Fair Work Act 2009

s.266 - Industrial action related workplace determination

Commonwealth of Australia represented by the Department of Home Affairs

[1] This statement sets out the Full Bench's intentions regarding a number of remuneration related issues (including wages) in advance of the Bench making a workplace determination in respect of the Department of Home Affairs (the Department). The Bench's intent in issuing this Statement is to assist the parties in preparing to implement what will be key components of the workplace determination, particularly as the Department in its submissions surprisingly stated that it has "made no forward provision in its budget for the outcome of the workplace determination."[1] While this Statement summarises key aspects of the parties' submissions on the issue of remuneration and sets out some of the considerations which the Bench has had regard to in coming to our intended approach as set out below, substantive reasons for our intended approach will be set out in our decision making the workplace determination.

[2] In summary, we intend to make a workplace determination that provides among other things wage increases totalling 7 per cent over its period of operation, which we intend to be 2 years. Specifically, we intend that those wage increases be paid in two instalments, the first being an increase of 4 per cent which will take effect from the date of this Statement and a further increase of 3 per cent which will take effect 12 months after the date the workplace determination is made.

[3] This matter has a long history with the then Department of Immigration and Citizenship (DIAC) and the Australian Customs and Border Protection Service (ACBPS) in mid-2014 commencing separate negotiations for enterprise agreements to replace the Department of Immigration and Citizenship Enterprise Agreement 2011-2014[2] (the DIAC Agreement) and the Australian Customs and Border Protection Service Enterprise Agreement 2011-2014[3] (the Customs Agreement) respectively. Both the DIAC and Customs Agreements passed their nominal expiry date on 30 June 2014.

[4] Following the integration of DIAC and ACBPS on 1 July 2015 to create the Department of Immigration and Border Protection (DIBP) the focus of the negotiations shifted to negotiating a single enterprise agreement to cover DIBP employees. It would be accurate to describe the negotiations as involving both robust and hard bargaining over an extended period of time on the part of both the DIBP and the Community and Public Sector Union (CPSU) which was one of the bargaining representatives for the proposed agreement. For instance, three proposed agreements were rejected by DIBP employees. Further, the CPSU took protected industrial action in support of its claims, with that action the subject of an Order[4] made by Commissioner Wilson in April 2016 suspending protected industrial action for a period of 90 days from 3 April 2016.

[5] Protected industrial action by CPSU members subsequently recommenced in September 2016. On 5 October 2016 Commissioner Wilson issued an Order[5] terminating protected industrial action in support of the then proposed DIBP enterprise agreement. The following day the Commissioner issued a Decision[6] outlining his reasons for terminating the protected industrial action.

[6] The post-industrial action negotiating period failed to result in agreement on any of the substantive issues in dispute. Subsequent attempts to narrow the range of issues on which the parties had not reached agreement were unsuccessful. In the absence of agreement between the parties on any of the issues, the Full Bench is therefore required to determine each and every aspect of the workplace determination.

[7] Against that background, Directions were issued for the filing of submissions and evidentiary material, with numerous objections to elements of each party's evidentiary material dealt with by the Full Bench. The Full Bench issued three Decisions[7] in August, September and October 2017 respectively, which dealt with objections to some of the evidence which had been filed on the grounds that it included material that was protected by Parliamentary privilege. As a result, substantive hearing of the matter relating to a workplace determination did not commence until October 2017.

[8] On 19 December 2017 the Full Bench made a statement on transcript declining to grant an application for a 2 per cent interim wage increase which was made by the Australian Institute of Marine and Power Engineers (AIMPE), a bargaining representative for the proposed agreement. That Statement was published on 21 December 2017[8].

[9] Closing oral submissions were made on 16 and 17 April 2018. At the hearing on 16 April 2018 the Full Bench sought the Department's view on issuing a separate decision on the wages claim[9]. While the Department did not object to that approach[10] the Full Bench has decided not to adopt that course but rather to issue this Statement.

[10] In other developments, on 18 July 2017 the Prime Minister announced that the Australian Government would establish a Home Affairs portfolio comprised of immigration, border protection and domestic security and law enforcement agencies. The Department was formally established on 20 December 2017 comprising employees of the former DIBP and employees transferred from the Attorney-General's Department and the Departments of Infrastructure and Regional Development, Prime Minister and Cabinet and Social Services. As at 8 February 2018 around 750 employees had been transferred from those agencies to the Department. The Australian Border Force (ABF) is an operationally independent body within the Department, as it was within DIBP.

[11] The Home Affairs portfolio also includes the Australian Criminal Intelligence Commission, the Australian Federal Police, the Australian Institute of Criminology and the Australian Transaction Reports and Analysis Centre, with legislation before the Australian Parliament which would see the Australian Security Intelligence Organisation also become part of the portfolio. However none of these agencies will be covered by the workplace determination which the Commission is required to make in this matter, i.e. the determination will only cover the Department.

[12] The Commonwealth's proposed workplace determination has a nominal expiry date 3 years after commencement with the following features in respect of remuneration:

• three wage increases of 2 per cent, i.e. 2 per cent on commencement and further increases of 2 per cent payable 12 and 24 months after commencement;

• the salary range for each classification level to reflect the salary range in the DIAC Agreement with no defined pay points within the salary range for the Australian Public Service (APS) and Executive Level (EL) classifications;

• advancement within the salary range for each classification level to be subject to meeting performance expectations, with salary advancement of 3 per cent for APS and EL employees where an employee has performed duties at their substantive level or above for a total of at least 6 of the last 12 months and their performance is assessed as having 'met expectations';

• employees advance to the top of the salary range for their classification level but no higher; and

• employees whose current salary is above the relevant salary range for their classification (as adjusted to reflect the abovementioned wage increases) would not receive any wage increase until such time as their salary falls within the relevant salary range (i.e. until the salary range catches up with their current salary).

[13] The CPSU's proposed workplace determination has a nominal expiry date of 30 June 2019 with the following features in respect of remuneration:

• wage increases totalling 12.5 per cent comprised of five increases of 2.5 per cent with effect from 1 July 2014, 2015, 2016, 2017 and 2018 (i.e. retrospective pay increases totalling 10 per cent and a prospective increase of 2.5 per cent on 1 July 2018);

• the minimum and maximum salary for each classification level to reflect the higher salary as per either the DIAC or Customs Agreement or the salary proposed in the DIBP's third agreement proposal which was voted down by employees;

• salary ranges to be adjusted prior to any salary advancement, i.e. employees transition into the new salary range for their classification, salary advancement then occurs with the abovementioned salary increases applied to an employee's post-advancement salary;

• advancement within the salary range for each classification level to be subject to meeting performance expectations, with salary advancement for APS and EL employees of 4 per cent where an employee has performed duties at their substantive level or above for a total of at least 6 of the last 12 months and their performance is assessed as having 'met expectations';

• where an employee is within 4 per cent of the maximum salary for his or her APS and EL classification and has met performance expectations, he or she would be advanced to the maximum salary with any residual component of the 4 per cent increase available via salary advancement to be paid as a lump sum bonus (capped at 2 per cent), with the lump sum bonus to count as salary for superannuation purposes; and

• employees advance to the top of the salary range for their classification level but no higher.

[14] The CPSU also proposed retention of the Customs Agreement provision[11] which provided that on promotion an employee would normally be paid at the minimum salary of the higher classification but that in circumstances where the employee's existing salary was within 5 per cent of the minimum salary of the new classification the employee's salary would be increased by a minimum of 5 per cent.

[15] AIMPE submitted that the workplace determination should operate for 3 years and provide backdated annual wage increases of 2.5 per cent on 1 July of each year commencing with 1 July 2014, 2.5 per cent on 1 July 2018 and thereafter an annual increase of 2.5% on 1 July for the duration of the workplace determination.

The position of other bargaining representatives on remuneration

[16] Ms Elizabeth Ryan, an employee bargaining representative, in her submissions urged the Commission in making a workplace determination to adopt the following approach in respect of wage related issues:

• a workplace determination with a minimum duration of 2 years and preferably 3 years;

• pay parity involving the "red circling" of current salaries for those classification levels where the minima and maxima exceed the DIAC Agreement salary rates by 5 per cent of more; and

• front loaded salary increases, with increases totalling 6 per cent comprised of either increases of 4 and 2 per cent or alternatively increases of 3, 2 and 1 per cent.

[17] Ms Ryan contended in her submissions that her suggested approach struck the right balance between the interests of employees and the Department's affordability requirements.

[18] Another employee bargaining representative, Mr Jon Holmes, proposed new salary ranges for each classification level having regard to salary levels in other APS agencies. For instance, for the APS Level 1-6 classifications Mr Holmes selected the maximum salary for each classification based on the eighth ranked maximum salary among APS agencies. This approach he contended would place the Department's maximum salary levels marginally outside the first quartile of large government agencies. For the EL 1 and 2 classifications, Mr Holmes selected the maximum salary for each classification based on the twelfth ranked maximum salary among APS agencies, which he contended translated to the 40th percentile. Mr Holmes further submitted that where an employee's current salary was below the revised maximum for their classification level on commencement of the workplace determination their salary would be increased by 2 per cent. Mr Holmes added that in circumstances where after that increase an employee's salary remains below the minima for their classification level that their salary would be further adjusted to that minimum level. Conversely, Mr Holmes posited that if applying the 2 per cent increase resulted in the employee's salary exceeding the maximum salary for their classification their salary would only increase to that maximum level. Further, increases of 2 per cent would apply from 1 July 2019 and 2020, suggesting a workplace determination of 3 years duration.

[19] As to salary advancement, Mr Holmes proposed that salary advancement of 3 per cent apply where an employee has performed duties at their substantive level or above for a total of at least 6 of the last 12 months and their performance is assessed as having 'met expectations'. Mr Holmes also submitted that salary advancement should not result in an employee's salary exceeding the maximum salary applying to the employee's substantive classification level.

The Full Bench's intended approach on key remuneration related issues

[20] We set out below the Full Bench's intended approach in respect of the key issues relevant to the issue of remuneration.

[21] It is clear from the material before the Commission that the creation of the DIBP and more recently the Department has involved significant changes from an administrative arrangements perspective, in terms of the focus of the Department and for employees in their day to day work. In terms of organisational performance, Ms Jenet Connell, Deputy Secretary and Chief Operating Officer DIBP, attested that during a period of significant change "the organisation continues to deliver and meet growing volumes, and its key performance indicators."[12] In terms of the impact on employees, Mr Murali Venugopal's, DIBP's First Assistant Secretary People Division, evidence was that since the integration of DIAC and ACBPS employees had "been agile, flexible and able to adapt."[13] In his reply witness statement[14] Mr Venugopal attributed the improvements in productivity achieved by DIBP to advancements in technology, the development and more targeted use of intelligence, the streamlining of processes through the use of electronic technology and greater facilitation of the physical movement of goods and people and programmes such as the Trusted Trader Programme[15]. Mr Clive Murray, Acting Deputy Commissioner - Operation with the ABF, attested that ABF employees were performing at a higher level[16]. Further, Mr Groves, DIBP's Chief Financial Officer, in his witness statement[17] referred to DIBP's increasing operational volume, deposing the following:

"(a) Visa applications increased by 15% (1.1m) from 2013-14 - 2015-16, and will grow a further 18% (1.5m) from this Budget year to 2019-20.

(b) Passenger volumes increased 11% (4.0m) and will grow a further 20% (8.2m) over the same periods.

(c) In-bound cargo volumes increased 14% (4.2m) and will grow a further 26% (9.2m) over the same periods."[18]

[22] While we note the Department's contention that there was no evidence before the Commission to suggest that labour inputs had resulted in improved productivity, the abovementioned considerations and the contribution made by employees to the establishment and operation of both DIBP and the Department are factors which go directly to the merits of the case. More importantly, they are factors which in our view should be recognised through appropriate wage increases.

[23] The Department submitted that any wage increase should apply prospectively, with the first increase being 2 per cent with effect from the date of commencement of the workplace determination. The CPSU in its submissions sought five wage increases of 2.5 per cent of which four increases would be retrospective, with the first increase backdated to 1 July 2014 and subsequent increases on 1 July in each year until 2018. AIMPE similarly proposed four retrospective increases from the same dates proposed by the CPSU, but given that it sought a workplace determination of 3 years duration it also sought three prospective wages increases of 2.5 per cent with effect from 1 July 2018, 2019 and 2020.

[24] In circumstances where the parties were unable to negotiate an agreement prior to the termination of protected industrial action in early October 2016 we see no justification for the initial wage increase taking effect prior to that date, particularly as it appears to us that the key protagonists were reluctant to make significant concessions in bargaining. The failure of the parties to narrow the range of disputed issues in the post-industrial action negotiation period and subsequent unsuccessful attempts at conciliation in our view further militates against any retrospective wage increases, particularly as there remain other APS agencies that are yet to conclude an enterprise agreement as part of the current APS bargaining round.

[25] While we do not propose to backdate the initial wage increase, we are nevertheless very mindful that employees who were covered by the former DIAC and Customs Agreements have not had a wage increase (excluding salary advancement related increases) since July 2013, i.e. almost five years ago. We note that Senior Executive Service employees in DIBP received 2 per cent wage increases in November 2016 and July 2017[19] and that employees who were transferred from other agencies as part of the machinery of government change which saw the Department created in late 2017 have had the benefit of at least one wage increase since 1 July 2014. Consistent with the approach adopted by the Full Bench in Parks Victoria v The Australian Workers' Union and others[20] (Parks Victoria) we consider that the time between the nominal expiry date of the previous agreements and the operative date of a workplace determination is a factor to be taken into account in deciding the wage increases to be included in a workplace determination[21]. To that end we propose to reflect the period in the initial wage increase we intend to determine.

[26] As to economic considerations, we note that from the June quarter 2014 to the March quarter 2018 inflation as measured by the All Groups Consumer Price Index Weighted average of Eight capital cities[22] increased by 6.3 per cent. Also in respect of inflation, the most recent Reserve Bank of Australia Statement on Monetary Policy includes the following inflation forecasts[23]:

[27] With regard to wages growth, the increase in the Wage Price Index through the years to June 2015, June 2016 and June 2017 was 2.3, 2.1 and 1.9 per cent respectively and for the first three quarters of 2017-2018 was 1.5 per cent[24]. The increases in Full-Time Adult Average Weekly Ordinary Time earnings (AWOTE) for the years ending November 2015, 2016 and 2017 (the most recent data available) were 1.6, 2.2 and 2.4 per cent[25]. Finally, we note that the national minimum wage increased by 3.0, 2.5, 2.4 and 3.3 per cent per cent on 1 July 2014, 2015, 2016 and 2017 respectively and will increase by a further 3.5 per cent on 1 July 2018.

[28] Beyond that, consistent with the view expressed by the Full Bench in Parks Victoria[26], we have also had regard to the Australian Government's Workplace Bargaining Policy 2018[27] (the Bargaining Policy) in determining the wage increases to apply under the wage determination. The Bargaining Policy provides inter alia that "Remuneration increases may be negotiated up to an average of 2.0% per annum"[28].

[29] Taking into account all of the above considerations and the changes which we intend to reflect in the workplace determination, e.g. in respect of hours of work (see below), which we believe will impact positively on productivity, we have determined that an increase of 4 per cent should apply from the date of this Statement with a further 3 per cent increase to apply twelve months after the commencement of the workplace determination.

[30] The Department proposed that the salary range for each classification level reflect the salary range in the former DIAC Agreement but with no defined pay points within the salary range for APS and EL employees.

[31] On the other hand the CPSU proposed that the minimum and maximum salary for each classification level reflect the higher of either the salary as per the former DIAC or Customs Agreement or the salary proposed in DIBP's third agreement proposal which was voted down by employees.

[32] The practical effect of the Department's proposal would be that some employees would not receive any increase at all during the 3 year life of its proposed workplace determination while other employees would not receive the full benefit of the Department's proposed wage increases. That view is based on the evidence of Mr David Leonard, Assistant Secretary Work Health and Safety and Enterprise Agreement Taskforce, who attested that some 116 EL 2 employees would receive no wage increase over the life of the Department's proposed workplace determination[29]. Mr Leonard further attested that around 2000 employees would receive less than the total increases provided for in the Department's proposed workplace determination[30], with many of those not receiving a wage increase "for a couple of years"[31]. If anything those numbers are likely to have increased as a result of the creation of the Department and the abovementioned transfer of employees from several other APS agencies.

[33] We do not consider it to be in the interests of employees or fair for that matter that after almost five years without a wage increase a not insignificant number of employees will, under the Department's proposed workplace determination, either not receive any wage increase or not receive the full benefit of the wage increases which the Department proposes. As such, we propose to determine a salary range for each APS and EL classification level which reflects the higher of the maximum salary under either the DIAC or Customs Agreement and the lower of the minimum salary under those Agreements. Where under our intended approach the minimum salary for a classification level is lower than the maximum salary for the classification level immediately below we will adjust the minimum salary level so that it is above the maximum salary for the lower classification level. This should entail minimal translation costs associated with employees moving to our intended salary ranges.

[34] We note that under this approach there may be some employees who were transferred from other agencies as part of the machinery of government changes which saw the Department created whose current salary will be above the maximum salary which we intend to determine for their classification. Given that these employees have, as previously mentioned, received at least one wage increase since 1 July 2014 we do not consider it inappropriate that they should receive either no or a reduced wage increase until such time as the salary range we intend to determine catches up with their current salary.

[35] As our intended salary ranges will result in some small differentials between the maximum salary of a lower classification level and the minimum salary level for the next highest classification level, we think it appropriate that some minimum remuneration increase be attached to a promotion given the generally increasing level of responsibilities and/or expectations attached to higher classification levels. Any such promotion related remuneration increase should in our view be greater than the increase available as a result of salary advancement. While we acknowledge the approach reflected in the Customs Agreement and the CPSU's proposed workplace determination, we also note that the salary differentials between classification levels in the DIAC Agreement range from 0.9 per cent to 2.0 per cent for the APS Level 1-5 classifications and is 8.8 per cent between the maximum salary for an APS Level 6 and the minimum salary for the EL 1 classification. The equivalent differential between the EL 1 and EL 2 classifications is 6.4 per cent. Having regard to those differentials, we consider a minimum increase in remuneration of 4 per cent on promotion to be appropriate in circumstances where the minimum salary for the classification level to which the employee has been promoted is less than 4 per cent above the employee's pre-promotion salary.

[36] With regard to the other classification groups who will be covered by the workplace determination, i.e. Legal Officers, Public Affairs Officers, Medical Officers and Training classifications, we note that the Department and CPSU in their respective proposed workplace determinations have retained salary ranges which include various pay points. A comparison of the respective proposed workplace determinations indicates that a large number of the proposed pay points are aligned, with significant differences relating to the maximum salary for the Principal Legal Officer and Senior Public Affairs Officer A classifications. Given our intended approach regarding the salary ranges for APS and EL classifications it is our view that the salary ranges for the abovementioned other classification groups should align as far as possible/appropriate with the salary range for APS and EL classifications. However, this raises other issues. For instance, aligning that maximum salary for the Senior Public Affairs Officer A classification with the maximum salary of the EL 2 classification would (based on current salary levels) see a minimum salary of $121,022 per annum and a maximum salary of $143,092 per annum with no pay points in between. We believe that such a wide range necessitates the insertion of one or more intermediate pay points. Accordingly, the Full Bench needs to give further consideration to such issues. Finally, we note that the salary range and pay points proposed by the Department and the CPSU in respect of Medical Officers are identical.

[37] None of the parties that addressed this issue in their submissions disagreed that salary advancement should apply where an employee has performed duties at their substantive level or above for a total of at least 6 of the last 12 months and their performance is assessed as having 'met expectations'. Further, it was not disputed that employees should not advance beyond the maximum salary for their classification level as a result of salary advancement. This approach is appropriate in our view and will be reflected in the workplace determination.

[38] What was disputed however in respect of salary advancement for APS and EL employees was the percentage amount by which an employee's salary should advance in circumstances where the above considerations were met. The Department and Mr Holmes proposed salary advancement of 3 per cent whereas the CPSU proposed advancement of 4 per cent.

[39] Having regard to the relevant provisions of the DIAC and Customs Agreements and the parties' respective submissions, we consider that salary advancement of 3 per cent is appropriate. In our view, anything greater than 3 per cent would potentially act as a disincentive to bargain in future.

[40] As to that aspect of the CPSU's salary advancement proposal which provides for the payment of a lump sum bonus capped at 2 per cent to those employees within 4 per cent of the maximum salary for their classification level, we do not intend to provide for such a payment. While we acknowledge that such a payment is a feature of the Customs Agreement, we think that such a payment is more appropriately addressed through future bargaining. In addition, we note that such payments are not common in other APS agency enterprise agreements.

[41] The duration of the workplace determination proposed by the parties ranges from effectively twelve months based on the CPSU's proposed nominal expiry date of 30 June 2019 (assuming a commencement date of the 1 July 2018 for the workplace determination) to 3 years as proposed by the Department, AIMPE, Ms Ryan and Mr Holmes. Given the difficult, protracted and ultimately unsuccessful negotiations for an agreement we consider that the CPSU's proposed timeframe too short to enable the parties to rebuild what appeared to us in the proceedings to be an understandably fractured relationship. Conversely, we consider a period of three years to be too long before the parties have the opportunity to bargain again. In our view, a nominal expiry date two years after the date of commencement of the workplace determination will not only provide the parties with an opportunity to rebuild their relationship but should also enable the creation of the Department to be bedded down, thereby providing the parties with an insight into the issues which might appropriately be discussed and/or addressed through bargaining.

[42] While the issues of allowances and hours of work will be dealt with in our decision making the workplace determination, we would take this opportunity to foreshadow that we:

• do not intend to provide for the composite allowance proposed by the Department - in our view that issue is more appropriately dealt with in future bargaining; and

• intend that the workplace determination provide that hours of work for all employees are 7.5 hours per day or 37.5 hours per week.

[43] The Full Bench will make a workplace determination as quickly as possible. However, should the parties request and/or consider it desirable, the Commission would be willing to convene a conference to canvass any of the issues dealt with in this Statement and/or any other issues relevant to the making of the workplace determination. For instance, one issue that might usefully be canvassed in any such conference is how the salary ranges for other classification groups such as Legal Officers, Public Affairs Officers and Training classifications are best aligned with the salary ranges we propose for APS and EL employees.

[44] Finally, we would observe that one option relating to the initial wage increase we intend to determine which the Department may wish to consider pending the making of the workplace determination is to give effect to that increase via a determination made under s.24 of the Public Service Act 1999. One obvious benefit of doing so would be to minimise the administrative burden associated with having to pay the increase at a later date as well as the goodwill it would create among employees.

[1] Department of Home Affairs Closing Submissions at paragraph 184 (Tab 1).

[4] PR579316.

[5] PR586132.

[6] [2016] FWC 7184.

[7] [2017] FWCFB 4200, [2017] FWCFB 4577 and [2017] FWCFB 5214.

[8] [2017] FWCFB 6887.

[9] Transcript of 16 April 2018 at PN226-233.

[10] Transcript of 17 April 2018 at PN453-461.

[19] Transcript at PN1045-1046 and PN1059-1061.

[20] [2013] FWCFB 950.

[22] Australian Bureau of Statistics Consumer Price Index (cat. no. 6401.0) March Quarter 2018.

[23] Reserve Bank of Australia Statement on Monetary Policy - May 2018 at Table 5.1.

[24] Australian Bureau of Statistics Wage Price Index, Australia (cat. no. 6345.0) March Quarter 2018 and June Quarter 2015.

[25] Australian Bureau of Statistics Average Weekly Earnings, Australia (cat. no. 6302.0) November 2017.

[26] [2013] FWCFB 950 at [207].

[27] http://www.apsc.gov.au/priorities/workplace-relations/bargaining-policy-2018.

[28] Workplace Bargaining Policy 2018 at 21.

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