Executive Summary:

Have your say! – As discussions continue between industry associations and unions, members of the HIA and MBA may still have an opportunity to support the submissions from those organisations or raise any concerns about the COVID-19 amendments to the Construction Awards. The proposed amendments are annexed to this article.

The HIA and MBA are trying to have amendments included into the Building and Construction General On-site Award 2010, Joinery and Building Trades Award 2010 and the Mobile Crane Hiring Award 2010 (the Construction Awards) so employers can vary hours or direct staff to take annual leave where their business experiences downturns caused by COVID-19.

The Detail:

COVID-19 has affected every industry in Australia, through the control measures both the Federal and state governments have put in place to restrict the spread of the virus. As a result of those measures, both employers and employees have struggled to manage their employment relationships in light of the impacts of the virus. The Fair Work Commission (FWC) has recently made additions to some modern awards or are in the process of making those changes, to assist employers and employees to navigate the employment effects of COVID-19.

The FWC initially determined that the construction sector would not be significantly impacted by COVID‑19 and made the decision that changes would not be necessary for the Construction Awards. In the FWC’s recent decision,[1] the Construction Awards were excluded from the list of Modern Awards proposed for COVID-19 variations because it had received expert advice that the construction sector is:

  • not likely to be affected in the short term;
  • does not have a high level of award-reliance; and
  • enterprise agreements are relatively common,

inferring that changes to the Construction Awards would have little value.

Employer organisations and unions involved in the construction industry have subsequently pursued discussions about measures to respond to the impacts of the COVID-19 pandemic and have made submissions to the FWC about the impact of COVID-19 on the building industry and that the COVID‑19 award amendments should extend to the Construction Awards.

Economist Report

The amendments to Australian modern awards are a result of a report by Professor Jeff Borland of the University of Melbourne, commissioned by the FWC.[2] The report was commissioned to assess industry groups in the Australian economy and identify in which industries there may be potentially benefit from immediate amendments allowing extra flexibility in employment arrangements during the period the COVID‑19 pandemic.

Professor Borland considered that the Construction Awards fell into a category where there have been no major decreases in labour demand but may be affected where more stringent government restrictions are imposed.[3]

Industry Submissions

Master Builders Australia

Master Builders Australia (MBA) advised the FWC that they support the inclusion of award amendments for ‘Unpaid Pandemic Leave’ and ‘Annual Leave at Half Pay’, similar to provisions already included in other awards. They also provided modelling of possible impacts on the construction industry, based on previous economic downturns, suggesting that the industry could suffer as much as a 50% drop in commercial building activity and 45% drop in new dwelling starts, which slightly exceeds the 1994-1996 downturn. As a worst case scenario, they predict a new home starts trough of 100,000 after COVID-19 restrictions are lifted. This is based on a post-crisis unemployment peak of 12%.

The MBA submissions assessed the Australian building and construction industry as representing over 11% of gross domestic product, with $268.9 billion worth of projects currently under construction across Australia. Further, the building and construction industry provides employment for approximately 1.2 million people and employs more full-time workers and more apprentices than any other sector. Each year, the building and construction industry pays approximately $65.5 billion in wages and utilises $173 billion in goods and materials.

MBA claims that although the industry is not currently the subject of a specific Government directive to cease or restrict operations in light of COVID-19, the building and construction sector is experiencing adverse effects from the pandemic and notes an increasing number of reports from members about those effects and the related consequences. MBA expects that adverse impacts will become more acute in the near future, as related industries experience major disruptions affecting the supply chain.

Under the current conditions, MBA has noted deterioration in community confidence and the general economic and market conditions. These are manifesting in several ways, including:

  • many residential housing clients are delaying or cancelling existing contracts, causing a drop in the quantity of current work and what is usually expected for the future;
  • commercial builders report that tenders for works of significant value have been withdrawn or suspended, and expected tenders that usually follow a call for expressions of interest have not been announced as would be expected;
  • the supply of overseas building products are either significantly delayed or in shortage, with no guarantee of the usual supply levels for the future;
  • there are a growing number of contractual disputes arising as a result of COVID-19, many of which are new or unexpected, leading to works slowing or being suspended in the absence of clarity or swift resolution; 
  • many businesses report that the impact of COVID-19 on other economic sectors and the community broadly, particularly those subject to Government restrictions, have hindered usual operations and are causing workforce uncertainty. Examples include delays in obtaining necessary third-party approvals for works undertaken (such as regulator assessment and approval), reduced workforce availability caused by school restrictions, increased family responsibilities, etc; and
  • a reported decrease in either planned or received contracts or orders. The reports estimate the decrease is as much as 60 per cent in comparison to normal business conditions.

HIA Submissions

The Housing Industry Association (HIA) made submissions to the FWC, that extended beyond the MBA submissions, identifying that (our emphasis added):

“More than 70 per cent of a builder’s workforce operates in the pre-construction stages of home building. This workforce is involved in sales, marketing, financing, design, planning approvals, building approvals and contract administration. The lead time for a new home building project to commence from the first client inquiry is generally around 6 months but often longer. It is during this period the pre-construction workforce carry out preliminary works to enable construction works to commence. Client activity has plummeted in March meaning that the pre-construction staff will be without work until new client activity resumes post the COVID-19 crisis. These staff will become unemployed in the coming weeks and retaining them in the business aligns directly with the purpose of the proposed variations.”[4]

To keep all building employees in work, action needs to be taken now. On that basis HIA agrees with the MBA position that COVID-19 amendments should be included in the Construction Awards. This approach assists in the retention of several thousands of jobs, ensuring that staff are ready for work when the industry can re-activate new home construction productivity.

HIA also believes that there is a risk that the recovery will not be as quick as the Australian government has suggested. They hold the view that industry may be unable or unwilling to return to ‘business as usual’ immediately following the pandemic, and that there will be a cautious recommencement of business activities which could mean that many employees in the sector will remain without work for some time after the COVID-19 crisis is over. They consider that this is partly because the Reserve Bank of Australia will not be able to support recovery of the industry in the way it had in previous downturns due to economic circumstances prior to and during the COVID-19 measures. HIA appears to consider that a recovery commencement could be delayed to early 2023.

HIA employs apprentices through its Group Training Organisation, and places them with host employers in the residential building industry. HIA reported that a number of their apprentices have been affected by COVID-19 and that has impacted their work arrangements and the businesses of their host employers. Apprentices are covered by the Construction Awards and HIA considers that the Construction Awards should be varied in the way that other modern awards have been varied to deal with that group of employees, in relation to COVID-19.

Business submissions

Rosenlund Contractors filed their own brief submissions regarding the proposed decision to exclude the Construction Awards from the proposed COVID-19 changes. Rosenlund opposed the provisional view that Construction Awards be excluded from COVID-19 amendments because they believed that there were current and impending adverse impacts on the construction sector that justifies extending the provisions to the Construction Awards.

Rosenlund submitted that COVID-19 was impacting current construction sites as significantly as any other industry that the commission is including in the award variations. They observed that there have been substantial impacts on the supply-chains that feed the construction industry, resulting in a foreseeable decline in construction activity once the materials cannot be replenished. They raised particular concerns about the unavailability of personal protective equipment required for their staff to be able to continue in their work safely, which has significantly limited the type and scope of work Rosenlund can undertake.

Rosenlund further cited onsite impacts of social distancing that have resulted in significantly reduced productivity, as well as additional costs to comply with health regulations to ensure a safe environment. Rosenlund expressed the view that Professor Borland erred in his view that the Construction sector’s only impact would be subject to possible supply chain deficiencies in the future and that it is appropriate to implement the award variations to the construction awards.

Conclusion

As discussions continue between the industry associations and unions, members of the HIA and MBA may still have an opportunity to support, or raise any concerns ,directly with those organisations regarding the COVID-19 amendments to the Construction Awards.

If you are interested in understanding which awards have been amended for COVID-19, we have included a link to the FWC notice.

In the meantime, if you require advice or assistance with managing your organisation’s employment obligations through COVID-19, whether it be changes to employment arrangements or claiming the JobKeeper payments, you can contact our employment team at reception@activelaw.com.au or call on (07) 3160 0000.

Annexure                     Proposed COVID-19 Amendments to Modern Awards

Below is an extract from the Fair Work Commission’s 1 April statement, outlining the proposed changes that have now been implemented into some awards. A link to the full statement is here.

“[56] We are proposing to insert a new Schedule: Schedule X – Additional measures during the COVID-19 pandemic into selected modern awards. The new schedule will operate until 30 June 2020 (unless extended on application or on the initiative of the Commission). The two additional measures in the Schedule are unpaid pandemic leave and the ability to take twice the amount of annual leave at half pay.

Unpaid pandemic leave

[57] As we have mentioned there is a ‘gap’ in the award safety net concerning employees who are required to self-isolate.

[58] We have drafted a model term to address that gap.

[59] The proposed provision for unpaid pandemic leave is as follows:

X.2.1 Unpaid pandemic leave

(a) Subject to clauses X.2.1(b) and (c), any employee may elect to take up to 2 weeks’ unpaid leave if the employee is
required, by government or medical authorities or acting on medical advice, to self-isolate or is otherwise prevented from
working by measures taken by government or medical authorities in response to the COVID-19 pandemic in circumstances
where the employee is required to work at premises operated by an employer.

(b) The employee must give their employer notice of the taking of leave under clause X.2.1(a) and of the reason the employee
requires the leave, as soon as practicable (which may be a time after the leave has started).

(c) An employee who has given their employer notice of taking leave under clause X.2.1(a) must, if required by the employer, give
the employer evidence that would satisfy a reasonable person that the leave is taken for a reason given in clause X.2.1(a).

(d) Leave taken under clause X.2.1(a) does not affect any other paid or unpaid leave entitlement of the employee and counts as
service for the purposes of entitlements under this Award and the National Employment Standards.

NOTE 1: A employee covered by this Award who is entitled to the benefit of clause X.2.1 has a workplace right under section 341(1)(a) of the Act.

NOTE 2: Under section 340(1) of the Act, an employer must not take adverse action against an employee because the employee has a workplace right, has or has not exercised a
workplace right, or proposes or does not propose to exercise a workplace right, or to prevent the employee exercising a workplace right. Under section 342(1) of the Act, an employer
takes adverse action against an employee if the employer dismisses the employee, injures the employee in his or her employment, alters the position of the employee to the employee’s prejudice, or
discriminates between the employee and other employees of the employer.

NOTE 3: Under section 343(1) of the Act, a person must not organise or take, or threaten to organise or take, action against another person with intent to coerce the person to exercise or not exercise,
or propose to exercise or not exercise, a workplace right, or to exercise or propose to exercise a workplace right in a particular way.

[60] The proposed term seeks to strike a balance between the various interests and has been drafted so that the unpaid pandemic leave entitlement:

  • will be available in full immediately, rather than accruing progressively during a year of service;
  • will only be available until 30 June 2020 (unless extended by further variation dependant on the duration of the COVID-19 pandemic);
  • will be available to full-time, part-time and casual employees (not pro-rated); and
  • it will not be necessary for employees to exhaust their paid leave entitlements before accessing unpaid pandemic leave.

[61] In relation to the last point we note that the approach proposed is consistent with that taken by the Commission in relation to unpaid domestic violence leave.

[62] As a practical matter, we think that award-reliant employees are likely to access any available paid leave entitlements before utilising an entitlement to unpaid pandemic leave but we do not think it appropriate to mandate such an approach. Further, to require employees to access any paid leave entitlement before accessing unpaid pandemic leave would introduce an unwarranted degree of complexity into the proposed award term.

[63] By addressing the ‘regulatory gap’ the new entitlement to unpaid pandemic leave will enable more people to remain in employment. We note that the common objective of the participants in the recent Hospitality, Private-Sector Clerical and Restaurant proceedings (including ACCI, ACTU, Ai Group and the Minister) has been to retain as many employees in employment as practicable in the current crisis.

[64] The proposed entitlement will also support the important public policy objective of encouraging those who should self-isolate, to do so and thereby limit the spread of COVID-19 in workplaces allowing businesses to continue to operate.

[65] We acknowledge that the proposed unpaid pandemic leave may be regarded, by some, as a minimalist measure. It does not operate on a ‘per occasion’ basis and hence may not assist those employees compelled to self-isolate on more than one occasion. Nor does it provide an entitlement to those caring for others who are compelled to self-isolate. But the proposed term is intended to provide a quick response to the current crisis and, in our view, the limited measure we propose is likely to attract broader support.

[66] Further consideration can be given to the scope of the proposed term at a later stage, if the circumstances so warrant.

Annual leave at half pay

[67] Annual leave was dealt with as a common issue during the 4 yearly review of modern awards. In decisions issued in July 2015 10 and September 2015,11 the Full Bench determined model terms in respect of, relevantly:

  • granting annual leave in advance; and
  • excessive annual leave.

[68] The Annual Leave Full Bench inserted a new annual leave in advance clause into 121 awards. 12 Under the annual leave in advance clause, an employee can take a period of annual leave in advance if all of the following conditions are met:

  • the employer and the employee must make a written agreement to the employee taking the period of leave in advance;
  • the written agreement must state the amount of leave to be taken in advance and the date on which the leave will commence; and
  • the written agreement must be signed by both the employer and employee (and a parent/guardian if the employee is under 18).

[69] The employer must keep a copy of the written agreement as an employee record.

[70] The Annual Leave Full Bench also inserted a model term in relation to excessive leave in 112 modern awards. Under the excessive leave award clause an employee has an excessive leave accrual if:

  • the employee has accrued more than 8 weeks’ paid annual leave, or
  • for a shiftworker if they have accrued more than 10 weeks’ paid annual leave.

[71] Where an employee has an excessive leave accrual, the employer must seek to confer with the employee and genuinely try to reach agreement on how to reduce or eliminate the excessive leave accrual. If an agreement cannot be reached, an employer can direct an employee to take one or more periods of annual leave subject to certain conditions. The direction:

  • must be in writing;
  • is of no effect if it would result at any time in the employee’s remaining paid annual leave balance being less than 6 weeks when any other paid annual leave arrangements are taken into account;
  • must not require the employee to take any period of paid annual leave of less than one week;
  • must not require the employee to take a period of annual leave beginning less than 8 weeks or more than 12 months, after the direction is given; and
  • must not be inconsistent with any leave arrangement agreed by the employer and employee.

[72] The proposed Schedule X includes a model term providing additional flexibility in respect of annual leave. In short it provides that an employer and employee may agree to take up to twice as much annual leave at half the rate of pay. We note that such a provision has recently been inserted into the Hospitality Award, the Clerks – Private Sector Award and the Restaurant Award.

[73] The term we are proposing to insert in the selected modern awards is as follows:

X.2.2 Annual leave at half pay

(a) Instead of an employee taking paid annual leave on full pay, the employee and their employer may agree to the employee taking
twice as much leave on half pay.

(b) Any agreement to take twice as much annual leave at half pay must be recorded in writing and retained as an employee
record.

EXAMPLE: Instead of an employee taking one week’s annual leave on full pay, the employee and their employer may agree to the employee taking 2 weeks’ annual leave on half pay. In this example:

• the employee’s full pay for the 2 weeks’ leave is the same as the pay the employee would have been entitled to for 1 weeks’ leave on full pay (including leave loading under the Annual Leave clause of this award); and

• one week of leave is deducted from the employee’s annual leave accrual. (Underlining added).

NOTE 1: A employee covered by this Award who is entitled to the benefit of clause X.2.2 has a workplace right under section 341(1)(a) of the Act.

NOTE 2: Under section 340(1) of the Act, an employer must not take adverse action against an employee because the employee has a workplace right, has or has not exercised a workplace right, or proposes or does not propose to exercise a workplace right,
or to prevent the employee exercising a workplace right. Under section 342(1) of the Act, an employer takes adverse action against an employee if the employer dismisses the employee, injures the employee in his or her employment, alters the position of the employee to the employee’s prejudice, or discriminates between the employee and other employees of the employer.

NOTE 3: Under section 343(1) of the Act, a person must not organise or take, or threaten to organise or take, action against another person with intent to coerce the person to exercise or not exercise, or propose to exercise or not exercise, a workplace right, or to exercise or propose to exercise a workplace right in a particular way.

[74] Proposed clause X.2.2(b) is to ensure that there is a record of the agreement in order to protect the interests of both parties and to minimise the risk of subsequent disputation. We note that Regulation 3.36 (with s. 535) requires employers to keep a record of any leave taken by an employee entitled to leave and to record the balance of the employee’s entitlement to that leave from time to time.

[75] The underlined words in the example in the proposed clause X.2.2 would only be included in those modern awards that currently contain a term providing for annual leave loading.

[76] Subsection 93(4) of the Act provides:

Terms about taking paid annual leave

(4) A modern award or enterprise agreement may include terms otherwise dealing with the taking of paid annual leave.’ (emphasis added)

[77] Section 93 is part of the NES. Modern awards and the NES interact in different ways:

•  A modern award may include any terms that the award is expressly permitted to include by a provision of Part 2-2 (which deals with the NES) (ss.55(2) and 136(1)(c)).13

•  A modern award may include terms that:

(i) are ancillary or incidental to the operation of an entitlement of an employee under the NES; or

(ii) terms that supplement the NES (s.55(4)).

[78] In relation to X.2.2(a) we note section 55(4) of the Act provides:

Ancillary and supplementary terms may be included

(4) A modern award or enterprise agreement may also include the following kinds of terms:

(a) terms that are ancillary or incidental to the operation of an entitlement of an employee under the National Employment Standards;

(b) terms that supplement the National Employment Standards;

but only to the extent that the effect of those terms is not detrimental to an employee in any respect, when compared to the National Employment Standards.

Note 1: Ancillary or incidental terms permitted by paragraph (a) include (for example) terms:

(a) under which, instead of taking paid annual leave at the rate of pay required by section 90, an employee may take twice as much leave at half that rate of pay; or

(b) that specify when payment under section 90 for paid annual leave must be made.

Note 2: Supplementary terms permitted by paragraph (b) include (for example) terms:

(a) that increase the amount of paid annual leave to which an employee is entitled beyond the number of weeks that applies under section 87; or

(b) that provide for an employee to be paid for taking a period of paid annual leave or paid/personal carer’s leave at a rate of pay that is higher than the employee’s base rate of pay (which is the rate required by sections 90 and 99).

Note 3: Terms that would not be permitted by paragraph (a) or (b) include (for example) terms requiring an employee to give more notice of the taking of unpaid parental leave than is required by section 74. [Emphasis added]

[79] It is our provisional view that the proposed annual leave on half pay provision is permitted by s.55(4) as an ancillary or incidental term and, insofar as the provision deals with annual leave loading, as a term that supplements the NES. The proposed term is consistent with the example given in Note 1 to s.55(4).”


[1]     AM2020/12 Section 157(3) of the Fair Work Act 2009 (Cth) – Variation of awards on the initiative of the Commission [2020] FWCFB 1837. https://www.fwc.gov.au/documents/decision_summaries/2020fwcfb1837_summary.htm

[2]     J. Borland, Benefit from greater flexibility in employment arrangements: A report to the Fair Work Commission, March 2020, Department of Economics, University of Melbourne. Accessed online https://www.fwc.gov.au/documents/documents/awardmod/variations/2020/am202012-information-note-flex-010420.pdf .

[3]     Ibid, page 4.

[4]     Housing Industry Association, Submission to the Fair Work Commission: Variation of awards on the initiative of the Commission (AM2020/12), 6 April 2020, p3. Accessed online https://www.fwc.gov.au/documents/documents/awardmod/variations/2020/am202012-sub-hia-060420.pdf


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