These paragraphs form part of detailed reasons for decision in a Fair Work Commission appeal which deals with the practical application of the better off overall test.
“Consideration of the appeal
[33] The notice of appeal, in substance, raises a single issue, that is, whether the Deputy President erred in finding that employees engaged by Thrive as Service Leaders are correctly matched to the Level 5 – Assistant Director classification in the Award rather than the Level 6 – Director classification. There is no dispute that the rates of pay for Service Leaders under the Agreement are lower than that for the Level 6 – Director classification under the Award, or that the Service Leaders would otherwise be better off under the Agreement than the Award if properly aligned with the Level 6 classification.
[34] An appeal under s 604(1) of the Act is by way of rehearing such that the Full Bench can only exercise its powers on appeal if it finds there is error on the part of the first instance decision-maker.20 A distinct question arises as to the standard of appellate review applicable to the particular decision under consideration. Under the correctness standard, the appellate bench determines for itself the correct outcome. In the case of a discretionary decision, the approach in House v The King (1936) 55 CLR 499 dictates that appellate intervention is limited to circumstances where the decision-maker at first instance acted upon a wrong principle, or allowed extraneous or irrelevant matters to affect the decision, mistook the facts, failed to take into account some material consideration or made a decision that was unreasonable or plainly unjust.21
[35] The Deputy President was, relevantly, required to consider whether she was satisfied that each award covered employee, and each reasonably foreseeable employee, would be better off overall if the Agreement applied to their employment than if the Award applied to their
employment for the purposes of s 193(1)(a) of the Act. The ultimate assessment as to whether a member of the Commission is satisfied that an enterprise agreement passes the better off overall test requires a global assessment of the various terms and conditions of the agreement and the relevant modern award.22 This will commonly require the identification of terms which are more beneficial or less beneficial for an employee, and an overall assessment of whether the employee would be better off under the agreement.23
[36] In this case, the question of whether the Deputy President was satisfied the Agreement passed the better off overall test turned on her determination as to whether the Service Leader position was correctly aligned to the Level 5 or Level 6 classification under the Award. The interpretation and application of the classification provisions of a modern award presents a legal question to which there can only be one correct answer.24 Either the Service Leader position should be classified as a Level 5 or Level 6 employee under the Award. The answer given by the Deputy President is either correct, or it is not. In those circumstances, the Full Bench must determine for itself the correct outcome in deciding the appeal.
Approach to be adopted
[37] It is appropriate to make three initial observations in relation to the approach to be adopted when determining a question as to the alignment between a classification in an enterprise agreement and a classification in a relevant modern award.
[38] The first observation is that the Deputy President was invited by both parties to apply what is known as the ‘principal purpose’ test. The question of whether a particular award classification is appropriate and thus applicable to the work performed by an employee has traditionally been resolved by the application of the principle of ‘major and substantial employment’ or an examination of the ‘principal purpose’ of the employment.25 Those approaches involve identifying the principal purpose or major and substantial aspect of the employment of an employee in order to determine whether the employment is covered by a particular award or industrial instrument. The assessment does not involve merely quantifying the time spent on the various elements of work performed by an employee. Rather, an examination must be made of the nature of the work and the circumstances in which the employee is employed to do the work.26
[39] The principal purpose test or an examination of the major and substantial aspect of the employment are likely to be of greatest utility in circumstances in which an employee undertakes work of a mixed nature and it is necessary to determine which of two industrial instruments covers the employment. In Ware v O’Donnell Griffin (Television Services) Pty Ltd [1971] AR (NSW) 18, for example, Sheldon J said:27
The finding of the Chief Industrial Magistrate raises two questions: Firstly, whether this is a case to be determined on the principle of major and substantial employment; and, secondly, if it is, whether the evidence justified his finding as to what the major and substantial employment of the complainant was.
It seems to me that this is clearly a case to which this principle is applicable. This principle is almost as old as industrial arbitration and it makes a practical approach to determining the application of awards where duties are of a mixed character and contain elements which have taken alone would be covered by more than one award. This is not an appropriate occasion on
which to discuss the method by which this test should be applied except to say that it is not merely a matter of quantifying the time spent on the various elements of work performed by a complainant; the quality of the different types of work done is also a relevant consideration.
[40] It has been accepted that those approaches can also be applied in determining whether a particular award classification regulates employment of a particular character.28
[41] It is important to remember that, although often found to be a useful device, examination of the ‘major and substantial employment’ or ‘principal purpose’ of an employment is no more than an aid in the task of construing and applying the relevant industrial instrument.29 There will be instances in which the ‘principal purpose’ test is ill-suited to determining whether a person falls within a classification if, for example, the classifications are expressed in highly generic terms and do not describe with any specificity the job functions required to be performed at each level.30 The question is, ultimately, one of the interpretation and application of the classification descriptors in the relevant modern award.
[42] There is no dispute that the Award covers the employment of Service Leaders employed by Thrive. The only dispute concerns whether the Service Leader position is appropriate aligned with the Level 5 – Assistant Director or Level 6 – Director classification. In those circumstances, we do not consider that an examination of the principal purpose of the position is of great assistance. Schedule B to the Award requires that an employee be classified ‘in accordance with the employee’s skills, responsibilities, qualifications, experience in the industry and duties’. The classification descriptions, at least so far as Level 5 and Level 6 are concerned, provide a list of indicative duties. The task, in our view, is to identify the most appropriate classification, or best fit, in light of the skills, responsibilities, qualifications, experience and duties required of the Service Leader position under the Agreement.
[43] The second observation to be made is that it is not necessary for there to be a precise correspondence between the duties and responsibilities of an employee and the classification description in a modern award for the award to cover the employee. It is ordinarily sufficient if the role in which a person is employed falls substantially within the scope of a classification described in the relevant award.31 In Putland v Royans Wagga Pty Limited [2017] FCA 910, for example, Bromwich J said:32
An award classification should not be read so strictly to require each and every criterion to apply in order that the classification apply. Referring to the bold emphasised text in the passage reproduced above from the Clerks Award dealing with classification, it will suffice if enough of the features apply to represent fairly the ‘characteristic and typical duties/skills’, with the characteristics being the ‘primary guide’ as they ‘indicate the level of basic knowledge, comprehension of issues, problems and procedures required and the level of supervision or accountability of the position’. The ‘key issue’ is the level of ‘competency and skill’ required to be exercised in the work performed, not the duties performed per se. A perfect fit is not required.
[44] Each classification in a modern award is required to be construed in accordance with its terms. However, generally modern award classifications are not drafted in a manner that requires each and every task, duty or responsibility listed in the classification description to be performed in order for an employee to fit within a classification. That is explicit in the case of
the Award which describes each classification primarily by reference to a list of ‘indicative duties’.
[45] The third observation to be made is that the Deputy President’s analysis focused, to a significant extent, on the evidence given by Ms O’Grady and Mr Tuttle in relation to the duties in fact performed, and responsibilities in fact assumed, by Ms O’Grady in her employment at the Beaconsfield Early Learning Service. Among other things, the Deputy President found that Ms O’Grady was in charge of the ‘day-to-day’ running of the service in Beaconsfield, a Level 5 duty under the Award, whereas Mr Tuttle and Ms Kinnersly held ‘overall management’ responsibility, as contemplated at Level 6 of the Award. Thrive submitted that the UWU’s appeal did not challenge these or any other of the Deputy President’s factual findings and that they should not be disturbed. But questions of interpretation are antecedent to factual findings, and while a certain appellate deference is shown to the latter, the Full Bench must decide for itself the proper meaning and significance of the constitutive elements of the disputed classifications and how the Agreement classifications best align with those in the Award.
[46] The question which required determination was whether persons employed by Thrive in the position of Service Leader under the Agreement would, if the Award applied to their employment, be entitled to be paid at the rate for a Level 5 or Level 6 employee. In this case, the Agreement contains a detailed position description for a Service Leader. Evidence as to the work performed by persons currently employed as Service Leaders in Thrive’s enterprise, and as to the manner of the operation of Thrive’s business, might provide context and inform the understanding of the classification descriptions in the Agreement, but this would not logically affect the meaning of the Award classifications, absent some connection with industry practice or the history of the Award. The question raised is to be answered primarily by reference to the description of the Service Leader position in the Agreement against the relevant classifications in the Award.
[47] It must also be remembered that findings about the work that is to be performed under the Agreement cannot displace the classification descriptors in the Agreement. We note that the Deputy President found, based on the evidence of Ms O’Grady, that the Service Leader role does not entail ensuring that the service adheres to regulations or statutory requirements.33 This finding is inconsistent with the classification description for a Service Leader in the Agreement which provide that ‘[a]t this level employees will be responsible for ensuring the service runs according to the NQF [National Quality Framework] and Thrive Policies and Procedures’. The classification description in the Agreement differs from the finding of the Deputy President in that respect.
Consideration of comparator classification
[48] It is necessary then to consider whether the classification of Level 5 – Assistant Director or Level 6 – Director is the most appropriate comparator for the Service Leader position in the Agreement. For the reasons which follow, we consider that the appropriate comparator for the Service Leader position in the Agreement is the classification of Level 6 under the Award. With respect, it is our opinion that the Deputy President erred in concluding that the appropriate comparator was the Level 5 classification. In reaching our conclusion, a number of textual and contextual considerations are significant.
[49] First, the Level 6 – Director classification is defined in clause B.1.10 as a person with relevant qualifications or experience ‘who is appointed as the director of a service’. The ordinary meaning of the term ‘director’ includes a ‘person who is in charge of an activity, department or organisation’.34 The indicative duties of the Level 6 classification reflect that the classification is intended to cover the person with practical responsibility for the operation of the service. Relevant indicative duties of the Level 6 classification include ‘[r]esponsible for the overall management and administration of the service’, ‘[s]upervise the implementation of developmentally appropriate programs for children’, ‘[e]nsure that the centre or service adheres to all relevant regulations and statutory requirements’, ‘[e]nsure that the centre or service meets or exceeds quality assurance requirements’ and ‘[p]rovide professional leadership and development to staff’. These all suggest the Director is the person with practical responsibility for, and control over, the management of the service.
[50] In that context, the description of the Service Leader position in the Agreement favours the conclusion that the Service Leader position is the person in charge of a service. The description of the position, among other things, indicates that the Service Leader ‘will be in charge of the day-to-day running of an education and care service’, ‘will lead a team of education at a service to provide quality education and care’ and ‘will be responsible for ensuring the service runs according to the NQF [National Quality Framework] and Thrive Policies and Procedures’. The description of the Service Leader position suggests that it is the person in charge of a service in a practical sense. This supports the conclusion that the position is appropriately aligned with the Level 6 classification.
[51] Second, the Level 5 classification is relevantly one of an ‘Assistant Director’, whose
indicative duties include:
- Responsible for the day-to-day management of the centre or service in the temporary absence of the Director and for management and compliance with licensing and all statutory and quality assurance issues.
[52] While it is not entirely clear, it appears that the ‘Assistant Director’ is only responsible for day-to-day management and for management and compliance with licensing and all statutory and quality assurance issues in the temporary absence of the Director. This is supported by the fact that the indicative duties of the Director classification include responsibility for licensing, statutory and quality assurance matters. The fact that the Service Leader is responsible for day-to-day management and with ensuring compliance with the NQF and Thrive policies and procedures by the service on an ongoing basis, and not only in the temporary absence of the Director, strongly suggests that the position is not appropriately aligned with the Level 5 classification. In our view, the position of Service Leader is not in the nature of an ‘Assistant Director’ who temporarily deputises for a superior who is occasionally absent.
[53] The indicative duties for Level 6 do not refer to the day-to-day management but to ‘overall management and administration of the service’. On one view, ‘overall management and administration’ might include responsibilities beyond ‘day-to-day management’. The language is unclear. However, we do not consider that this difference in language undermines the conclusion to be drawn from the indicative duties of the Level 5 classification that Level 6 is intended to include the most senior employee in a service who has ongoing responsibility for the day-to-day management of the service. Even if ‘overall management and administration’ is
a broader concept, the fact that a Service Leader is generally responsible for day-to-day management demonstrates that the position undertakes at least a substantial part of the duties of the Level 6 classification.
[54] Third, the first five indicative duties in the Service Leader position description in the Agreement closely reflect the first five indicative duties in the Level 5 – Assistant Director classification in the Award although they are not identical. This provides some support for Thrive’s submission that the Level 5 classification is the appropriate comparator. However, there is overlap between the indicative duties of the Level 5 appearing in the Service Leader position and the Level 6 classification in the Award. For example, the first indicative duty for the Level 5 classification is ‘[c]o-ordinate and direct the activities of employees engaged in the implementation and evaluation of developmentally appropriate programs’. It is unclear how that role differs from the second indicative duty for a Level 6 employee to ‘[s]upervise the implementation of developmentally appropriate programs for children’. The fact that the description of the Service Leader position in the Agreement uses the former language rather than the latter does not take the analysis very far.
[55] Furthermore, the differences between the Service Leader and the Level 5 classification are significant. As we have observed, the fact that the Service Leader position in the Agreement indicates that the Service Leader is responsible for the day-to-day management of the service on a permanent basis and not only in the absence of the Director is illuminating and difficult to reconcile with the indicative duties of the Level 5 classification. The additional indicative duties of the Service Leader position are also more consistent with the indicative duties of the Level 6 classification. Those include ‘[c]onduct annual performance reviews of staff on your team’, ‘[i]nterview parents at time of enrolling’, ‘[b]e actively aware of the services budget and spending’, ‘work in conjunction with the EYSACM for planning and preparing the service for future Assessment and Rating’ and ‘[p]romote the service to the wider community’. Those indicative duties go beyond the duties contemplated for a Level 5 – Assistant Director.
[56] Fourth, the structure of the Level 6 – Director classification is instructive. A Director is defined in clause B.1.10 as a person ‘who is appointed as the director of a service’. This contemplates that each service will have a director. Furthermore, the classification of Director is divided into Level 1, Level 2 and Level 3 depending on the number of children to whom a service is licenced to provide care. A different rate of pay attaches to each level. Implicitly, this structure recognises that the degree of responsibility involved increases depending on the number of children provided with care at an individual service. This underlines that the Award contemplates that a director is responsible for a particular service.
[57] Thrive’s submission is that the role of a Director of a service can be performed by an individual who is, functionally at least, the Director of an infinite number of centres. In Thrive’s case, it says the functions of the Director of each of 21 services are performed by two individuals in its head office. It nonetheless says that the most senior employee who performs work at the service and is responsible for the day-to-day management of the centre is appropriately classified as an Assistant Director. In our view, that arrangement is difficult to reconcile with a classification structure which determines the rate of pay of a Director by reference to the number of children to whom a particular service is licensed to provide care. It would result in the same rate of pay being afforded to the employee responsible for the day-to-
day management of a centre, and practically in charge of its operations, whether the centre provides care to up to 39 children, 40 to 59 children or 60 or more children.
[58] Fifth, the fact that the title of the Level 5 classification is ‘Assistant Director’ is significant. The title, in itself, suggests that the position is intended to assist a Director who is contemplated to be responsible for a particular service. A Service Leader employed by Thrive is the most senior managerial employee working at a service and is responsible for the day-to-day management of the service. In our view, a Service Leader cannot sensibly be said to be merely assisting a Director. There is no person who is the Director of a particular service in Thrive’s business model. Although there is some imprecision in the indicative tasks for a Level 5 employee, the title of the classification is consistent with at least the second and fourth dot points. A Level 5 employee is only expected to contribute to a centre or service’s policies ‘through the Director’ and is only responsible for the day-to-day management of the centre or service ‘in the temporary absence of the Director’. For the reasons we have explained, the second of those references is particularly significant.
[59] Thrive relied on the assertion that Mr Tuttle or Ms Kinnersly are designated as the ‘nominated supervisors’ of its services for the purposes of the NQF with responsibility for ensuring compliance with statutory requirements. The information in relation to the obligations imposed by the National Law and National Regulations before the Deputy President suggested that the ‘nominated supervisor’ is the person ‘responsible for the day-to-day management of an approved service’, although provision is made for the nominated supervisor to appoint a ‘person in day-to-day charge’ of a service.35 It is unnecessary for us to consider whether Thrive’s arrangements are consistent with the National Law and National Regulations. It is sufficient to observe that, even if Mr Tuttle or Ms Kinnersly have ultimate legal responsibility for compliance with statutory requirements, the responsibility for practically ensuring compliance falls on the Service Leader who is in day-to-day control and management of each service.
[60] Sixth, directions were made at the conclusion of the hearing of the appeal permitting the parties to file submissions in relation to the history of the Award insofar as it casts light on the origin of the Director and Assistant Director classifications. Submissions were filed by the UWU on 25 September 2025. Thrive did not file any further submissions. The submissions of the UWU describe that preschool and childcare were traditionally regulated by State industrial systems.36 The first federal awards applicable to private sector early childhood education and care were the Kindergartens and Child Care Centres, etc. (ACT) Award 1974 and the Child Care Industry (Northern Territory) Award, 1982.
[61] Those awards were then the subject of a work value review by a Full Bench of the Australian Industrial Relations Commission (the AIRC) in 1990 resulting in a decision published on 14 September 1990.37 As a result of that review, new classifications were introduced for a Child Care Worker Level 5 and Director Level 1, 2 and 3. The Child Care Worker Level 5 classification was described as assuming additional responsibilities above a Level 4 Child Care Worker including:
- carrying out the work of an Assistant Director. (This position would only be necessary in a centre where there is a Director Level 3);
- supervising qualified and unqualified Workers;
- planning and co-ordinating in-service training for the centre or service;
- planning and implementing special programs such as integrating children with disabilities or children of a non-English speaking background.
[62] The Director Level 1 classification was described as follows:
This person is a co-ordinator in charge of a child care centre or service, and is qualified in accordance with the Act. The Director Level 1 is responsible for the overall administration of the centre or service. Duties will include the following:
- recruit staff in consultation with the management of a centre;
- keep day-to-day accounts and handle clerical matters;
- ensure that the centre or service adheres to all relevant regulations;
- formulate and evaluate annual budgets with relevant authorities;
- develop, plan and supervise the implementation of educational and/or developmental programs for young children;
- ensure that submissions for funding to the relevant authorities are made and monies received;
- ensure that Government guidelines on access to centres or services are adhered to;
- liaise with management committees or proprietors as appropriate.
[63] The Director Level 2 and Level 3 classifications then had the same responsibilities as a Director Level 1 but with respect to a centre or program with a larger number of places.
[64] Following the abolition of the Victorian state system in 1993, a federal award was made for Victoria known as the Children’s Services (Victoria) Award 1995. In 2005, a Full Bench of the AIRC dealt with an application to vary the ACT and Victorian childcare industry awards on work value grounds. The classifications for Assistant Director and Director were amended in largely the same terms in both awards in a manner that largely reflects the current Level 5 and Level 6 classifications.38 The Director classification again had three levels and was described as a person with relevant qualifications or experience who ‘is appointed as the Director of a Service and is responsible for the overall management and administration of the service’ with the various additional indicative duties.
[65] During the award modernisation process, early childhood education and care sector awards were considered in the Stage 4 proceedings. In publishing a draft of the Award, the Full Bench stated that the ‘classification structures for childcare employees have, in recent times, been the subject of work value assessments by the Commission and this is reflected in the exposure draft’.39 The Award was made on 4 December 2009.40 The classifications in respect of Directors and Assistant Directors were largely consistent with the system from the ACT and Victorian federal awards subject to relatively minor wording changes. The only potentially significant change was that reference in the Director classification to responsibility for the ‘overall management and administration of the service’ was added as an indicative duty of a Director, rather than as an overall description of the Director position.
[66] This history provides limited assistance in answering the question posed by the present appeal. In our view, however, the origin of the current Level 5 – Assistant Director and Level 6 – Director classifications in the Northern Territory and ACT awards is consistent with the conclusion we have otherwise reached that the Assistant Director classification is intended to be subordinate to, and to assist, the Director of the same service and that the Director classification is focused on a position that is a co-ordinator in charge of a child care centre or
service. This supports the conclusion that the Service Leader position is more appropriately aligned with the Level 6 – Director classification.
Conclusion and disposition
[67] For those reasons, we consider that the Deputy President erred in concluding that the position of Service Leader under the Agreement is correctly aligned to the classification of Level 5 – Assistant Director under the Award rather than the classification of Level 6 – Director. The consequence is that the Deputy President erred in being satisfied the Agreement passed the better off overall test. The decision to approve the Agreement should be quashed and the application for approval must be redetermined.
[68] Thrive accepted that, if the Service Leader position is properly to be compared with the Level 6 classification in the Award, the Agreement does not pass the better off overall test. The Agreement could be approved if Thrive gave an appropriate undertaking under s 190(2) of the Act. The Agreement could also be approved with an amendment specified by the Commission under s 191A(2) even if Thrive is not willing to give an undertaking to address the deficiency in the Agreement in relation to the Service Leader position. In order for that step to be considered, the views of the employer, employees and bargaining representatives are required to be considered in accordance with s 191A(3).
[69] At the hearing of the appeal, Thrive indicated that it would not give an undertaking to permit approval of the Agreement in the event that the submissions of the UWU in relation to the Service Leader position were accepted. It is nonetheless appropriate that the application for approval be remitted to the Deputy President to allow Thrive to consider its position in light of the decision of the Full Bench and, if appropriate, for the Commission to consider whether the Agreement should be approved with amendments under s 191A. The application will be remitted to the Deputy President.
[70] The Full Bench makes the following orders:
(a) Permission to appeal is granted;
(b) The appeal be allowed;
(c) The decisions [2025] FWC 2105 and [2025] FWC 2414 given on 18 July 2025 and 22 July 2025 in matter number AG2025/1798 are quashed; and
(d) The application for approval of The Thrive Group Tasmania Enterprise Agreement 2025 is remitted to Deputy President Millhouse.”
United Workers’ Union v Thrive Group Tasmania Inc (108V) Re [2026] FWCFB 7 deliovered 16 January 2026 per Gibian VP, Colman DP and Grayson DP