arrangements where hours were banked.

4.6.   A new clause was negotiated between Mr Stephen Smith of Ai Group and Mr
       Julius Roe of the AMWU and the clause was inserted into the Metal,
       Engineering and Associated Industries Award 1998 by consent. The final
       clause resulted from what became an extensive negotiation process. In fact, of
       all the clauses in the simplified award this clause was the subject of the most
       discussion and negotiation between Ai Group and the unions.

5.1.   The agreed clause was inserted into the Award through the Metal Industry
       Award Simplification Decision (Print P9311) of Her Honour Senior Deputy
       President Marsh. The clause is reproduced below:

       7.5.4 Rostered day off falling on public holiday

       (a)       Except as provided for in 7.5.4(b) where a full-time employee’s
                 ordinary hours of work are structured to include a day off and such day
                 off falls on a public holiday, the employee is entitled, at the discretion
                 of the employer, either:

                   (i)     7 hours and 36 minutes pay at ordinary rates; or

                   (ii)    7 hours 36 minutes added to his or her annual leave; or

                   (iii)   a substitute day off on an alternative week day.

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This shall not apply where the rostered day off falls on a Saturday or a
              Sunday.

                (i)       Where an employee has credited time accumulated (see
                          5.11.6), then such credited time should not be taken as a day
                          off on a public holiday.

                (ii)      If an employee is rostered to take credited time as a day off
                          on a week day and such week day is prescribed as a public
                          holiday after the employee was given notice of the day off,
                          then the employer shall allow the employee to take the time
                          off on an alternative week day.

                (iii)     Paragraphs (i) and (ii) do not apply in relation to days off
                          which are specified in an employee’s regular roster or pattern
                          of ordinary hours. Paragraph 7.5.4(a) shall apply in such
                          circumstances.”

4.7.   In order to explain the provisions of the new, simplified award to member
       companies, Ai Group published an annotated version of the award in 1998.
       The relevant annotation for subclause 7.5.4 is reproduced below:

       Ai Group ANNOTATION:

       Subclause 7.5.4 is an important provision which is designed to cater for the
       wide variety of working hours arrangements which might be in operation under
       this Award. It is designed to provide a practical and equitable arrangement
       when a public holiday falls on a non-working day for a particular employee.

       Two distinctly different situations are provided for:

       Situation 1: where the public holiday falls on a day off which is specified in an
                        employee’s ‘regular roster or patter of ordinary hours”

       For example:

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•   a rostered day off for an employee working under a 19 day, 4 week
              cycle; or

          •   days off which are specified in an 8, 10 or 12 hour shift roster.

       Situation 2: where time has been accumulated by an employee and such
                     time is taken off in a flexible manner rather than in accordance
                     with a regular roster or pattern.

       For example, where time has been banked under the time off in lieu of
       overtime arrangement in 6.4.1(d).

       The provisions of 7.5.4(a) apply to situation 1. The employer has the discretion
       to choose which of the three alternatives will apply on each occasion that a
       public holiday falls on a day off.

       The provisions of subclause 7.5.4(b) apply to Situation 2. In such
       circumstances, an employer cannot require an employee to take accumulated
       time off on a public holiday.

       Employees are not entitled to the benefits set out in subclause 7.5.4 in respect
       of public holidays which fall on a Saturday or Sunday.

4.8.   On 1 August 2008, during the Priority Stage of the Award Modernisation
       Process, Ai Group and the MTFU tendered a joint draft award. The relevant
       clause (6.5.5) in the joint draft award was identical to subclause 7.5.4 above.

4.9.   The clause which the AIRC Full Bench included in the Manufacturing Modern
       Award has slightly simpler wording but has the same effect as subclause 7.5.4
       above. The relevant clause is reproduced below:

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“44.3 Rostered day off falling on public holiday

      (a)    Except as provided for in clauses 44.3(b) and (c) and where the
             rostered day off falls on a Saturday or a Sunday, where a full-time
             employee’s ordinary hours of work are structured to include a day off
             and such day off falls on a public holiday, the employee is entitled, at
             the discretion of the employer, to either:

             (i)     7.6 hours of pay at the ordinary time rate; or

             (ii)    7.6 hours of extra annual leave; or

             (iii)   a substitute day off on an alternative week day.

      (b)    Where an employee has credited time accumulated pursuant to clause
             34.6, then such credited time should not be taken as a day off on a
             public holiday.

      (c)    If an employee is rostered to take credited time accumulated pursuant
             to clause 34.6, as a day off on a week day and such week day is
             prescribed as a public holiday after the employee was given notice of
             the day off, then the employer must allow the employee to take the
             time off on an alternative week day.

      (d)     Clauses 44.3(b) and (c) do not apply in relation to days off which are
              specified in an employee’s regular roster or pattern of ordinary hours
              as clause 44.3(a) applies to such days off.”

The key differences between the ACTU’s proposed ‘model’ clause and
subclause 44.3 in the Manufacturing Modern Award

4.10. Key differences between the ACTU’s proposed ‘model’ clause and subclause
      44.3 in the Manufacturing Modern Award are:

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•   The ACTU’s clause extends to public holidays which fall on weekends,
              whereas subclause 44.3 excludes public holidays which fall on
              weekends;

          •   The ACTU’s clause applies to full-time and part-time employees
              whereas subclause 44.3 only applies to full-time employees;

          •   The ACTU’s clause has application with regard to ordinary hours and
              overtime hours, whereas subclause 44.3 only deals with patterns of
              ordinary hours;

          •   Under subclause 44.3, the employer has the right to determine which of
              the three compensation options will be implemented whereas under the
              ACTU’s clause the employee is given the right to determine this;

          •   Under subclause 44.3, the entitlement is “7.6 hours of pay” whereas
              under the ACTU’s clause the entitlement is “an additional day’s wages”
              which will be 8, 10 or 12 hours depending upon the length of the
              employee’s “day”;

          •   Under subclause 44.3, the entitlement is “7.6 hours of extra annual
              leave” whereas under the ACTU clause the entitlement is “an additional
              day of annual leave” which will be 8, 10 or 12 hours (plus leave loading
              or any higher shift loading) depending upon the length of the
              employee’s “day”;

          •   Under the ACTU’s clause the alternative day off must be taken within
              28 days, whereas this restriction is not included in subclause 44.3.

4.11. Including a clause similar to 44.3 in the Manufacturing Modern Award in all
      modern awards would be costly for thousands of employers because this
      clause is relatively generous and is not included in most modern awards.

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4.12. Of course, the far more generous clause proposed by the ACTU would result
      in huge cost increases for employers. There would also be a significant
      reduction in productivity given the large amount of extra time off that
      employees would receive.

Public holiday entitlements for shift workers

4.13. The ACTU’s clause would result in employees who regularly work on
      weekends receiving an additional day off whenever a public holiday falls on a
      weekend.

4.14. For many employees this would be “double-dipping” because it is common for
      awards to provide for a fifth week of annual leave for shift workers who are
      regularly rostered to work on public holidays which fall on a weekend. Such
      employees receive the additional week of annual leave in addition to public
      holiday penalty rates for working on the holiday.

4.15. Ai Group opposes the ACTU’s proposed clause, and opposes the concept of a
      model clause dealing with public holidays.

Public holiday entitlements for part-time employees

4.16. There is a longstanding principle which applies to public holiday entitlements
      for part-time employees. That is, a part-time employee is entitled to be paid
      when absent on a public holiday which falls on an ordinary working day for the
      employee, but not on other days.

4.17. This principle is enshrined within section 116 of the FW Act as follows:

      “116    Payment for absence on public holiday

              If, in accordance with this Division, an employee is absent from his or

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her employment on a day or part-day that is a public holiday, the
              employer must pay the employee at the employee’s base rate of pay for
              the employee’s ordinary hours of work on the day or part-day.

              Note: If the employee does not have ordinary hours of work on the
              public holiday, the employee is not entitled to payment under this
              section. For example, the employee is not entitled to payment if the
              employee is a casual employee who is not rostered on for the public
              holiday, or is a part-time employee whose part-time hours do not
              include the day of the week on which the public holiday occurs.

              (Emphasis added)

4.18. The Explanatory Memorandum for the Fair Work Bill 2008 provides the
      following explanation of section 116:

      “460.    Clause 116 entitles an employee to payment when absent from work
      on a public holiday. Where an employee is absent on a day or part-day that is
      a public holiday under this Division, the employer is liable to pay the employee
      at his or her base rate of pay for ordinary hours of work.

      461.    An employee is not entitled to any payment for absence on a public
      holiday if they would not ordinarily have worked on that day.

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Illustrative example

      Erika usually works overtime in addition to her ordinary hours of work on
      Tuesdays, receiving penalty rates for the overtime hours under a modern
      award. Erika is absent on the public holiday on Tuesday, 26 January 2010.
      Erika is entitled to her base rate of pay for her ordinary hours. She is not
      entitled to payment for the overtime hours she would have worked had it not
      been a public holiday.

      Erika’s colleague Toby is a part-time employee who is rostered to work
      Wednesday to Friday only. As Toby’s ordinary hours of work do not include
      Tuesdays, Toby is not entitled to payment for the public holiday on 26 January
      2010.

      Another employee, Holger is on unpaid parental leave for the first half of 2010.
      Holger would not be entitled to payment for the public holiday on 26 January
      2010.”

      (Emphasis added)

4.19. The principle in section 116 of the FW Act was enshrined within the Metal,
      Engineering and Associated Industries Award 1998 when subclause 7.5.4
      (Rostered Day Off Falling on a Public Holiday) was inserted into the award by
      consent. Paragraph 4.2.4(e) of this award stated:

      “4.2.4(e) Public Holidays

                Where the part-time employee’s normal paid hours fall on a public
                holiday prescribed in clause 7.5 and work is not performed by the,
                such employee shall not lose pay for the day. Where the employee
                works on the holiday, such employee shall be paid in accordance
                with Clause 7.5 of this award.”

                (Emphasis added)

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4.20. Further, the principle was enshrined within the Manufacturing Modern Award
      when subclause 44.3 (Rostered Day Off Falling on a Public Holiday) was
      inserted into the award by consent. Subclause 13.9 of this award states:

      “13.9     Public Holidays

                (a)   Where the part-time employee’s normal paid hours fall on a
                      public holiday prescribed in the NES and work is not performed
                      by the employee, such employee shall not lose pay for the day.

                (b)   Where the part-time employee works on the public holiday, the
                      part-time employee must be paid in accordance with clauses
                      32.4(e), 36.2(f), 37.5 and 40.9.”

                (Emphasis added)

4.21. The ACTU’s proposed clause:

      •   Is inconsistent with section 116 of the FW Act;

      •   Is inconsistent with the part-time provisions in numerous awards (e.g. see
          subclause 13.9 of the Manufacturing Modern Award as reproduced above);

      •   Would operate very unfairly for employers.

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5.     ACTU Claim: “Rostered Day Off must not be taken on public
       holiday”

5.1.   The ACTU seeks the following “model” award provision:

       “Rostered Day Off must not be taken on public holiday

       An employee who, by the arrangement of their ordinary hours of work, is
       entitled to a rostered day off, is entitled to take the rostered day off on an
       ordinary working day. The rostered day off must not be scheduled on a public
       holiday. Where a holiday is prescribed or declared, after the employee has
       been notified of the RDO, and that holiday falls on the employee’s RDO, the
       employer must allow the employee to take the RDO on an alternative
       weekday.”

5.2.   The above ACTU clause is illogical given that their proposed clause for “Public
       Holidays Falling on Non Working Days” deals with overlapping circumstances
       and is inconsistent. RDOs are of course non-working days.

5.3.   The clause agreed upon between Ai Group and the MTFU for the Metals
       Award 1998 and Manufacturing Modern Award (subclause 44.3) is informative
       when considering the merits (or lack thereof) of the ACTU’s proposed model
       clauses.

5.4.   Under subclause 44.3 of the Manufacturing Modern Award, regular RDOs are
       dealt with in paragraph (a) regardless of whether an RDO falls every week,
       every fortnight or every 20th working day. In such circumstances the employer
       can decide which of three compensation options to implement. In
       circumstances where an employee does not have a regular rostered day off
       but rather the employee banks time more flexibly, paragraphs 44.3(b) and (c)
       operate to ensure that the employer cannot require the employee to take the
       time off on a public holiday.

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5.5.       Ai Group opposes the ACTU’s proposed clause and opposes the concept of a
           model clause dealing with this topic.

6.         ACTU Claim: “Christmas Day Loading”

6.1.       The ACTU’s Christmas Day claim seeks the inclusion of a model clause
           relating to public holidays which will result in an additional 50% loading for
           work performed on Christmas Day in circumstances where that day falls on a
           Saturday or Sunday and is not regarded as the public holiday.

6.2.       This situation arises when a State or Territory declares a substitute day as the
           Christmas Day holiday (typically the following Monday) when 25 December
           falls on a Saturday or Sunday as occurred in 2010 and 2011.

6.3.       An application similar to the Christmas Day claim was recently the subject of a
           decision of the Full Bench of FWA.25 The AMWU, United Voice, ANF and
           ASU applied to vary the Manufacturing Modern Award, Cleaning Services
           Award 2010, Security Services Industry Award 2010, Nurses Award 2010 and
           the Banking, Finance and Insurance Award 2010 respectively on the basis that
           a variation was necessary to achieve the modern awards objective (section
           157 of the FW Act) and the non-inclusion of a Christmas Day loading was an
           error (section 160 of the FW Act).

6.4.       The Full Bench of FWA rejected the applications by the unions (and an
           application by Ai Group relating to public holiday penalty rates), in strongly
           contested proceedings.

6.5.       In making their decision, the Full Bench of FWA considered the Public
           Holidays Test Case and said:

25
     [2010] FWAFB 9290

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“ [44] It is apparent the Public Holiday Test Case decision of 1995 commended
      the additional penalty rate in respect of Christmas Day as a principle that may
      need adaption to specific circumstances. Further, while the Full Bench
      expected the principle would generally be implemented, the Full Bench
      acknowledged there were pre-existing diverse practices and anticipated the
      principle would be applied sensitively and flexibly with due regard to special
      circumstances.

      [45] The additional penalty rate in respect of Christmas Day is not a prevailing
      standard in the underlying award-based transitional instruments that
      previously covered the employers and employees now covered by the modern
      Manufacturing Award, modern Cleaning Award, modern Security Award or
      modern Nurses’ Award.

      [46] In respect of the modern Finance Award, the additional penalty rate where
      Christmas Day both falls on a weekend and is not a “public holiday” was
      specifically raised during the course of the AIRC proceedings concerning the
      making of the modern Finance Award. However, the AIRC did not include it in
      the modern Finance Award.

      [47] Fair Work Australia’s ability to vary modern awards outside the four yearly
      reviews of modern awards is constrained by the Fair Work Act. We do not
      think the non-inclusion of the additional penalty rate in respect of Christmas
      Day in the modern awards before us can be regarded as an error in the sense
      intended by s.160 of the Fair Work Act. We have come to this conclusion
      having regard to the caution expressed by the Full Bench in the Public
      Holidays Test Case decision of 1995 and the other factors to which we have
      just referred concerning the absence of a prevailing standard in respect of the
      additional penalty rate in the relevant underlying instruments and the
      additional penalty rate having been specifically raised previously but not

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