Employers are reminded to be very cautious when attempting to classify their junior or low-paid employees as “award free“.
In a recent case before the Fair Work Commission, the Full Bench held that the exclusions under Clause 4.2 of the Miscellaneous Award 2010 (Miscellaneous Award) had been previously incorrectly interpreted and should readily apply to junior classes of workers or low-paid classes of workers in industries not traditionally covered by modern awards.
In United Voice v Gold Coast Kennels Discretionary Trust t/a AAA Pet Resort [2018] FWCFB, the Full Bench considered the coverage of the Miscellaneous Award and found that the Respondent could only avoid the applicability of the Award in circumstances where an employee was in a class of employees not traditionally covered by an award because of the nature of the work or the seniority of the role.
As such, the Respondent’s junior level employees (animal attendants at a pet resort) were considered to fall within the coverage of the Miscellaneous Award.
Extended coverage of the Miscellaneous Award 2010
Previously, the Fair Work Commission had held that low paid employees in industries not traditionally covered by a modern award would not be covered by the Miscellaneous Award.
This interpretation was however, found to be incorrect as it ignored the double requirements stipulated in the exclusion at Clause 4.2 of the Miscellaneous Award.
Clause 4.2 provides as follows:
4.2 The award does not cover 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.
In interpreting this clause, the Commission held that it plainly has 2 elements that are required to be satisfied before an employee, or class of employees, could be excluded from coverage, that is:
- The classes of employees must not have been traditionally covered by awards; and
- This must have been because of the nature or seniority of their role.1
This interpretation of the Miscellaneous Award is consistent with the Fair Work Act 2009 which provides similar double requirements.
Section 143(7) of the Fair Work Act 2009 provides:
(7) A modern award must not be expressed to cover classes of employees:
(a) who, because of the nature or seniority of their role, have traditionally not been covered by awards (whether made under laws of the Commonwealth or the States); or
(b) who perform work that is not of a similar nature to work that has traditionally been regulated by such awards.
(our emphasis)
In addition, the Commission found that the overall broad and generic nature of the wording of the Miscellaneous Award tended to infer that the purpose of it was to “provide minimum (and minimalistic) conditions of employment for a miscellaneous range of employers and employees without reference to industry, business function or occupation“.2
This inference can be supported by having regard to the generic nature of the classification descriptors of employees, and the low minimum wages provided, which suggests that the Miscellaneous Award intends to cover a broad range of low-skilled employees.
What does this mean for Employers?
While this decision is only recent, Employers should be wary of its potential impact on employment conditions for their employees.
As the Commission found in this case, it is no longer sufficient for Employers to avoid the applicability of the Miscellaneous Award by relying on the fact that a class of employees have not been covered by awards where this is not attributable to the nature or seniority of their roles.3
Should Employers fail to have regard to the appropriate award, they could be faced with a barrage of underpayment claims as awards generally provide a number of allowances and penalties that are not always included or properly set off in contracts of employment.
In addition to this, Employers may also face penalties under the Fair Work Act 2009 for failing to comply with a modern award.
Accordingly, we recommend that all employers take this opportunity to review the status of their “award free” employees and seek to clarify any potential underpayment issues as soon as practicable.
Written by Brad Swebeck, Partner and Heidi Dopson, Graduate-at-Law.