Industrial Secretary & Ors v Public Service Association and Professional Officers' Association Amalgamated Union of New South Wales & Ors - [2024] NSWIRComm 25 - NSWIRComm 2024 case summary — Zoe

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Industrial Secretary & Ors v Public Service Association and Professional Officers' Association Amalgamated Union of New South Wales & Ors

[2024] NSWIRComm 25

Industrial Relations Commission (NSW)|2024-12-20|Before: Taylor J, Chin J, Paingakulam J

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At a glance

Source facts

Court

Industrial Relations Commission (NSW)

Decision date

2024-12-20

Before

Taylor J, Chin J, Paingakulam J

Catchwords

[2023] FWCFB 3500 Re Annual Wage Review 2023-24 (2024) 331 IR 248
[2012] NSWIRComm 23 Re Crown Employees (Public Sector - Salaries 2020) Award and Other Matters (No 2) (2020) 301 IR 321

Source

Original judgment source is linked above.

Catchwords

[2023] FWCFB 3500 Re Annual Wage Review 2023-24 (2024) 331 IR 248[2012] NSWIRComm 23 Re Crown Employees (Public Sector - Salaries 2020) Award and Other Matters (No 2) (2020) 301 IR 321

Judgment (35 paragraphs)

[1]

Table of Contents DECISION Introduction Mandatory considerations (principle 2) No extra claims commitments (principle 4) New principles addressing changes in the cost of living (principles 6, 9, 14, 17.2) Paid rates adjustment Arbitrated Case (principle 9) Value of Money Principle (principle 14) Productivity and Efficiency Principle (principle 11) Negotiating Principle (principle 15) Gender Based Undervaluation Principle (principle 12) Special Case Principle (principle 13) Other amendments ORDERS ANNEXURE A - THE 2024-2025 AWARD MAKING PRINCIPLES 1. Preamble 2. Mandatory considerations 3. When an award may be varied or another award made without the claim requiring consideration as an Arbitrated Case 4. No extra claims commitments 5. Test Case Standards 6. State Wage Case Adjustments 7. Adjustment of Allowances 8. Minimum rate of pay 9. Arbitrated Case 10. Work Value Changes Principle 11. Productivity and Efficiency Principle 12. Gender Based Undervaluation Principle 13. Special Case Principle 14. Value of Money Principle 15. Negotiation Principle 16. Economic Incapacity Principle 17. Transitional provisions 18. Duration The Commission makes the following order pursuant to s 51: A. Minimum Wage for Award/Agreement Free Employees

[2]

[6]

Paid rates adjustment

The Secretary noted that the parties had not been asked to provide submissions on the paid rates award adjustment. He submitted that including references to the adjustment would confuse practitioners and should be omitted entirely from the proposed Principles. We disagree and have decided to retain the relevant provisions. It is appropriate for the Principles to contain proposed text that the parties can address in the next case, while making clear by way of a note and in Principle 17.2 that they do not currently have effect. Importantly, retaining this text will ensure that the consideration and implementation of a paid rates adjustment will not be delayed, potentially for another year, if the Commission confirms that the mechanism for such an adjustment should remain in the Principles.
The Secretary also submitted that while the proposed cl 6.4(5) specified that a paid rates adjustment would be determined with regard to the mandatory considerations in principle 2, it ought to explicitly include the state of the economy of New South Wales and the likely effect of the Commission's decisions on that economy. We are content to include words to this effect at 6.4(5).
Unions NSW submitted that the undertaking given by a union party "not to pursue any further claims in proceedings" in order to access the paid rates adjustment at cl 6.6(5) should be amended to an undertaking "not to pursue any further paid rates related claims". It noted that cl 6.6(5) in its current form could preclude a union from bringing further claims that are not related to paid rates, like "claims relating to non-financial matters or claims relating to reimbursement for allowances". However, the Full Bench intended the undertaking to afford a measure of industrial stability for the period of the paid rates adjustment by extending beyond salary related claims to include claims relating to award conditions. The Full Bench has decided to make a minor change to remove any doubt that the undertaking in cl 6.6(5) applies to further claims for any changes to the award, subject to the exceptions provided. Such an undertaking will not prevent a union from being able to represent their members in respect of any claim for the recovery of unpaid entitlements and the like.

[7]

Arbitrated Case (principle 9)

Proposed subprinciples 9.2 and 9.3 state: 9. Arbitrated Case … 9.2 An Arbitrated Case may be granted if it meets one or more of the following criteria: (1) there has been a change in work value that meets the requirements of the Work Value Changes Principle; (2) there has been an increase in productivity or efficiency in respect of public sector awards that meets the requirements in the Productivity and Efficiency Principle; (3) the application addresses undervaluation on a gender basis in accordance with the Gender Based Undervaluation Principle; (4) a special case is established in accordance with the Special Case Principle; and (5) there has been a change in the value of money justifying a change in rates of pay and conditions for public sector employees that meets the requirements of the Value of Money Principle. 9.3 When determining an Arbitrated Case, the Commission will have regard to changes in the value of money since wage rates were last adjusted.
LGNSW submitted that proposed subprinciple 9.3 merely replicates the terms in cl 9.2(5) and thus should be deleted. We disagree. Clauses 9.2(1)-(5) list the various ways in which an Arbitrated Case may be granted under the following Principles, including, for example, on the basis of a change in the value of money. The purpose of subprinciple 9.3 is to make clear that the Commission will have regard to changes to the cost of living since rates were last set whenever it determines actual rates of pay as a result of a successful Arbitrated Case, regardless of whether the Arbitrated Case application was made on the basis of a change in the value of money. This is consistent with long-standing practice by the Commission to consider inflation when determining what wage increase should be awarded. [1] For instance, if the Commission determined, as a result of an application made under the Work Value Changes Principle, that an award should be varied to increase wages by 4%, in circumstances where the last wage increase was made a year earlier, the Commission would need to consider whether the actual rates set should increase by more than 4% due to changes in the value of money over the last 12 months.
The Secretary noted that both this Commission and the Fair Work Commission have stated that wages should keep pace with inflation "over time" [2] or "in the medium to long term". [3] It thus submitted that proposed subprinciple 9.3, which sets the reference point for the change in the value of money as "since wage rates were last adjusted", stifles the Commission's ability to set fair and reasonable conditions of work which maintain the real value of wages over a medium to long-term period. Instead, the Secretary suggested that the Commission should "have regard to changes in the value of money over the medium to long-term prior to the arbitration".
We do not agree that such a change ought to be made. The Secretary's proposed text gives rise to potentially quite different considerations and alters the proposed outcome in a manner that would not be contemplated without the benefit of response submissions from the other parties.
When considering changes to the value of money, the Commission has not yet determined whether and to what extent it is appropriate to look back in time before wage rates were last adjusted. We appreciate that the Secretary's concern is to ensure that when considering any particular 12-month period, the Commission should have regard to the fact that the year in question may be anomalous, such that instead of a full adjustment in that year the change might be addressed over time. In our view such submissions could be made without changing the text. On the other hand, unions may seek to convince the Commission to make wage adjustments that reflect past changes in the value of money over many years. Indeed, a submission of this kind was made in Industrial Secretary & Ors v Public Service Association and Professional Officers' Association Amalgamated Union of New South Wales & Ors (No 2) [2024] NSWIRComm 21 at [57]. The change suggested by the Secretary might assist them to make good such a case.
In our view, the time period over which changes to the value of money should be determined is an issue which will be considered when a case comes before the Commission.
Overall, we do not accept that setting a reference point for the change in the value of money as "since wages were last adjusted" restricts the Commission's ability to set fair and reasonable conditions of work which maintain the real value of wages over a medium to long-term period. While subprinciple 9.3 makes clear that the Commission will have regard to changes in the value of money over the last 12 months, it does not preclude the Commission from considering matters that the Secretary correctly puts are also relevant matters.

[8]

Value of Money Principle (principle 14)

The proposed principle 14, with the internal numbering corrected, is as follows: 14. Value of Money Principle 14.1 The Commission can make a new award or vary an award to address changes in the real value of money having regard to: (1) the mandatory considerations in Principle 2 including the need to ensure that the award rates remain fair and reasonable; (2) the status of bargaining between the parties to the Award; (3) the likelihood of that bargaining concluding in a timely fashion; and (4) the terms of any no extra claims undertaking that relevant unions provide to the Commission in order to obtain the increase; in circumstances where: (5) the award applies to public sector employees; (6) the nominal term of the existing award has expired; (7) the employees covered by that award have not had an increase in rates for at least 12 months; (8) no paid rates adjustment has been set pursuant to Principle 6; and (9) each union party to the award gives a no extra claims undertaking in the following terms, or in such other terms as the parties agree or the Commission considers appropriate in the circumstances: [Name of union] undertakes not to pursue any further claims in proceedings before the Industrial Relations Commission in respect of employees covered by the award that would take effect during its nominal term. Provided that this undertaking does not prevent: (i) participation in collaborative discussions to amend the award by means of mutual gains bargaining or otherwise; (ii) making an application to vary the award by consent; (iii) participation in a consent arbitration; (iv) participation in a s 19 review or other proceedings initiated by the Commission or another party that affects the award; or (v) pursuing and giving effect to claims under the Gender Based Undervaluation Principle during the nominal term.
While the wording in cl 14.1(5) indicates that it only applies to awards covering public sector employees, we are content to adopt the suggestion from LGNSW that an additional subprinciple should be added to expressly exclude Local Government awards from principle 14's operation.
The Secretary submitted that a clause should be added to subprinciple 14.1 requiring the Commission to have regard to "any increases in an employee's actual wages due to band progression in the applicable Awards" when considering whether to increase wages under principle 14. The Secretary's proposed addition, which is directed to changes in "an employee's actual wages", is to a principle that applies to changes to award rates. Band progression results from a change in an employee's experience (progression by time served) and/or skills and training (progression by meeting higher criteria). It is not immediately apparent why the progression of specific employees is relevant to a consideration of changes to the value of rates of pay under an award generally. The Secretary's submissions did not identify any reasons to make such a change, and the change was not one identified in the Secretary's earlier written submissions. We take no final view as to whether such a consideration is a relevant matter generally or in specific cases. We are not satisfied, however, that it ought to be elevated to a mandatory consideration, although it is a matter we could reconsider in the next State Wage Case in light of any evidence or submissions. For now, we are content to alter subprinciple 14.1 to clarify that the "Commission can make a new award or vary an award to address changes in the real value of money having regard to all the circumstances including" the clauses in (1)-(4), to make it clear that such a consideration can be raised, if relevant.
The Secretary also submitted the addition of a subprinciple stating: "For the avoidance of doubt, in the immediate circumstances of a particular case it may not be possible to maintain the real value of wages." While we do not disagree that an application to increase rates to maintain their value in real terms might not succeed once all relevant matters are considered, we do not see the benefit of adding such a subprinciple.
Unions NSW contended the new principle would be easier to read if it were bifurcated into two subprinciples. We are not presently minded to do so, as we consider the current draft assists to make clear that the Commission will make a new award or vary an award to address changes in the real value of money if considers it appropriate to do so having had due regard to the matters numbered (1) to (4) and then only in the circumstances enumerated at (5) to (9).

[20]

State Wage Case Adjustments 6.1 Following the completion of an Annual Wage Review by the Fair Work Commission, the Commission will issue a notice to show cause why that National decision should not be adopted wholly or partly and with or without modification for certain minimum rates awards and for paid rates awards that apply to the public sector, which will be determined at a State Wage Case hearing. 6.2 In the State Wage Case hearing the Commission will determine a minimum rates adjustment for the following awards: 1. Security Industry (State) Award ("Security Industry Award"); 2. Miscellaneous Workers - Kindergartens and Child Care Centres, &c. (State) Award; 3. Health, Fitness and Indoor Sports Centres (State) Award; 4. Transport Industry (State) Award; 5. Clerical and Administrative Employees (State) Award; 6. Local Government (Electricians) (State) Award; 7. Entertainment and Broadcasting Industry - Live Theatre and Concert (State) Award; 8. Local Government Aged Disability and Home Care (State) Award; and 9. Nurses' (Local Government) Residential Aged Care Consolidated (State) Award 2021. and vary them to give effect to that minimum rates adjustment, provided that each award contains the following clause: "The rates of pay in this award include the adjustments payable under the State Wage Case for the relevant year. These adjustments may be offset against: (i) any equivalent over award payments, and/or (ii) award wage increases other than State Wage Case adjustments." 6.3 In the State Wage Case hearing the Commission may determine a paid rates adjustment for paid rates awards that apply to the public sector. Note: As provided in Principle 17, Transitional Provisions, Paragraphs 6.3 to 6.6 have no application before the 2025 State Wage Case, which will consider whether to make a paid rates adjustment and will also determine whether there should be any alteration to those paragraphs. 6.4 A paid rates adjustment will be determined having due regard to all the circumstances including: 1. the National Decision; 2. its application to paid rates awards; 3. the terms of the no extra claims undertaking required; 4. changes in the value of money since the last State Wage Case; and 5. the mandatory considerations in Principle 2, including the need to ensure that awards remain fair and reasonable, the likely effect of the decisions on the New South Wales economy, and the fiscal position and outlook of government. 6.5 For the avoidance of doubt, the paid rates adjustment need not be the same as the minimum rates adjustment and need not equate to the rate of inflation over the previous 12 months. 6.6 Following the making of a paid rates adjustment, a public sector award may, on application, be varied to apply that adjustment and extend its nominal term for 12 months from the date the adjustment takes effect, having regard to: 1. the status of bargaining between the parties to the Award; and 2. the likelihood of that bargaining concluding in a timely fashion; but only where: 1. the nominal term of the award has expired; 2. the award has not had an increase in rates for at least 12 months; and 3. each union which is a party to the award gives to the Commission a no extra claims undertaking in the following terms or in such other terms as the parties agree: [Name of union] undertakes not to pursue any further claims to amend the award in proceedings before the Industrial Relations Commission in respect of employees covered by the award that would take effect during its nominal term. Provided that this undertaking does not prevent: (i) participation in collaborative discussions to amend the award by means of mutual gains bargaining or otherwise; (ii) making an application to vary the award by consent; (iii) participation in a consent arbitration; (iv) participation in a s 19 review or other proceedings initiated by the Commission or another party that affects the award; or (v) pursuing and giving effect to claims under the Gender Based Undervaluation Principle during the nominal term 6.7 Applications to apply a paid rates adjustment will be dealt with expeditiously.

[23]

Arbitrated Case 9.1 Other than as allowed elsewhere in these Principles, an application for increases in remuneration (including for new service increments or superannuation contributions higher than those mandated by Commonwealth legislation) or changes in conditions in awards, will be determined as an Arbitrated Case and, unless otherwise allocated by the President, will be heard by a Full Bench of the Commission. 9.2 An Arbitrated Case may be granted if it meets one or more of the following criteria: 1. there has been a change in work value that meets the requirements of the Work Value Changes Principle; 2. there has been an increase in productivity or efficiency in respect of public sector awards that meets the requirements in the Productivity and Efficiency Principle; 3. the application addresses undervaluation on a gender basis in accordance with the Gender Based Undervaluation Principle; 4. a special case is established in accordance with the Special Case Principle; and 5. there has been a change in the value of money justifying a change in rates of pay and conditions for public sector employees that meets the requirements of the Value of Money Principle. 9.3 When determining an Arbitrated Case, the Commission will have regard to changes in the value of money since wage rates were last adjusted. 9.4 Following determination of an Arbitrated Case the Commission will not include a no extra claims clause in the settled award, but may identify in the decision the extent to which it is open to parties to the award to make further claims that would take effect during the life of the resultant award. 9.5 Claims that are based substantially on comparative wage justice will not be countenanced other than to the extent contemplated by the Gender Based Undervaluation Principle. 9.6 There will be no double counting, provided however, that an Arbitrated Case may rely upon a cumulation of the factors referred to in these Principles. 9.7 In the following Principles the expression "the conditions under which the work is performed" relates to the environment in which the work is done.

[24]

Work Value Changes Principle 10.1 Changes in work value may arise from changes in the nature of the work, skill and responsibility required or the conditions under which work is performed. Changes in work by themselves may not lead to a change in wage rates. The strict test for an alteration in wage rates is that the change in the nature of the work should constitute such a significant net addition to work requirements as to warrant the creation of a new classification or upgrading to a higher classification. 10.2 In addition to meeting the test in 10.1, a party making a work value application will need to justify any change to wage relativities that might result not only within the relevant internal award structure but also against any external classification to which that structure is related. There must be no likelihood of wage leapfrogging arising out of changes in relative position. 10.3 The foregoing circumstances are the only ones in which rates may be altered on the ground of work value under this Principle and the altered rates may be applied only to employees whose work has changed. 10.4 In applying the Work Value Changes principle, the Commission will have regard to the need for any alterations to wage relativities between awards to be based on skill, responsibility and the conditions under which work is performed. 10.5 Where new or changed work justifying a higher rate is performed only from time to time by persons covered by a particular classification, or where it is performed only by some of the persons covered by the classification, such new or changed work should be compensated by a special allowance which is payable only when the new or changed work is performed by a particular employee and not by increasing the rate for the classification as a whole. 10.6 The time from which work value changes in an award should be measured is the date of operation of any adjustment arising from the last work value inquiry or the date of a consent award where the parties agreed that the wage increases in the consent award reflect or include increases in work value, whichever is the later. 10.7 Care should be exercised to ensure that changes that were taken into account in any previous work value adjustments or in a structural efficiency exercise are not included in any work evaluation under this Principle. 10.8 Where the tests specified in 10.1 are met, an assessment will have to be made as to how that alteration should be measured in monetary terms. Such assessment will normally be based on the previous work requirements, the wage previously fixed for the work and the nature and extent of the change in work or the date of a consent award in which the parties have agreed that the wage increases reflect increases in work value. 10.9 The Commission will guard against contrived classifications and over-classification of jobs.

[25]

Productivity and Efficiency Principle 11.1 Productivity or efficiency measures that have delivered substantial cost savings and/or productivity or efficiency improvements or which have made a substantial contribution towards the attainment of the objectives of the employer (including departments and agencies of the Crown) to achieve an improved quality of service, and/or become more competitive and/or efficient, to which employees have made a significant contribution, may constitute the basis for increases to wages and salaries or improvements in employment conditions, provided that the time from which such measures, savings or improvements are measured is the later of: 1. the date of the last adjustment awarded on account of productivity and efficiency; or 2. the date of a consent award in which parties have agreed that the wage increases incorporate an adjustment made under this Principle. 11.2 Productivity or efficiency improvements in the public sector could arise from: 1. delivering the same service (quality or quantity) with fewer inputs; 2. delivering a better service (quality or quantity) with the same inputs; 3. achieving a large reduction of inputs, with a relatively slight reduction in service quality/quantity; and/or 4. achieving a large improvement in service quality/quantity, with a relatively small increase of inputs. 11.3 The following are not productivity or efficiency improvements in the public sector: 1. gaining a small improvement in output with a proportionate or relatively large increase in inputs; 2. achieving a small reduction in inputs with a proportionate or relatively larger reduction in service quality/quantity; 3. gaining a small improvement in quality, with no extra inputs, but with a relatively large reduction in output; 4. slightly boosting output, with no extra inputs, but with a relatively large reduction in quality. 11.4 For the avoidance of doubt, it is not necessary to identify cost savings before an increase can be awarded under this Principle. 11.5 This Principle does not apply to Local Government awards.

[26]

Gender Based Undervaluation Principle 12.1 Claims may be made for an alteration in wage rates or other conditions of employment on the basis that the work, skill and responsibility required, or the conditions under which work is performed, have historically been, or are presently, undervalued on the basis of gender. 12.2 Where such a claim is established, the Commission will seek to ensure that wage rates and conditions of employment properly reflect the value of the work, skill and responsibility required and/or the conditions under which the work is performed. 12.3 Where the undervaluation is sought to be demonstrated by reference to any comparator awards or classifications, the assessment is not to have regard to factors incorporated in the rates of such other awards which do not reflect the value of work, such as labour market attraction or retention rates or productivity factors. 12.4 The application of any formula, which is inconsistent with proper consideration of the value of the work performed, including where such formulas may themselves have been the result or product of gendered conceptions of the value of the work the subject of the application, is inappropriate to the implementation of this Principle. 12.5 The assessment of wage rates and other conditions of employment under this Principle is to have regard to the history of the award concerned, including any historical gendered conceptions of the value of the work the subject of the application. 12.6 Where the requirements of this Principle have been satisfied, an assessment will be made as to how the undervaluation should be addressed in money terms or by other changes in conditions of employment, such as reclassification of the work, establishment of new career paths or changes in incremental scales. Such assessments will have regard to the wages and conditions of employment previously fixed for the work and the nature and extent of the undervaluation established. 12.7 In applying the previous paragraph, consideration is to be given to measures to address so far as possible, consistent with achieving the outcome in 12.2 above, a legitimate concern that changes in wage relativities, not only within the award in question but also against external classifications to which the award structure is related, will give to rise to claims that would cause wage leapfrogging. 12.8 Any changes made to the award as a result of this assessment may be phased in and consideration is to be given, where relevant, to whether any increase in award rates can be absorbed in individual employees' over-award payments. 12.9 The Commission will guard against contrived classifications and over-classification of jobs. 12.10 Equal remuneration will not be achieved by reducing any current wage rates or other conditions of employment.

[29]

Negotiation Principle 15.1 When considering an application for a new award or the variation of an award, including the timetabling of such an application, the Commission will have regard to whether the parties have complied with the following. 15.2 In respect of the commencement of negotiations for a new award: 1. a party contemplating a major industrial case pursuant to Practice Direction 8A must notify the Commission and the other relevant parties at least three months before the nominal expiry date of the award that it is their intention to enter into negotiations for a new award in respect of claims justified under one or more of the Arbitrated Case criteria or otherwise; 2. the parties to the award must begin negotiations as soon as is practicable after the notification has been given. In this regard, once a written claim has been made by one party on another party, then if negotiations have not already commenced they must begin within 28 days unless it is agreed by the parties to commence negotiations at a later time; 3. prior to or at the outset of negotiations, a party can make a reasonable request to another party for relevant information to be used for the purpose of evaluating options or developing claims and that request will not be unreasonably refused; 4. disputes about these procedures will be dealt with in accordance with the dispute resolution procedures in the relevant award applying to the parties to the dispute. 15.3 In respect of any claim to alter existing wages and conditions, including to modernise or consolidate awards, each party is to bargain in good faith prior to any arbitration commencing. In particular, parties are to: 1. consider whether to enter into mutual gains bargaining under Chapter 2A of the Act; 2. attend meetings they have agreed to attend and be represented at the negotiations by persons capable of giving genuine consideration and reasoned responses to the proposals of other parties; 3. comply with agreed or reasonable negotiating or meeting procedures; 4. disclose relevant information for the purposes of negotiation; 5. respond to each other's claims and/or counter claims in a reasonable and timely manner; and 6. to the extent that agreement is reached, apply by consent to the Commission to make a new award or vary an award to give effect to that agreement. 15.4 The good faith bargaining requirements do not require a party to: 1. make concessions during bargaining; or 2. reach agreement on the terms that are to be included in the agreement.

Industrial Secretary & Ors v Public Service Association and Professional Officers' Association Amalgamated Union of New South Wales & Ors

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Judgment (35 paragraphs)

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