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Application for Crown Employees (Public Sector – Salaries 2020) Award and Other Matters (No 3) [2020] NSWIRComm 1077 - NSWIRComm 2020 case summary — Zoe
On 1 October 2020 the Full Bench handed down its substantive decision in these proceedings, in Application for Crown Employees (Public Sector - Salaries 2020) Award and Other Matters (No 2) [2020] NSWIRComm 1066. In that decision the Full Bench determined that:
1. employees under the Relevant Awards [1] are entitled to maintain the real value of their earnings: at [157];
2. if no increase is awarded to the employees under the Relevant Awards in the period to 30 June 2021, the employees will, on the economic evidence and projections before the Commission, see a reduction in the real value of their earnings of 0.3%: at [158];
3. the Commission proposed to make awards and variations to avoid such a reduction, by awarding increases of 0.3%: at [158];
4. exceptional circumstances have been made out within the meaning of cl 6.2 of the Industrial Relations (Public Sector Conditions of Employment) Regulation 2014 (NSW) ("2014 Regulation"), with the effect that any awards or variations made will take effect from the first full pay period to commence on or after 1 July 2020: at [169];
5. in light of evidence that a lump sum payment should have a greater stimulatory impact on the economy than a 0.3% increase to salaries and salary-related allowances in the Relevant Awards, the parties should be heard as to the form of any award the Commission might make, including the possibility of an award of a lump sum payment in lieu of an increase to the rates of pay: at [164] and [168]; and
6. it would defer a determination as to whether any award or variation made by the Commission ought to include a no extra claims provision, as sought by the Employers: at [170].
The Full Bench directed as follows:
"171. Having regard to the Full Bench's determination at [158] above, each party is invited by 4.00pm on Friday, 23 October 2020 to:
(1) file written submissions with the Commission:
(a) as to whether a 0.3% increase ought to be awarded to the employees by way of:
(i) that percentage increase to the salaries and salary-related allowances in the Relevant Awards;
(ii) a lump sum payment to the relevant employees and, if such is proposed, the amount or amounts to be paid to the relevant employees; or
(iii) any other means, in which case the party is to outline the approach it proposes; and
(b) as to the arguments on which it relies as to why the Commission ought to adopt the approach for which the party advocates; and
(2) inform the Commission whether it wishes to be heard on its submissions."
Pursuant to those directions, on 23 October 2020 the Commission received the following:
1. a document titled "Supplementary Submissions of the PSA, NSWNMA and HSU"; and
2. a document titled "Submissions for the Respondents".
In separate emails received by the Commission on 23 October 2020 each of ASMOF and the IEU informed the Commission that they adopted the submissions made on behalf of the PSA, the NMA and the HSU and that they did not intend to file separate submissions.
In their Supplementary Submissions the PSA, the NMA and the HSU requested that they be given an opportunity to reply to the Employers' submissions. The Full Bench acceded to this request. On 26 October 2020 the Full Bench arranged for the Registrar to write to the parties to inform them that any submissions in response to the other parties' submissions were to be filed and served by 2 November 2020 and, further, that any party wishing to make oral submissions in lieu of or in addition to further written submissions was to notify the Commission as soon as possible and no later than 4.00pm on 30 October 2020.
On 2 November 2020 the Commission received the following:
1. a document titled "Further Supplementary Submissions of the PSA, NSWNMA and HSU"; and
2. a document titled "Submissions for the Respondents in Reply".
In an email received by the Commission on the same day, the IEU informed the Commission that it adopted the further submissions made on behalf of the PSA, the NMA and the HSU and that it did not intend to file separate submissions.
No party sought to be heard on their submissions. The Full Bench has accordingly proceeded to determine the matters outstanding "on the papers".
[3]
Form of award
The PSA, the NMA and the HSU submitted that, having regard to the determination of the Full Bench at [158] in Application for Crown Employees (Public Sector - Salaries 2020) Award and Other Matters (No 2), the increase of 0.3% in salaries and salary-related allowances should be awarded by way of a 0.3% increase to salaries and salary-related allowances in each of the Relevant Awards from the first full pay period on or after 1 July 2020. They opposed the suggestion that the increase be paid as a lump sum, at least if the lump sum payment was proposed to be paid in lieu of an ongoing increase in salaries and salary-related allowances.
The unions' submissions included the following contentions:
1. The Full Bench determined in Application for Crown Employees (Public Sector - Salaries 2020) Award and Other Matters (No 2) that a failure to maintain the real value of the employees' earnings would not afford fair and reasonable conditions of employment. If a lump sum payment is made in lieu of an increase in salaries and salary-related allowances the Commission would fail to adhere to its statutory mandate to provide for fair and reasonable conditions of employment.
2. The evidence does not permit a conclusion to be drawn that a lump sum payment would have a greater stimulatory impact than an ongoing salary increase. In any event, given the quantum of the increase, there is no basis upon which it could confidently be concluded that the same amount converted to a lump sum payment would have any significant stimulatory impact, and certainly not greater than an ongoing salary increase.
3. Dr Andrew Charlton had given uncontroverted evidence that part of the stimulatory impact of increasing public sector salaries is that an increase in future earnings affects borrowing and spending decisions in the present, over and above expenditure of the immediate wage increase itself. A lump sum payment would not have the same effect if it would not increase future earnings.
4. If the increase awarded is converted to a lump sum payment with no ongoing salary increase at all, this will also have a longer term impact on cumulative superannuation balances.
5. Awarding an increase by way of a lump sum payment rather than an increase in ongoing salaries would at least create uncertainty as to the application of cl 6 of the 2014 Regulation in the following year. It would be unclear whether a subsequent increase is limited to a 2.5% increase in the underlying salary or the salary including the lump sum payment. As such, a lump sum payment in lieu of an increase in ongoing salaries may disadvantage employees in future years.
In their submissions of 23 October 2020 the Employers submitted:
"2. The Commission observed that a 0.3% increase to salaries and salary-related allowances is likely to have little impact on the employees' expenditure when contrasted with the payment of a lump sum.
3. The Commission found that greater stimulatory benefit to the economy would be generated by the award of a single lump sum payment.
4. Consistent with this observation, the Respondents submit that, in lieu of an increase to the rates of pay, the Commission should order that:
a. employees (employed at the date of the Commission's order) be paid 0.3% of their base annual salary as a lump sum for the period 2020-21; and
i. for employees who commenced employment after 1 July 2020, the lump sum to be calculated over the period from commencement of employment to 30 June 2021; and
ii. for part-time and casual employees the lump sum to be calculated on the basis of hours of work undertaken in the six months prior to the Commission's order multiplied by two (and for those who have not been employed for 6 months, calculated based on the average hours worked each fortnight since employment commenced); and
b. a 0.3% increase be consolidated into the rate of pay for future years by adjusting rates of pay, effective on the last day of the nominal term of the Awards, namely 30 June 2021.
5. The Respondents maintain this ought to be the preferred approach as the lump sum payment would generate a greater stimulatory effect on the economy than 0.3% increases to salaries and salary-related allowances. The consolidation of the 0.3% increase would ensure there is no reduction in the real salaries of employees over time."
(Footnote omitted)
In their Further Supplementary Submissions the PSA, the NMA and the HSU resisted the approach proposed by the Employers. The unions submitted:
"3. … The approach proposed by the respondents would disadvantage employees in a manner not contemplated by the Full Bench decision and which is unjustified, including as follows:
(a) The lump sum payment is proposed to be calculated by reference to an employee's base salary only (RS [4a]). Employees would receive no increase at all in entitlements referrable to base salary, including overtime, loadings, penalties, leave loading and salary-related allowances. In this respect, the respondents' position is contrary to the decision of the Full Bench that the increase apply to salary-based allowances. A lump sum payment as proposed would be a less beneficial outcome for employees and less stimulatory.
(b) The lump sum is proposed to be paid only to employees employed at the date of the Commission's order (RS [4a]). Employees who commence employment between the Commission's order and 30 June 2021 or who ceased employment prior to the Commission's order will receive no benefit at all from the Commission's decision and, in effect, be paid less for performing the same work. It would be unfair to distinguish between employees in applying an increase in pay based on whether the employees happened to be employed at the date of the Commission's order: Re Crown Employees (Public Sector - Salaries 2011) Award (No 4) [2011] NSWIRComm 130 at [17]-[18] (relying on the 81 year old principle derived from Re Crown Employees (Land Surveyors) Conciliation Committee [1930] AR 278 at 280).
(c) The increase will not flow on to superannuation payments and employees will receive super contributions only by reference to existing salaries. Employees in defined benefits schemes who retire prior to 30 June 2021 will be permanently disadvantaged in retirement as pension or lump sum payments under those schemes are calculated by reference to final salary.
(d) There remains potential uncertainty as to the application of the 2.5% cap in clause 6(1)(a) of the Industrial Relations (Public Sector Conditions of Employment) Regulation 2014 in future years in the event of a lump sum payment arrangement is imposed. Any such uncertainty is best avoided.
4. The respondent's submissions (RS [3]) favouring a lump sum payment are premised on the assumption that the Full Bench has found that greater stimulatory benefit would be generated by a single lump sum payment. With respect, the Full Bench (at [164]) did no more than observe that a lump sum payment 'should' produce a greater stimulatory benefit whilst acknowledging (at [168]) that the subject was not canvassed. For the reasons given in the earlier submissions, the material before the Full Bench did not address the question specifically."
[4]
No extra claims clause
The Employers submitted that the Commission ought to vary the Relevant Awards so as to include a no extra claims clause. In their submissions of 23 October 2020 they contended as follows:
"8. The Commission has previously observed that the purpose of No Extra Claims provisions is to 'ensure certainty during the life of the relevant industrial instrument'. They have also been held to be crucial parts of the integrity of the system of wage fixation which occurs in the New South Wales system of industrial regulation.
9. It is open to the Commission, as a matter of discretion, to insert such a provision into the Awards.
10. The inclusion of a No Extra Claims clause acts to remind the industrial parties that the terms and conditions of employment are settled during the nominal term of the award.
11. Clause 6(1)(d) of the Industrial Relations (Public Sector Conditions of Employment) Regulation 2014 ('the Regulation') made under s. 146C of the Industrial Relations Act 1996 provides that:
'Awards and orders are to resolve all issues the subject of the proceedings (and not reserve leave for a matter to be dealt with at a later time or allow extra claims to be made during the term of the award or order)...'
12. The Commission has held that the effect of the Regulation is to extinguish the capacity of any party to agitate the subject matter of the award during the nominal term of the award. It has been held that, on that basis, there is no necessity to include a No Extra Claims clause. However it is respectfully submitted that the insertion of a No Extra Claims Clause would be consistent with Clause 6(1), and serve to remove any doubt that no further claims could be brought within the 1 year term of the Awards.
13. In particular, notwithstanding Commission decisions as to the effect and scope of the Regulation, it has been contended that it leaves open the possibility that an extra claim can be made by a party where the variation sought was not subject of the current proceedings, or indeed not subject of the relevant awards. It is appropriate to include an express term to reflect the Commission's view that such an application cannot be brought."
(Footnotes omitted)
The PSA, the NMA and the HSU submitted that the Commission could not and, in any event, should not include a no extra claims provision in any of the Relevant Awards. In their Supplementary Submissions the unions argued:
"8. The Full Bench rejected the employers' submission that new awards should be made and it is assumed the Commission proposes to vary the existing awards. Given the Commission's decision to award only a 0.3% increase, a no extra claims clause should not be imposed as part of any variation. The Regulation does not require the inclusion of a no extra claims provision. There is no merit identified for a no extra claims provision to be imposed in the absence of consent, particularly where such a clause could not prevent claims being made by the unions in accordance with the Act. The unions also submit it is beyond power to insert a no extra claims clause without agreement to the extent it would be inconsistent with the Act which expressly permits awards to be made and varied upon application.
9. There is no utility or merit in a no extra claims provision being imposed given it could not constrain the exercise of the statutory right to bring proceedings. It is open to the unions to bring proceedings before the Commission and the Commission cannot constrain parties from exercising rights to apply for the making of a new award or to vary existing award entitlements. Furthermore, an attempt to constrain further claims is particularly inappropriate in the present circumstances. The Full Bench emphasised the uncertainty of the present economic environment. Given that uncertainty, there is no merit in constraining parties from seeking to address a changing and unpredictable situation over the next year, including before the Commission."
(Footnotes omitted)
In their Further Supplementary Submissions the PSA, the NMA and the HSU further contended:
"5. The respondents (RS [7]-[17]) persist in a submission that the awards subject of the proceedings should be varied to include a no extra claims provision or existing no extra claims provisions be varied to extend their operation beyond the nominal expiry of the award. That submission is made notwithstanding no such application being before the Commission.
6. The submission is without merit. The respondents acknowledge that clause 6(1)(d) of the Regulation does not require inclusion of a no extra claims provision (Crown Employees Wages Staff (Rates of Pay) Award 2011 (2015) 249 IR 414 at [25]) and that inclusion of such a term is unnecessary and 'wholly superfluous' (Crown Employees Wages Staff (Rates of Pay) Award 2011 (2015) 249 IR 414 at [25]-[28]; Re Crown Employees (Administrative and Clerical Officers - Salaries) Award 2007 (2016) 260 IR 175 at [58]-[601). It is said (RS [12]) that a no extra claims provision would serve to 'remove doubt' that no further claims could be brought within the 1-year term of the awards.
7. There are manifest difficulties with the submission. Firstly, the awards sought to be varied are now outside their nominal terms and have no term. The respondents have not made any applications for new awards. Secondly, to the extent the proposed no extra claims clauses are said to merely reflect the requirements of clause 6(1)(d), the terms have no utility. It is not appropriate for awards to include terms which have no operative effect and purport to be merely declaratory of what is otherwise the law. Thirdly, to the extent that the proposed no extra claims provisions go further than clause 6(1)(d) and constrain applications the Act permits, the clauses would be ultra vires and void."
[5]
Determination
Having considered the submissions, the Full Bench has determined that:
1. the increase of 0.3% in salaries and salary-related allowances should be awarded by way of a 0.3% increase to salaries and salary-related allowances in each of the Relevant Awards from the first full pay period on or after 1 July 2020; and
2. the Commission should not include, or should not vary, a no extra claims provision in any of the Relevant Awards.
In making this determination we largely accept the submissions of the PSA, the NMA and the HSU. We do not propose to canvass issues which are, on the whole, well-articulated in the submissions filed on behalf of those unions as summarised or reproduced above.
There is, however, a matter arising out of those submissions that ought to be clarified. To the extent that the PSA, the NMA and the HSU submitted that cl 6(1)(d) of the 2014 Regulation necessarily renders a no extra claims provision to be superfluous or of no utility, we do not agree. In Crown Employees (Administrative and Clerical Officers - Salaries) Award 2007 and Ors [2016] NSWIRComm 1028 it was observed at [59] that "the inclusion of a no extra claims clause may act to remind the industrial parties that the terms and conditions of employment are settled during the nominal term of the award". Employees to whom an award will apply and the management of their employers cannot be presumed to be aware of the effect, or even the existence, of cl 6(1)(d) of the 2014 Regulation. Even to the extent that the no extra claims clause does no more than reflect that provision, it may serve to alert those employees and managers to the fact that "terms and conditions of employment are settled". At least in that respect a no extra claims provision may be said to have utility.
It follows that it is not the case that the inclusion of a no extra claims provision in an award can or should only be the result of consent between the parties. It will remain a matter within the Commission's discretion as to whether an award should contain a no extra claims clause and the form that clause should take.
These matters having been noted, it is our view that in the present case the Commission ought not to include a no extra claims provision in any of the Relevant Awards, or vary any no extra claims provision as might already exist in a Relevant Award. If any of the Applicants seek to make a further claim in respect of any of the Relevant Awards that is intended to have effect prior to 1 July 2021 it will fall to be determined in accordance with the provisions of cl 6(1)(d) of the 2014 Regulation.
[6]
Orders and directions
The Commission orders that there be a 0.3% increase to the salaries and salary-related allowances in each of the Relevant Awards, with such increase to take effect from the first full pay period on or after 1 July 2020.
The Commission directs that:
1. the PSA prepare short minutes of order in each of matters 2020/79899, 2020/142592, 2020/143834, 2020/143934, 2020/144112, 2020/144177, 2020/145080, 2020/145086, 2020/145184, 2020/145362 to give effect to the Commission's order at [21] above;
2. the NMA prepare short minutes of order in each of matters 2020/141023, 2020/141054, 2020/141076 and 2020/141076 to give effect to the Commission's order at [21] above;
3. the HSU prepare short minutes of order in each of matters 2020/161502, 2020/161507, 2020/161511, 2020/161538, 2020/161544, 2020/161549, 2020/161557, 2020/161564, 2020/161568, 2020/161582, 2020/162841, 2020/162861, 2020/163121, 2020/163146, 2020/163179, 2020/163193, 2020/163207, 2020/163241, 2020/163257, 2020/163272, 2020/163286, 2020/163927, 2020/168263 and 2020/170775 to give effect to the Commission's order at [21] above;
4. ASMOF, in consultation with the HSU, prepare short minutes of order in each of matters 2020/163005, 2020/162860, 2020/163048 and 2020/162849 to give effect to the Commission's order at [21] above;
5. the PSA, the NMA, the HSU and ASMOF each confer with the Employers, and any other respondent to any of the Joined Applications brought by the relevant union, as to the content of the proposed short minutes of order; and
6. no later than 4.00pm on Friday, 4 December 2020 the PSA, the NMA, the HSU and ASMOF each file with the Registry of the Commission the short minutes of order they each propose, together with a document identifying:
1. those proposed short minutes of order which are agreed by the relevant parties; and
2. those proposed short minutes of order which are not agreed by the relevant parties, and stating the basis of the disagreement between the relevant parties.
[7]
Endnote
For convenience and consistency, and unless otherwise stated, defined/capitalised terms appearing in this decision have the meaning attributed to them in Application for Crown Employees (Public Sector - Salaries 2020) Award and Other Matters (No 2) [2020] NSWIRComm 1066
DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.
Decision last updated: 12 November 2020
Legislation Cited (1)
Industrial Relations (Public Sector Conditions of Employment) Regulation 2014(NSW)