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Update to the Building and Construction General (On-Site) Award 2020

Distant work payment
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Update to the Building and Construction General (On-Site) Award 2020

Update to the Building and Construction General (On-Site) Award 2020

30 April 2021

On 21 April 2021, the Fair Work Commission (Commission) issued a final decision and determination to amend the Distant work payment provision in the Building and Construction General (On-Site) Award 2020. This was to resolve the ‘double-compensation problem’ raised by Master Builders Australia (MBA) and the Housing Industry Association (HIA).


Background

The Commission’s Full Bench addressed the proposals provided by MBA and the HIA to amend the distant work payment provision in its decision issued on 26 September 2018. This included a proposed modification of clause 25 Travelling time entitlements of the 2010 Award, which included a revised clause 25.4 Distant work payment which was the same terms as the current clause 26.4 Distant work payment of the 2020 Award. On 20 March 2020, the Full Bench made a determination to vary clause 25 of the 2010 Award in the terms of the proposed redraft contained in the September 2018 decision which took effect on 1 July 2020.

The issues later raised by MBA and the HIA, and the position of relevant unions in response, were summarised by the Full Bench dealing with the finalisation of exposure drafts in a decision issued on 4 December 2020. The matter was then referred to a Full Bench of the Commission, including three of the members of the Full Bench who made the September 2018 decision.


Double-compensation problem

In this Full Bench’s decision of 2 March 2021, it accepted the submission by MBA and the HIA that the most rational interpretation of clause 26.4 of the 2020 Award is that:

‘…where the criteria in clauses 26.4(a)(i) and (ii) are satisfied in relation to an employee, the employer is required to pay the employee the allowance provided in clause 26.1 and the distant work payment in clause 26.4 in respect of time and distance travelled from the employee’s place of residence to the construction site’.

It was further accepted that this amount would consequently ‘double-compensate’ for that part of the travel which is within the relevant metropolitan radial area and within a radius of 50 kms from the employee’s place of residence. As explained the September 2018 decision,

‘…the allowance in clause 26.1 compensates an employee, on an averaging basis, for the cost and inconvenience associated with travel to and from varying construction sites. Read with clause 26.4, it can be inferred that clause 26.1 is intended to compensate for all such travel within a metropolitan radial area and within a radius of 50 kms from the employee’s residence. However, an employee is compensated for that travel again under clause 26.4(b), which overlaps with the functional operation of clause 26.1.’

This was not the result intended by the September 2018 decision and, consequently, the Full Bench considered that an appropriate variation to clause 26.4 was required. Thus, to resolve the problem of double-compensation, the Full Bench’s provisional view in the March 2021 decision was to make the allowance in clause 26.1 of the 2020 Award inapplicable to employees who qualify for distant work payments under clause 26.4(a). Following this, various submissions from relevant unions supported this provisional view while MBA and the HIA’s submissions did not.


Final decision

The Full Bench’s latest final decision and determination confirmed that the 2020 Award was to be varied in accordance with the provisional view they had expressed in the March 2021 decision. The following are the only relevant considerations that the Full Bench assigned weight to in reaching its final decision:
  • In contrast to MBA and the HIA’s submissions, a substantive variation to clause 25 of the 2010 Award was intended in the September 2018 decision as the Full Bench (at that time) concluded that clause 25 was ‘unnecessarily complex and confusing, and required simplification’. This included the way the concept of radial areas operated.
  • The resulting new clause 25.4 of the September 2018 decision was intended to alter the existing distant work payment system into a new structure that would be simpler ‘conceptually and administratively’. The MBA and the HIA’s proposal to restore the pre-existing system as the solution to the double-compensation problem would effectively reverse the outcome of the 4- yearly review and therefore must be rejected.
  • Neither the HIA nor MBA were able to demonstrate that the proposed variation would have any cost impact as their submissions did not attempt ‘any aggregate estimate of the relative cost of the proposed variation across a representative sample of employees and worksites’.

Ultimately, the Full Bench concluded that the proposed variation not only resolved the existing doublecompensation problem, but also ensures employees who travel long distances to a work site (not just those who travel beyond an ‘arbitrary radial boundary’) are appropriately compensated. Furthermore, by removing the double-compensation problem, the proposed variation reduces employment costs for employers and results in an easily understood provision that is administratively simpler to apply.


What are the changes?

  • Replacing the words “in addition to” in clause 26.4(a) with the words “instead of”.


When will the changes come into effect?

These changes will be effective from the first full pay period on or after 1 May 2021.

To view the decision in full click here.

To view the determination in full click here.


Further information

To view the updated version of the Award from the effective date, click here.

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