Miscellaneous Award coverage to be clarified at long last – but who will be covered?

Have you ever wondered which employees are covered by the Miscellaneous Award 2010 (Miscellaneous Award)?  You are not alone.  After finding that the answer isn't clear the Fair Work Commission (FWC) has released a draft update to the coverage clause  and has asked interested parties to lodge their submissions in response and evidence by 4 March 2020.

What's the current position?

As you would be aware, modern awards are industrial instruments.  By and large, they set the minimum employment conditions (including wages) for an industry (such as retail) or an occupation (such as clerks), on top of the minimum employment conditions set out in the National Employment Standards in the Fair Work Act 2009 (Cth) and the national minimum wage.

If an employee's employment falls outside the classifications of industry and occupational awards, they might be covered by the Miscellaneous Award.

Relevantly, the Miscellaneous Award's coverage clause states:

4.1 Subject to clauses 4.2, 4.3, 4.4, 4.5 and 4.6 this award covers employers throughout Australia and their employees in the classifications listed in clause 14—Minimum wages who are not covered by any other modern award.

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.

4.3 The award does not cover employees:

(a) in an industry covered by a modern award who are not within a classification in that modern award; or

(b) in a class exempted by a modern award from its operation,

or employers in relation to those employees. [Emphasis added]

When drafting the Miscellaneous Award, the AIRC (the second immediate predecessor to the FWC) flagged that it was 'unclear which employees will be covered by' it and that 'the coverage of the award is very narrow and likely to be limited in time where emerging industries are concerned or where the expansion of coverage of a modern award is involved'.

Later, in 2018, the Full Bench of the FWC  clarified that:

• the correct interpretation of clause 4.2 (above) is that the Miscellaneous Award does not cover classes of employees who have not been traditionally covered by awards because of the nature or seniority of their role;
• managerial employees are excluded from coverage because of the seniority of their role, and specialist white collar professionals traditionally not covered by awards are excluded due to the nature of their role; and
• the classification descriptors in the Miscellaneous Award are necessarily broad and generic, and a lack of specificity specific to an industry or occupation will not mean an employee cannot fall within one of the classifications.

These broad statements might not necessarily be helpful in guiding you when applying the Miscellaneous Award to your workers.

What could change?

On 12 February 2020, the FWC Full Bench handed down a decision that examined which employees the legislation requires the Miscellaneous Award to cover, what the effect of the current coverage clause is, and how the clause should be re-drafted.  The result is that a new clause has been proposed, as follows:

4. Coverage

4.1 Subject to clauses 4.2, 4.3, 4.4, and 4.5 this award covers employers throughout Australia and their employees in the classifications listed in clause 14—Minimum wages who are not covered by any other modern award.

4.2 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.

4.3 The award does not cover employees excluded from award coverage by the Act.

4.4 The award does not cover employees who are covered by a modern enterprise award, or an enterprise instrument (within the meaning of the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 (Cth)), or employers in relation to those employees.

4.5 The award does not cover employees who are covered by a State reference public sector modern award, or a State reference public sector transitional award (within the meaning of the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 (Cth)), or employers in relation to those employees.

4.6 This award covers any employer which supplies on-hire employees in classifications set out in Schedule B and those on-hire employees, if the employer is not covered by another modern award containing a classification which is more appropriate to the work performed by the employee. This subclause operates subject to the exclusions from coverage in this award.

4.7 This award covers employers which provide group training services for apprentices and trainees under this award and those apprentices and trainees engaged by a group training service hosted by a company to perform work at a location where the activities described herein are being performed. This subclause operates subject to the exclusions from coverage in this award.

The classification structure and descriptors in the Miscellaneous Award will remain unchanged, as follows:

Level 1

An employee at this level has been employed for a period of less than three months and is not carrying out the duties of a level 3 or level 4 employee.

Level 2

An employee at this level has been employed for more than three months and is not carrying out the duties of a level 3 or level 4 employee.

Level 3

An employee at this level has a trade qualification or equivalent and is carrying out duties requiring such qualifications.

Level 4

An employee at this level has advanced trade qualifications and is carrying out duties requiring such qualifications or is a sub-professional employee.

What's the effect of the proposed changes?

If implemented in the proposed terms, the practical effect of new clause 4 is that:

• The Miscellaneous Award will not apply to managerial employees or white collar professionals.  Although it is still unclear exactly how far 'professional employees such as' extends in clause 4.2, ultimately most white collar professionals would be too highly skilled or qualified (e.g. with a diploma or degree) to fit within one of the classifications covered by the Miscellaneous Award (Excluded Employees).  Ultimately, this exclusion does not change the status quo in this regard.
• Unless an employee is an Excluded Employee (or unless clauses 4.3-4.5 apply in respect of the Employee), the Miscellaneous Award will apply to the employee if they fit within one of the classifications contained in it.

As a result, the Miscellaneous Award will apply to most employees who perform work of a low skilled, low paid, manual nature, and who are not covered by any other modern award.

This variation addresses a fundamental gap in award coverage by removing the exemption created by clause 4.3(a) of the current clause (Industry Exemption).  As set out above, because of the Industry Exemption, the Miscellaneous Award does not cover any employee who:

• is employed by an employer covered by an industry award (e.g. building and construction); but
• does not perform a role that falls within any classification covered by that industry award (e.g. security guards).

The FWC Full Bench noted that there is 'no intelligible industrial rationale' for the Industry Exemption.  

To use a concrete example, under the proposed new clause 4, security guards employed by an employer in the building and construction industry would be covered by the Miscellaneous Award.

A greater number of (but not all) employees will be covered by the Miscellaneous Award and entitled to the benefits set out in it, such as:

• higher payment than the minimum wage, depending on experience in the job;
• penalties for hours worked outside 7am – 7pm Monday to Friday and on weekends;
• overtime at 150% for the first 3 hours and 200% for all hours after that;
• annual leave loading at 17.5%;
• access to conversion from casual employment to permanent employment after 12 months;
• allowances such as leading hand/in charge allowance, first aid allowance, meal allowance and fuel allowance;
• clothing/uniform reimbursement; and
• extra obligations for apprentices and trainees (school-based and after school).

What's next?

The Full Bench of the FWC has given interested parties 21 days to come up with a good reason why it should not implement the proposed new clause 4.  It is particularly interested in hearing from anyone who can explain why removing the Industry Exemption would result in a particular class of employees being inappropriately award-covered.

Beyond the opportunity to make a submission, employers should look closely, in particular, at:

• lower-paid employees who are not directly involved in the 'traditional' work of their industry;
• mid-level managers who are not covered by their industry Award; and
• semi-professional staff who are not covered by their industry Award.

Employers should consider, as soon as possible, whether any of these workers would be captured by the Miscellaneous Award, if the proposed changes come into effect, and whether a submission is warranted, opposing their coverage under the Miscellaneous Award.

Employers should also consider employees who will be covered by the Miscellaneous Award who are paid an annual salary, to make sure it is award and common law-compliant.

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