Consideration
33The approach we intend to take is to make orders varying the Crown Employees (Public Sector - Salaries) Award 2008 and the two RTA awards to provide for a 2.5 per cent increase in salaries and salary based allowances. The increase is to apply from the first full pay period to commence on or after 1 July 2011. For the reasons we shall explain, there shall be no term of 12 months and we do not propose to include a no extra claims provision, at least at this stage.
34The intention of the legislature in amending the Industrial Relations Act to include s 146C and in promulgating the Regulation was undoubtedly to limit employment costs in the public sector. Increases in employee-related costs are to be limited to 2.5 per cent per annum. "Per annum" means "by the year" or "yearly". If employee-related costs savings cannot be achieved to fully offset any increase in employee-related costs in any one year beyond 2.5 per cent, on the face of the Regulation there can be no increase in remuneration for employees beyond that amount.
35These proceedings fall to be determined against the background of the Regulation. However, the proceedings arise in unusual circumstances. Prior to the introduction of s 146C and the Regulation, the PSA filed an application for salary increases, such application to be tested against the requirements of the Commission's Wage Fixing Principles. Those Principles do not impose any cap on wage increases, but they do require stringent examination of whether there had been work value changes or productivity or efficiency improvements such as to justify the grant of wage increases.
36Before the PSA's application could be heard, the rules about wage fixation changed and it was no longer open to the Commission to apply its Wage Fixing Principles to the application. However, the PSA has challenged the constitutional validity of s 146C and the validity of the Regulation made under that section. The Industrial Court is reserved on that matter. If the challenged provisions are found to be invalid the PSA will be entitled to have its application dealt with in accordance with the Principles. If not, the Regulation will apply.
37It seems to us that the preferable course is to adjourn any further consideration of the PSA's application until such time as the validity questions have been determined. In the meantime, however, the DPE and RTA have made counter-applications by which they are prepared to pass on an increase in remuneration of 2.5 per cent from 1 July 2011, subject to achieving no extra claims provisions in the awards. They contend that 2.5 per cent is the maximum increase available to employees unless there are necessary cost savings that offset any increase beyond 2.5 per cent.
38If we were to make new awards in response to the counter-applications and include in those awards the no extra claims provisions that are sought, it would have the effect of precluding any consideration of the PSA's application, even in circumstances where s 146C and the Regulation were found invalid. Moreover, we have reservations regarding the validity of the no extra claims provisions proposed by the DPE and RTA. The DPE's provision is predicated on the basis of an agreement between the parties that there will be no extra claims. There is no such agreement. Further, both the DPE's provision and that of the RTA provide that no "proceedings, claims or demands concerning wages or conditions of employment ... will be instituted before the Industrial Relations Commission of New South Wales or any other industrial tribunal." We do not know how the Commission may make an order precluding claims being made before a tribunal other than itself. Moreover, in the absence of legislative backing, the power of the Commission to order a party not to make claims it is entitled to make under the statute must be in doubt. We also note that the proposed no extra claims provisions, on their face, would preclude claims otherwise permitted under the Regulation (for example, claims relating to equal remuneration).
39It was submitted for the employer parties and the intervener that cl 6 of the Regulation provided the statutory basis for inserting into awards and orders the no extra claims provisions proposed in the cross-applications. Clause 6(1)(d) relevantly provides that awards and orders are to resolve all issues the subject of the proceedings and are not to allow extra claims to be made during the term of the award or order. The PSA contended such a provision does not require the Commission to insert a no extra claims provision in an award or order, but rather prevents the Commission from including in the award or order a provision that allows extra claims to be made. There would appear to be some substance in this proposition, but for the moment we do not decide it.
40Awards may be varied after their nominal term if the Commission considers that it is not contrary to the public interest to do so (s 17(3)(d) of the Industrial Relations Act ), but there is no power, in our opinion, to extend the nominal term of an award by way of a variation. Section 16 of the Industrial Relations Act provides that the nominal term of an award must not be less than 12 months nor more than 3 years. The awards that are subject of the cross-applications have passed their nominal terms (30 June 2011) of three years.
41As we foreshadowed, in the unusual circumstances of these proceedings we propose, for the time being, to vary the awards that are the subject of the counter-applications rather than make new awards. By doing so, no term having the effect of extending the nominal life of the awards will be included as part of any variation.
42This leaves the question of what to do with the PSA's application. If the PSA is successful in challenging the validity of s 146C or the validity of the Regulation, there would seem to be no bar to the Commission proceeding to deal with the application in accordance with the Wage Fixing Principles.
43If the PSA is unsuccessful, such that the legislation is held to be valid, the PSA will be provided with the opportunity of putting its case that the increase of 2.5 per cent does not represent the maximum amount that may be awarded by way of an increase in remuneration under the Regulation. Otherwise, by force of the Regulation it seems to us, the increase of 2.5 per cent that has been granted by way of variation in the awards that are the subject of the counter-applications is to be regarded as the amount of increase in employee-related costs under those awards for a period of 12 months from 1 July 2011. In those circumstances, given it has been conceded that the evidence filed in support of the PSA's application would not satisfy the requirements for employee-related cost savings as specified in the Regulation, no further increase in remuneration would be available prior to the expiry of the 12 months' period. The issue of whether a no extra claims clause should be inserted into the awards will be further considered by the Full Bench in the course of determining the disposition of the PSA's application.
44The PSA submitted we should proceed immediately to hear the evidence relating to its application. We do not propose to take that course. As matters currently stand, the Regulation is valid. The evidence the PSA proposes to call has no relevance given the requirements of the Regulation. It would not be appropriate for the Commission to proceed to hear that evidence on the basis of a possibility that the Regulation might be found to be invalid. In this regard, we agree with the submissions of the DPE.
45We acknowledge that nearly four weeks of hearing may be thrown away depending on when the Industrial Court gives judgment on the jurisdictional questions. However, if the Regulation is found to be invalid the Commission will endeavour to accommodate a hearing of the PSA's application as early as practicable.
46We find that it would not be contrary to the public interest to vary the awards that are the subject of the counter-applications to provide for a 2.5 per cent increase in salaries and allowances.
47An increase in salaries and allowances can only be made operative from a date earlier than the Commission's decision if there are "exceptional circumstances": Cll 6(1)(e) and 6(2) of the Regulation. The employer parties indicated they had little to say on this aspect. However, the Commission must, nevertheless, be satisfied regarding the existence of special circumstances.
48In this respect, the PSA referred to Maan v Minister for Immigration and Citizenship [2009] FCAFC 150; (2009) 179 FCR 581, where Branson J said at [51]:
[51] Although the expression ' exceptional circumstances ' is not defined in the Regulations it has been the subject of consideration in numerous cases. Assistance in interpreting the expression can be found in comments of Lord Bingham of Cornhill CJ in R v Kelly (Edward) [2000] 1 QB 198 at 208 as follows:
We must construe " exceptional " as an ordinary, familiar English adjective, and not as a term of art. It describes a circumstance which is such as to form an exception, which is out of the ordinary course, or unusual, or special, or uncommon. To be exceptional a circumstance need not be unique, or unprecedented, or very rare; but it cannot be one that is regularly, or routinely, or normally encountered . (emphasis added)
Reference was also made to Burden v Walgett Shire Council [2006] NSWIRComm 169 where Haylen J (at [42]) referred to authorities that treated a requirement for there to be "exceptional circumstances" as permitting a court to intervene in a case which appears to it to be "out of the ordinary".
49The PSA identified what it considered to be the exceptional circumstances in this matter as follows:
(a) The PSA notified an intention to commence a major industrial case in accordance with Practice Direction 8A in January 2011 and in March 2011 commenced proceedings seeking the making of new awards providing for increases in salaries and allowances, with the first of such increases to operate from 1 July 2011.
(b) The PSA's applications were subject of directions in March 2011 providing for the preparation of evidence for a hearing from 1 August 2011 to 26 August 2011 in accordance with the existing powers of the Commission and the Commission's wage fixing principles, including the capacity to order increases in salaries retrospectively.
(c) The Amendment Act inserting s 146C into the Act received royal assent on 17 June 2011 and the Regulation was promulgated on 22 June 2011. These events occurred well after the PSA's case had commenced and after the PSA was committed to a course of seeking increases in salaries and allowances in a case set down for hearing in August 2011. Consequently, the prima facie restriction on the Commission's capacity to award retrospective increases was imposed well after the parties had committed to a procedural course which involved the PSA's claim not being heard until a month after the expiry of the current award.
(d) Further, the employees covered by the existing awards have not had any increase in salaries and allowances since July 2010. The employees have not received increases in salaries and allowances in circumstances in which inflation is currently running at in excess of 3% and an increase of 2.5% will not even maintain the real value of wages: see the discussion in State Wage Case 2010 [2010] NSWIRComm 183 at [48]-[56].
50The Commission accepts these matters constitute exceptional circumstances justifying an operative date of 1 July 2011.