Penalty Rates Cut Upheld By FCAFC: SDA v The Australian Industry Group [2017] FCAFC 161

1. Must review all modern awards; and
2. May make:
1. One or more determinations varying modern aawards; and
2. One or more modern awards; and
3. One or more determinations revoking modern awards; and
3. Must not review, or make a determination to vary, a default fund term of a modern award.

[…]

(3) In a 4 yearly review of modern awards, the FWC may make a determination varying modern award minimum wages only if the FWC is satisfied that the variation of modern award minimum wages is justified by work value reasons.

(4)  Work value reasons are reasons justifying the amount that employees should be paid for doing a particular kind of work, being reasons related to any of the following:

1. the nature of the work;
2. the level of skill or responsibility involved in doing the work;
3. the conditions under which the work is done.

(1)  The FWC must ensure that modern awards, together with the National Employment Standards, provide a fair and relevant minimum safety net of terms and conditions, taking into account:

1. relative living standards and the needs of the low paid; and
2. the need to encourage collective bargaining; and
3. the need to promote social inclusion through increased workforce participation; and
4. the need to promote flexible modern work practices and the efficient and productive performance of work; and
   da. the need to provide additional remuneration for:
1. employees working overtime; or
2. employees working unsocial, irregular or unpredictable hours; or
3. employees working on weekends or public holidays; or
4. employees working shifts; and
5. the principle of equal remuneration for work of equal or comparable value; and
6. the likely impact of any exercise of modern award powers on business, including on productivity, employment costs and the regulatory burden; and
7. the need to ensure a simple, easy to understand, stable and sustainable modern award system for Australia that avoids unnecessary overlap of modern awards; and
8. the likely impact of any exercise of modern award powers on employment growth, inflation and the sustainability, performance and competitiveness of the national economy.

“The Penalty Rates decision determined, amongst other things, that the existing Sunday penalty rates in the Hospitality Industry (General) Award 2010 (Hospitality Award), Fast Food Industry Award 2010 (Fast Food Award), General Retail Industry Award 2010 (Retail Award) and Pharmacy Industry Award 2010 (Pharmacy Award) did not achieve the modern awards objective, as they do not provide a fair and relevant minimum safety net. The effect of the Penalty Rates decision was to reduce Sunday penalty rates to 150 per cent for full-time and part-time employees in the Hospitality, Retail and Pharmacy Awards and to 175 per cent for casual employees in the Retail and Pharmacy Awards. The Sunday penalty rate for casual employees in the Hospitality Award remained unchanged at 175 per cent. The decision reduced the Sunday penalty rates in the Fast Food Award (for Level 1 employees only) to 125 per cent for full-time and part-time employees and 150 per cent for casual employees. The Penalty Rates decision also reduced the public holiday penalty rates in the above awards, as well as the Restaurant Industry Award 2010 (Restaurant Award).” at [2] of 4 yearly review of modern awards – Penalty Rates – Transitional Arrangements [2017] FWCFB 3334

“It would be wrong to read, for example, [885] and [886] of the primary reasons in isolation and without regard to the opening words “[f]or the reasons given” with which [885] commences.  It must be recognised that these (and similar paragraphs dealing with the other sectors) record a mental process which the FWC has carried out explaining the conclusions reached.  The mental process is explained by everything which precedes the conclusions.  The conclusions are the outcomes or results of that mental process.  The outcomes are expressed in separate paragraphs referring to “fair and relevant” in [885] and the s 134(1)(a)-(h) matters in [886].  But this is to ensure that the conclusions are logically structured.  Read in context, it is apparent that having regard to all factors it considered relevant (all of which were permissible and which included the historical context) the FWC considered that, as to Sunday penalty rates, the application of the modern awards objective as a whole required a variation of the rate in the Hospitality Industry (General) Award 2010 in the amount identified.

As such, this is not a case in which the FWC misapplied the statutory provisions.  Its description of “relevant” as meaning “suited to contemporary circumstances” at [120] and elsewhere is too narrow if it is to be read literally as meaning suited to modern circumstances.  As discussed “fair and relevant”, which are best approached as a composite phrase, are broad concepts to be evaluated by the FWC taking into account the s 134(1)(a)-(h) matters and such other facts, matters and circumstances as are within the subject matter, scope and purpose of the Fair Work Act.  Contemporary circumstances are called up for consideration in both respects, but do not exhaust the universe of potentially relevant facts, matters and circumstances.  But, as we have tried to demonstrate, the primary reasons when read as a whole amply demonstrate that the function, as in fact performed by the FWC, was not confined by reference to the criterion of contemporary circumstances.  Nor, do the reasons demonstrate that, as a criterion, contemporary circumstances were elevated or given undue priority.  This suggests that by “contemporary circumstances” the FWC may have simply meant “present circumstances” or, in other words, the circumstances at hand” at [64] - [65].