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Local Government (Early Childhood Education and Care Worker Retention Payments) Splinter Award 2024 [2024] NSWIRComm 1073 - NSWIRComm 2024 case summary — Zoe
On 7 November 2024, the NSW Local Government, Clerical, Administrative, Energy, Airlines and Utilities Union (USU) notified a dispute to the Industrial Relations Commission pursuant to s 130 of the Industrial Relations Act 1996 (IR Act). The dispute notification was in effect a place marker for an anticipated consent award application.
The proposed award is a new award, being Local Government (Early Childhood Education and Care Worker Retention Payments) Splinter Award 2024 (Splinter Award). The Splinter Award is intended to operate to supplement conditions already set by four awards, including any successor awards, namely the Local Government (State) Award 2023, Broken Hill City Council Consent Award 2022, the City of Sydney (South Sydney) Award 2021 to 2024, the City of Sydney Award 2022 and any enterprise agreement relevant to those four awards, collectively the subsisting awards.
From the dispute notification of 7 November 2024, the background is described in an attached letter to the Industrial Registrar from Local Government NSW. That letter sets out:
"The purpose of this correspondence is to provide the Commission with early notice of the likelihood of an application being made to the Commission in approximately mid-November 2024 ('foreshadowed application') for the making of a new Local Government (Early Childhood Education and Care Worker Retention Payments) Splinter Award 2024 ('Splinter Award').
The foreshadowed application is likely to be made by consent of Local Government NSW ('LGNSW') and the New South Wales Local Government, Clerical, Administrative, Energy, Airlines & Utilities Union, trading as the United Services Union ('USU') (collectively referred to as the 'industrial parties').
Notwithstanding that the foreshadowed application is unlikely to meet the definition of a 'major industrial case' in Practice Note No. 8A (because the application is likely to be a consent application that does not require a Full Bench) I request that the Commission afford high priority to the matter for the reasons set out below.
Background/context
On 30 September 2024 the Commonwealth Department of Education released Early Childhood Education and Care Worker Retention Payment Funding Guidelines ('Guidelines'). The Guidelines give effect to a Commonwealth Government announcement in August to invest $3.6 billion in Early Childhood Education and Care ('ECEC') services by funding a 15 per cent increase for ECEC workers phased in over two years (+10% from December 2024 and +5% from December 2025, in addition to any increases awarded by the Fair Work Commission in its annual wage review decisions) (the 'ECEC Worker Retention Payment Grant').
New South Wales councils are eligible for the ECE worker retention payment grant if they satisfy the eligibility criteria. One of the eligibility criteria is that the employer must be covered by an eligible workplace instrument which must be in place before 2 December 2024 to be able to gain access to the maximum available funding. To be an eligible workplace instrument, the instrument must provide the ECE workers an enforceable entitlement to be paid prescribed amounts above the minimum rates under the federal Child Services Award 2010 and Education Service (Teachers) Award 2020 (the 'relevant federal awards').
Many New South Wales councils employ ECE workers under the Local Government State Award 2023 ('LG State Award') and although this requires council employed ECE workers to be paid above the minimum rates prescribed under the Federal awards, the LG State Award is not an eligible workplace instrument (because it does not expressly require ECEC workers to be paid prescribed amounts above the minimum rates of pay in the federal awards).
The industrial parties are currently working on a draft Splinter Award, and I anticipate will reach an in-principle agreement on its terms within the next week. The draft instruments will then need to navigate its way through our respective organisations' internal governance/approval process before a formal application can be made to the Commission (expected to take approximately two weeks).
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I estimate the application for the making of the splinter award be filed with the Commission on approx. 15 November 2024, and we are aiming for the Splinter Award for to be approved by approximately 25 November (so that councils can complete their application and commence paying ECEC worker retention payments from 2 December 2024)."
It is clear from this letter being attached to the USU's dispute notification that:
1. The parties seeking to have the award today have been engaged in a co-operative exercise to draft the Splinter Award;
2. They have been doing so under unusual time pressures; and
3. Circumstances outside the usual processes of the Commission and of our Commonwealth counterpart, the Fair Work Commission, have driven the need for both that urgency and that the circumstances have imposed requirements that create complexities and potential unforeseen consequences.
It is clear that the policy intent behind the external government policy is well intentioned. The purpose is to provide substantial money to improve the pay of a large cohort of lower paid workers and to ensure those funds end up in the pockets of the workers in full.
The additional requirements of limiting the increase in fees which providers may charge for child care services has left some councils to balk at accepting the money. As I set out later, this is problematic as the Splinter Award if made will set wages for the same work in substantial identical workplaces at significantly different rates of pay.
It is a measure of the consent with which the application is pressed that the principal evidence in support of making an award in settlement of the dispute notified by the USU is from Mr Nassif, Manager Workplace Relations at Local Government NSW, the employer association.
Mr Nassif swore an affidavit on 25 November 2024, which was filed on the same date. Mr Nassif's affidavit attached a draft of the Splinter Award the parties submitted should be made [1] . Mr Nassif's evidence was that:
"3. I n my capacity as Manager Workplace Relations, I have overseen the LGNSW response to ensuring that local government providers of Child Care Subsidy approved services have an eligible workplace instrument in place for the purposes of the Commonwealth's Early Childhood Education and Care Worker Retention Payment Grant.
4. I have also been involved in negotiations with the New South Wales Local Government, Clerical, Administrative, Airlines and Utilities Union, trading as the United Services Union ('USU') for the making of a consent industrial instrument to facilitate access by Early Childhood Education and Care ('ECEC') employees and employers to the Commonwealth's Early Childhood Education and Care Worker Retention Payment Grant.
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7. It is my understanding that the Application for the ECEC Splinter Award proceeds by consent of the USU.
8. I confirm that the purpose of the proposed ECEC Splinter Award is to put in place a special interim arrangement to assist in ensuring that local government providers of Child Care Subsidy approved services are eligible for the Commonwealth's Early Childhood Education and Care Worker Retention Payment Grant.
9. On 1 October 2024 the Commonwealth Department of Education released Early Childhood Education and Care Worker Retention Payment Funding Guidelines (the 'Guidelines') (a copy of which is attached and marked as Annexure MN 1).
10. The Guidelines give effect to a Commonwealth Government announcement in August 2024 to invest $3.6 billion in ECEC services by funding a 15 per cent increase for ECEC workers phased in over two years.
11. Annexure MN 1 (at the bottom of page 5) clarifies that the purpose of the ECEC Worker Retention Payment Grant is for the Australian Government to provide funding towards a wage increase for eligible ECEC workers to recognise the value of the workforce and support the Government's ambition of universal access to affordable, quality ECEC.
12. Similarly, the Guidelines (at the top of page 6) state that one of the objectives of the grant program is to support a meaningful wage increase for a historically undervalued, highly feminised sector that provides an essential service.
13. In this regard I believe that the proposed ECEC Splinter Award will meet the requirements of section 23 of the Act and the requirements enunciated by the Full Bench in Re Equal Remuneration Principle [2000] NSWIRComm 113, in that the proposed ECEC Splinter Award specifically addresses the issue of equal remuneration and other conditions of employment for men and women doing work of equal or comparable value.
14. In accordance with section 14 of the Act, the proposed ECEC Splinter Award contains a provision for the resolution of disputes, and this is found at clause 8 where the proposed ECEC Splinter Award adopts the Grievance and Dispute Procedures of the Local Government (State) Award 2023.
15. Consistent with section 16 of the Industrial Relations Act 1996 (NSW) the nominal term of the proposed Award will be 12 months.
16. It is proposed that the ECEC Splinter Award commence operation on and from 28 November 2024, and that the nominal term come to an end on 30 November 2026.
17. To the best of my knowledge and belief, the proposed Award complies with all relevant statutory requirements, including the Anti-Discrimination Act 1977 (NSW)."
[Emphasis in original.]
The Splinter Award has 11 clauses and Schedules A and B. The key provisions of the Splinter Award are:
1. Clause 2: the commencement date of 24 November 2024 and a nominal term of two years and two days;
2. Clause 3; the award only applies to employees of employers named in sch A;
3. Clause 6; the interaction of the Splinter Award with the subsisting awards;
4. Clause 7: intention, setting out:
"7.1 This Award puts in place special interim arrangements to assist in ensuring that local government providers of CCS approved services may be eligible for the Commonwealth's Early Childhood Education and Care Worker Retention Payment Grant."
1. Clauses 8 and 9: which adopt the grievance and disputes clause and to the anti-discrimination clause of the Local Government (State) Award 2023;
2. Clause 10: which sets out the relevant allowances and how those payments in sch B will be applied; and
3. Schedule B: which sets out the increase in hourly rates the employees are to receive.
It should be observed that the employees will cease to be entitled to the increases if the Commonwealth Government ceases to fund the increases.
Pursuant to s 10 of the IR Act:
10 Commission may make awards
The Commission may make an award in accordance with this Act setting fair and reasonable conditions of employment for employees.
Two things flow from s 10:
1. Other requirements of Division 1 of Part 1 of Chapter 2 of the IR Act need to be met and other provisions of the IR Act may inform that assessment; and
2. An award must set conditions which are fair and reasonable.
I turn first to deal with the meaning of the requirements of Part 1. Section 11, 12, 13, 14, 15 and 16 are relevant, and these sections provide:
11 When award may be made
(1) An award may be made -
(a) on application to the Commission or on the Commission's own initiative, or
(b) in the course of an arbitration by the Commission under Chapter 3 to resolve an industrial dispute.
(2) An application for an award may be made only by -
(a) an employer, or
(b) an industrial organisation of employers or employees, or
(c) a State peak council.
(3) Anyone who can apply for an award may become a party to any proceedings for making an award.
(4) An applicant for an award, or to become a party to the making of an award, is required to satisfy the Commission that it or any one or more of its members has a sufficient interest in the proposed award.
12 Persons bound by award
(1) An award is binding on all employees and employers to which it relates, whether or not they were a party to the making of the award.
(2) An award that applies to a particular industry is, subject to its terms, taken to bind all employees and employers engaged in the industry.
(3) An award is, subject to its terms, binding on all industrial organisations that were a party to the making of the award.
13 Formal matters relating to making of award
(1) An award is required to be in writing, expressed to be an award and signed by at least one member of the Commission.
(2) An award is to be published by the Industrial Registrar on the NSW industrial relations website.
(3) An award is to comply with such other requirements as to form and procedure for its making as may be made by the regulations or (subject to any such regulations) by the rules of the Commission.
(4) The Commission may give directions as to the standard format for awards.
14 Mandatory dispute resolution procedures in awards
(1) An award is not to be made unless it contains procedures for the resolution of industrial disputes under the award (dispute resolution procedures).
(2) However, an award need not contain dispute resolution procedures if the Commission is satisfied that another specified award already does so.
(3) Dispute resolution procedures are to include procedures for -
(a) consultation at the workplace, and
(b) the involvement of relevant industrial organisations.
(4) Dispute resolution procedures in awards do not apply to employers who employ fewer than 20 employees, unless the award specifically applies those procedures to such an employer.
15 Commencement of award
(1) An award comes into force on the date specified by the Commission.
(2) However, legal proceedings relating to the enforcement of the award cannot be commenced until the expiration of 7 days after the day on which it is published on the NSW industrial relations website.
(3) An award may be expressed to apply retrospectively, but not earlier than the date on which -
(a) application for the award was lodged with the Industrial Registrar, or
(b) the Commission itself initiated proceedings for the award, or
(c) the industrial dispute giving rise to the award was notified to the Commission.
(4) Despite subsection (3), the following awards may, with the consent of the parties to the making of the award, apply retrospectively from a date, specified in the award, that is earlier than any date referred to in that subsection -
(a) an award that sets conditions of employment in connection with a project,
(b) an award that sets conditions of employment for employees of a single employer or for employees of two or more associated employers.
16 Term of award
(1) An award applies for the period specified in it as its nominal term and, after that period, until rescinded by the Commission.
(2) The nominal term of an award must not be less than 12 months nor more than 3 years.
(3) However, an award that sets conditions of employment in connection with a project may have a specified nominal term that does not exceed the expected duration of the project.
(4) An award may in special circumstances be made on an interim basis. Any such award is to be expressed to be an interim award and applies only for the period (not exceeding 12 months) specified in it.
As to s 11, it is apparent that:
1. The Splinter Award is to be made on the application of Local Government NSW and in the course of this notified dispute. This satisfies both paragraphs of s 11(1) and s 11(2);
2. The parties to the Splinter Award, as set out in cl 4 of the Splinter Award are the USU and Local Government NSW. Pursuant to subs (11)(3), they are properly entitled to become parties; and
3. As industrial associations with membership coverage of the employers and employees covered by the splinter award it is clear they have a considerable interest in the proposed award; accordingly, s 11(4) is satisfied.
As to s 12, it should be noted that the terms of the award make clear that it only applies to those employers set out in sch B. This is permitted pursuant to s 12(2).
As to s 13, the Splinter Award is in writing and, if made, will be in due course signed by a member of the Commission and published on the New South Wales Industrial Relations website, which meets the requirements of s 13(1) and s 13(2).
Section 13(3) provides that any applicable regulation and rule of the Commission must be complied with. It is not apparent that any regulation imposes a requirement that must be fulfilled prior to the making of an award.
Rule 6.8 of the Industrial Relations Rules 2022 provides that:
6.8 Applications for consent awards
(1) An application for a consent award must be supported by an affidavit setting out -
(a) the way in which the consent award provides for equal remuneration and other conditions of employment for men and women doing work of equal or comparable value, and
(b) the reasons why the making of the consent award is in the public interest having regard to the matters set out in the Act, section 146(2).
(2) The following must be filed with the application for the consent award -
(a) the supporting affidavit,
(b) an electronic copy of the proposed award.
(3) In this rule -
consent award means an award made by mutual consent of all parties to the proposed award, and includes a variation of an award made by mutual consent of all parties to the original award.
The affidavit filed is, contrary to the exhortations of the Commission at the mention of the dispute on 12 November 2024, perilously thin on:
1. Why the Splinter Award provides for equal remuneration and other conditions of employment for men and women doing work of equal or comparable value; and
2. Why the making of the splinter award is in the public interest, having regard to s 146(2).
Section 146(2) provides that:
146 General functions of Commission
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(2) The Commission must take into account the public interest in the exercise of its functions and, for that purpose, must have regard to -
(a) the objects of this Act, and
(b) the state of the economy of New South Wales and the likely effect of its decisions on that economy, and
(c) for the exercise of a function about public sector employees - the fiscal position and outlook of the Government and the likely effect of the exercise of the Commission's function on the position and outlook.
Mr Mann, who appeared for Local Government NSW submitted that the subsisting awards can be presumed to be fair and reasonable and providing for equal remuneration of men and women for the same work or work of equal value. To the extent that the Splinter Award provides higher rates, it is to be presumed, although there is not actually evidence before the Commission, that the relevant employees are heavily skewed to women and, therefore, this would assist in an equal remuneration objective.
It is also clear from the Splinter Award that it does not distinguish between men and women.
On these bases, the Commission is satisfied that r 6.8(1)(a) is satisfied. I will return later to the matters addressed by r 6.8(1)(b).
As to s 14(1), it is clear that a dispute resolution clause is, albeit by reference, contained in the Splinter Award. As that clause is in an award of the Commission made in the last two years, I am satisfied that the Splinter Award is in compliance with s 14 of the IR Act.
As to s 15, the Splinter Award sets a date for commencement as required by s 15 subs (1). The award does not apply retrospective, so 15(3) does not apply.
As to s 16, the Splinter Award sets out a nominal term and that is two years and two days, thus meeting the requirements of s 16 (1) and 16(2).
I do not consider any other sections of Division 1 set any requirements that need to be addressed.
I now turn to Practice Note 6.
Effectively, these are the same matters addressed above when considering s 13 and the Rules of the Commission. Accordingly, issues relevant to equal remuneration have been addressed. Issues related to s 146(2) of the IR Act remain to be addressed.
Turning next to the Wage Fixing Principles. I consider that Principles 1.1, 1.2, 2.1 paras (d) and (e) are applicable, they provide:
"1. Preamble
1.1. These Principles have been established by the Industrial Relations Commission of New South Wales ("Commission") under the Industrial Relations Act 1996 ("Act"). These Principles recognise that most employees within the jurisdiction of the Commission are employed by the Crown in the right of New South Wales, a local government entity, or a statutory body representing the Crown. The Commission further recognises that the awards which will be made or varied by the Commission which will require consideration of these Principles by the Commission are primarily public sector awards.
1.2. The four primary aims of these Principles are:
1.2.1. to provide a framework under which wages and employment conditions in the government and local government sectors of New South Wales remain fair and reasonable in accordance with the requirements of the Act, and economically sustainable reflecting the obligation of the Commission to take into account the public interest and, in doing so, to have regard to the objects of the Act and to the state of the economy of New South Wales and the likely effect of the Commission's decisions on that economy;
1.2.2. to provide a framework that accommodates the interests of employers and employees and their representatives and ensures consistency of approach, certainty and predictability as to the principles that are to operate in respect of the fixation of wages and the setting of employment conditions;
1.2.3. to provide a framework in which all awards within the Commission's jurisdiction are maintained up to date in respect of rates of pay and pay-related allowances; and
1.2.4. to protect the low paid.
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2. When an Award may be Varied or Another Award Made without the Claim Requiring Consideration as an Arbitrated Case
2.1. In the following circumstances an award may, on application, be varied or another award made without the application requiring consideration as an Arbitrated Case under Principle 8:
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d) where the application is consented to by the parties, in which case, it will be dealt with in accordance with the Act; and
e) to adjust wages pursuant to an application claiming that work has been undervalued on a gender basis in accordance with Principle 11."
I consider the effect of these and especially 2.1(d) is that the Wage Fixing Principles can properly be dispensed with except in so far as the guiding principles set out an overarching context.
Returning to s 146 subs (2), I turn first to consider the objects of the Industrial Relations Act.
The parties agreed that objects (a), (b), (e), (f), (h) and (i) all potentially may have relevance to the making of the Splinter Award.
I observe that s 146(2)(b) and (c) have no relevance to the making of the Splinter Award:
1. The first because, whilst the sector is important and indeed the purpose of the Splinter Award is to give effect to the recognition of its importance, the Splinter Award cannot be said to impact the wider New South Wales economy sufficiently. To the extent that it recognises the value of work performed and better incentivises people to work in the industry, it might be thought to have a positive effect on the New South Wales economy. That said, this assumption is speculative, and the Commission has no evidence before it in support of such an assumption.
2. The second because the relevant employees are not public sector employees.
Returning to the objects: object (b) is in fairness at best in the same category as s 146(2)(b). It might be assumed to be supportive, but the Commission has only assumptions to base that support on.
Object (d) is supportive but only really in a very general way as to awards generally. I will return to the word "appropriate" shortly.
The same may be said for object (a), especially in so far as "fair and just" are the key operative words in object (a).
Objects (f), (h) and (i) provide the most cogent and substantive support for the Splinter Award. The purpose of the award is to access funding that the Commonwealth government is providing to raise wages in the sector explicitly on the basis that wages have been under their true value based on gender. Paying higher wages will likely attract more employees to work in the sector and it is expressly the purpose of the Commonwealth government funding to do this.
The objects clearly support the Splinter Award being made.
There are a number of issues that are of concern to the Commission.
The Splinter Award will recreate two levels of pay for substantially identical work. This should trouble the question of appropriate awards, see object (e), and the question of fair and reasonable conditions of employment, see s 10.
The submission of the parties was that some providers, read employers, cannot afford or economically manage or are not yet certain if they can under the funding conditions of a cap on fee increases. Nothing more than submissions from the bar table were advanced in support of this proposition. Further, it was not explained beyond the conditional funding why that was a proper basis to create differential rates of pay.
Related to this is the question of why the Commission should make differential award conditions when the IR Act provides a proper mechanism for such an outcome, that is, differential rates at the option of the employer to accept the higher rates, being enterprise agreements.
These are not trivial or pedantic issues. Very much on balance and with reluctance, the Commission has concluded that the Splinter Award should be made as sought.
Ultimately the Commission appreciates the bind in which the parties find themselves because of the conditions imposed on accepting the funding. A one-size-fit-all approach by the Commonwealth Government, albeit clearly well intentioned, without consideration of the industrial consequences, processes and timing has left the parties here.
The Commission accepts that implementing enterprise agreements would have been sufficiently time consuming that the employers now to be bound may not have completed the process in time for the funding to flow, and that would ultimately impact their employees. That would not be fair and reasonable.
While it is questionable if it is fair and reasonable to leave some employees on lower rates, it is clearly unfair and unreasonable to deny the employees who can benefit from higher wages that benefit. That is a deciding factor from the evidence and submissions before the Commission.
Accordingly, I order that:
1. The Local Government (Early Childhood Education and Care Worker Retention Payments) Splinter Award 2024 be made in the terms of annexure A to the affidavit of 25 November 2024 of Mr Nassif, subject to two changes:
1. Deletion of the words 'subject to clause 3.3' in cl 3.2, the reason for that being that there is no cl 3.3 in the Splinter Award; and
2. A longer list of employers in sch A. Those employers will now be:
1. Liverpool Plains Shire Council,
2. Bogan Shire Council,
3. Moree Plains Shire Council,
4. Eurobodalla Shire Council,
5. Lachlan Shire Council,
6. Bathurst Regional Council,
7. Penrith City Council,
8. Cumberland City Council,
9. Central Coast Council,
10. Canterbury Bankstown Council,
11. Northern Beaches Council,
12. Tamworth Regional Council,
13. Wollondilly Shire Council,
14. Inner West Council,
15. Campbelltown City Council,
16. The City of Parramatta Council,
17. Leeton Shire Council,
18. Sutherland Shire Council,
19. Fairfield City Council,
20. Lane Cove Council,
21. Liverpool City Council,
22. Singleton Council.
1. In accordance with its terms, the award will commence on 28 November 2024, being today. The award will have a nominal term ending on 30 November 2026.
C Muir
Commissioner
[2]
Endnote
The published version of the Ex-Tempore Reasons for Decision have excluded references made in the ex tempore reasons to an affidavit of Daniel Papps, Manager Industrial Rules Governance and Compliance for the USU. Upon revision of the transcript, it is clear that affidavit does not relate to matters relevant to consideration in this application, but rather as to related, but different proceedings before the Commission.
[3]
Amendments
04 December 2024 - Amendments:
04 December 2024 - Correction to [2]; "successful" replaced with "successor"
[4]
04 December 2024 - Correction to [34] and [35]; reference to s164 corrected to s146
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Decision last updated: 04 December 2024