State Wage Case 2018 [2018] NSWIRComm 1063

[2018] NSWIRComm 1063

Industrial Relations Commission (NSW)|2018-09-13

View original source

At a glance

Source facts

Court

Industrial Relations Commission (NSW)

Decision date

2018-09-13

Source

Original judgment source is linked above.

Judgment (22 paragraphs)

[1]

Judgment

Following the publication of the decision of the Minimum Wage Panel of Fair Work Australia in Annual Wage Review 2017-18 [2018] FWCFB 3500 on 1 June 2018, the Commission directed the Industrial Registrar, Ms Melinda Morgan, to issue a Summons to Show Cause to various industrial parties. The Summons, dated 8 June 2018, called upon those parties to show cause why the Commission should not take such action as it thought proper under Part 3 of Chapter 2 of the Industrial Relations Act 2016 (NSW) ("the Act") and Clause 4 of the Wage Fixing Principles as determined in the State Wage Case 2017 [2017] NSWIRComm 1068.
The matter began by way of a directions hearing before the Chief Commissioner. The parties advised that they had commenced discussions both as to the orders which should be made and the changes which may be required following a review of the Wage Fixing Principles. At a subsequent directions hearing the parties reported that their discussions had proved fruitful and a consensus had been achieved. The matter was then listed before the Full Bench.
Short Minutes of Order were presented to the Full Bench providing for general orders under s 52 of the Act varying awards and a few minor changes to the Wage Fixing Principles. The Full Bench made orders in accordance with the Short Minutes.
We note that, consistent with earlier decisions (see State Wage Case 2015 [2015] NSWIRComm 31at [1], State Wage Case 2016 [2016] NSWIRComm 12 at [4]), and State Wage Case 2017 at [4]), we consider the Annual Wage Review 2017-18 to be a "National Decision" as provided under s 48 of the Act. Further, we are satisfied the draft orders comply with the requirements of the Act including those of s 146C.
Accordingly, the Commission makes the orders set out in Annexure 1. We note that, for ease of reference, the Wage Fixing Principles are contained in Annexure A of Annexure 1. Further we delegate to the Chief Commissioner any remaining functions in relation to the award variations ordered in Annexures B and C of Annexure 1. Annexure 1

[6]

State Wage Case Adjustments 4.1 Following the completion of an Annual Wage Review by the Fair Work Commission, the Commission shall issue a notice to show cause why that decision should not be flowed on to relevant New South Wales awards (as per 4.2 of this Principle) in the New South Wales industrial jurisdiction. 4.2 Unless the Commission determines otherwise, all relevant New South Wales awards (excluding those that are caught by Principles 4.2(c) and 14) will be varied to include a State Wage Case adjustment by the making of a general order of the Commission pursuant to s 52 of the Act, subject to the following: (a) At the time when the award is to be varied to insert the State Wage Case adjustment (or a proportionate amount in the cases of part time and casual employees, juniors, trainees, apprentices, employees on a probationary rate, employees on a supported wage or with permits under s 125 of the Act), the following clause will be inserted in the award: "The rates of pay in this award include the adjustments payable under the State Wage Case 2018. These adjustments may be offset against: (i) any equivalent over award payments, and/or (ii) award wage increases other than State Wage Case adjustments." The above clause will replace the offsetting clause inserted into awards pursuant to the Principles determined in previous State Wage Case decisions. (b) By consent of all parties to an award, where the minimum rates adjustment has been completed, award rates may be expressed as hourly rates as well as weekly rates. In the absence of consent, a claim that award rates be so expressed may be determined by arbitration. (c) The State Wage Case adjustment will only be made in respect of rates in awards which have not been increased, other than by State Wage Case adjustments. (d) The State Wage Case adjustment may apply where the rates in an award have increased under the Arbitrated Case and/or Equal Remuneration Principles in accordance with the Commission's Decision as set out in Principles 8.2(l) and 12.16 respectively.

[9]

Minimum Wage for Award/Agreement Free Employees 7.1 Subject to the provisions set down in Principle 4, State Wage Case Adjustments, and following the completion of an Annual Wage Review by the Fair Work Commission: 7.1.1 The Minimum Wage shall apply to those adult employees, junior employees, employees to whom training arrangements apply and employees with a disability who are employed in the jurisdiction of the Commission and whose employment is not subject to the terms of an industrial instrument. 7.1.2 The minimum weekly rate of pay payable to an adult employee (as defined in s 5 of the Act) engaged on a full-time basis whose employment is not subject to the terms of an industrial instrument (as defined in s 8 of the Act) shall be the rate of pay equal to the National Minimum Wage, as varied from time to time by the Fair Work Commission. 7.1.3 The minimum hourly rate of pay payable to an adult employee (as defined in s 5 of the Act) engaged on a part-time basis whose employment is not subject to the terms of an industrial instrument (as defined in s 8 of the Act) shall be the rate of pay equal to the National Minimum Wage, as varied from time to time by the Fair Work Commission divided by 38. 7.1.4 The minimum hourly rate of pay payable to an adult employee (as defined in s 5 of the Act) engaged on a casual basis whose employment is not subject to the terms of an industrial instrument (as defined in s 8 of the Act) shall be the rate of pay equal to the National Minimum Wage, as varied from time to time by the Fair Work Commission divided by 38 plus any casual loading calculated in accordance with 7.1.8 hereof. 7.1.5 Unless the Commission otherwise determines, the minimum weekly rate of pay for junior employees, employees to whom training arrangements apply and employees with a disability (as defined by s 12 of the Fair Work Act 2009 (Cth)) engaged on a full-time basis whose employment is not subject to the terms of an industrial instrument (as defined in s 8 of the Act) shall be the rate of pay equal to the special National Minimum Wage as per s 294(1)(b) of the Fair Work Act 2009 (Cth), as varied from time to time by the Fair Work Commission. 7.1.6 Unless the Commission otherwise determines, the minimum hourly rate of pay for junior employees, employees to whom training arrangements apply and employees with a disability (as defined by s 12 of the Fair Work Act 2009 (Cth)) engaged on a part-time basis whose employment is not subject to the terms of an industrial instrument (as defined in s 8 of the Act) shall be the rate of pay equal to the special National Minimum Wage as per s 294(1)(b) of the Fair Work Act 2009 (Cth), as varied from time to time by the Fair Work Commission divided by 38. 7.1.7 The minimum hourly rate of pay for a junior employee, employees to whom training arrangements apply and employees with a disability (as defined by s 12 of the Fair Work Act 2009 (Cth)) engaged on a casual basis whose employment is not subject to the terms of an industrial instrument (as defined in s 8 of the Act) shall be the rate of pay equal to the special National Minimum Wage as per s 294(1)(b) of the Fair Work Act 2009 (Cth), as varied from time to time by the Fair Work Commission divided by 38 plus any casual loading calculated in accordance with 7.1.8 hereof. 7.1.8 Casual loadings (if applicable) for adult employees, junior employees, employees to whom training arrangements apply and employees with a disability who are award or agreement free will be adjusted in line with s 294(1)(c) of the Fair Work Act 2009 (Cth), as varied from time to time by the Fair Work Commission.

[10]

Arbitrated Case 8.1 General Any claim for increases in wages and salaries, or changes in conditions in awards, other than those allowed elsewhere in the Principles, will be processed as an Arbitrated Case by a Full Bench of the Commission unless otherwise allocated by the Chief Commissioner. In determining such an application, the Commission shall, subject to the relevant provisions of the Act, do so in accordance with the following criteria: 8.2 Work Value Considerations (a) 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. (b) In addition to meeting the test in (a), 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. (c) The foregoing circumstances are the only ones in which rates may be altered on the ground of work value and the altered rates may be applied only to employees whose work has changed in accordance with this Principle. (d) 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. (e) 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. (f) The time from which work value changes in an award should be measured is the date of operation of the second structural efficiency adjustment allowable under the State Wage Case 1989 (1989) 30 IR 107 or the last work value inquiry or the date of a consent award where the parties have agreed pursuant to a consent award the wage increases reflect increases in work value, whichever is the later. (g) Care should be exercised to ensure that changes that were, or should have been, 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. (h) Where the tests specified in (a) 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 where the parties have agreed pursuant to a consent award that the wage increases reflect increases in work value. (i) The expression "the conditions under which the work is performed" relates to the environment in which the work is done. (j) The Commission will guard against contrived classifications and over-classification of jobs. (k) Any changes in the nature of the work, skill and responsibility required or the conditions under which the work is performed, taken into account in assessing an increase under any other Principle of these Principles, will not be taken into account under this Principle. (l) In arbitrating an application made under this Principle, the Commission is required to determine whether or not future State Wage Case general increases will apply to the award. 8.3 Productivity and Efficiency Considerations Productivity and efficiency measures that have delivered substantial costs 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) in seeking to 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 without the requirement to make out a special case, provided that such measures, savings or improvements have not already been taken into account in previous wage adjustments.

[13]

Negotiating Principles 9.1 In order to encourage participation in industrial relations by representative bodies of employees and employers, avoid industrial disputes, provide a prompt and fair manner for their resolution with a minimum of legal technicality, and to encourage and facilitate co-operative workplace reform, the following processes shall be followed with respect to claims under Principles 8 and 12. 9.2 In respect of the commencement of negotiations for a new award: (a) At least one month before the nominal expiry date of an award a party to the award must notify the Commission (where a major industrial case is contemplated pursuant to Practice Direction 8A) and the other parties to the award that it is their intention to enter into negotiations for a new award in respect of claims pursuant to Principles 8 and/or 12. (b) The parties to the award shall 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, negotiations should begin within a reasonable period of time unless it is agreed by the parties to postpone the commencement of negotiations to a later time. (c) Disputes about these procedures shall be dealt with in accordance with the relevant dispute resolution procedure. 9.3 Subject to the provisions of the Act, and unless the Commission otherwise determines, a party is not entitled to prosecute an arbitration unless the party has bargained beforehand in good faith and, in particular, the party has: (a) attended meetings they have agreed to attend and had been represented at the negotiations by persons capable of giving genuine consideration to the proposals of other parties and giving reasoned responses to those proposals; and (b) complied with agreed or reasonable negotiating or meeting procedures; and (c) disclosed relevant information for the purposes of negotiation; and (d) responded to each other's claims and/or counter claims in a reasonable and timely manner. These good faith bargaining requirements do not require: (a) a party to make concessions during bargaining; or (b) to reach agreement on the terms that are to be included in the agreement. 9.4 The Commission may assist the parties in reaching agreement. The Commission may provide such assistance in respect of a dispute when a request is made by any party or on its own motion. 9.5 The Commission may exercise conciliation powers under the Act, and in that connection may, at the request of all the parties to a dispute, engage in a "Bluescope" process: see Construction, Forestry, Mining and Energy Union (New South Wales Branch) and Macquarie Generation [2009] NSWIRComm 160; Re Operational Ambulance Officers (State) Award [2008] NSWIRComm 168; Minister for Industrial Relations (Notification under s 167 of a dispute between BHP Billiton) and The Australian Workers Union [2002] NSWIRComm 378; Crown Employees (NSW Fire Brigades Permanent Firefighting Staff) Award 2008 [2008] NSWIRComm 174; and Re Crown Employees (Public Sector -Salaries 2008) Award [2008] NSWIRComm 193. 9.6 If conciliation fails, and the parties do not elect for the "Bluescope" process, the Commission may arbitrate consistent with the powers under the Act and these Principles.

[14]

Enterprise Arrangements 10.1 The Commission may approve of enterprise arrangements reached in accordance with this Principle and the provisions of the Act. 10.2 Industrial unions of employees and industrial unions of employers, or industrial unions of employees and employers, or employees and employers may negotiate enterprise arrangements which, subject to the following provisions, shall prevail over the provisions of any award or order of the Commission that deals with the same matters insofar as they purport to apply to parties bound by the arrangements, provided that, where the arrangement is between employees and an employer, a majority of employees affected by the arrangement genuinely agree. 10.3 An enterprise arrangement shall be an agreed arrangement for an enterprise, or discrete section of an enterprise, being a business, undertaking or project, involving parties set out in Principle 10.2. 10.4 Enterprise arrangements shall be for a fixed term and there shall be no further adjustments of wages or other conditions of employment during this term other than where contained in the arrangement itself. Subject to the terms of the arrangement, however, such arrangement shall continue in force until varied or rescinded in accordance with the Act. 10.5 For the purposes of seeking the approval of the Commission, and in accordance with the provisions of the Act, a party shall file with the Industrial Registrar an application to the Commission to either: (a) vary an award in accordance with the Act; or (b) make a new award in accordance with the Act. 10.6 At a hearing for the approval of an enterprise arrangement, the Commission will consider, in addition to the industrial merits of the case under the State Wage Case Principles: (a) ensuring the arrangement does not involve a reduction in ordinary time earnings and does not depart from the Commission's standards of hours of work, annual leave with pay or long service leave with pay; and (b) whether the proposed award or variation is consistent with the continuing implementation at enterprise level of structural efficiency considerations. 10.7 The Commission is available to assist the parties to negotiations for an enterprise arrangement by means of conciliation and, in accordance with these Principles and the Act, by means of arbitration. If any party to such negotiations seeks arbitration of a matter relating to an enterprise arrangement, such arbitration shall be as a last resort. 10.8 Enterprise arrangements entered into directly between employees and employers shall be processed as follows, subject to the Commission being satisfied in a particular case that departure from these requirements is justified: (a) All employees will be provided with the current prescriptions (e.g. award, industrial agreement or enterprise agreement) that apply at the place of work. (b) The arrangement shall be committed to writing and signed by the employer, or the employer's duly authorised representative, with whom agreement was reached. (c) Before any arrangement is signed and processed in accordance with this Principle, details of such arrangement shall be forwarded in writing to the union or unions with members or persons eligible for membership in that enterprise who are affected by the changes and the employer association, if any, of which the employer is a member. (d) A union or employer association may, within 14 days thereof, notify the employer in writing of any objection to the proposed arrangements, including the reasons for such objection and in such circumstances the parties are to confer in an effort to resolve the issue. (e) Where an arrangement is objected to by a union or employer association and the objection is not resolved, an employer may make an application to the Commission to vary an award or create a new award to give effect to the arrangement. (f) A union and/or employer association shall not unreasonably withhold consent to the arrangements agreed upon by the parties. (g) If no party objects to the arrangement, then a consent application shall be made to the Commission to have the matter approved in accordance with paragraph (e) of this Principle. (h) Such arrangement once approved shall be displayed on a notice board at each enterprise affected.

[15]

Superannuation 11.1 An application to make or to vary a minimum rates or paid rates award which: (a) seeks a greater quantum of employer contributions than required by the Superannuation Guarantee (Administration) Act 1992 (Cth) ("the SGA Act"); or (b) seeks employer contributions to be paid in respect of a category of employee in respect of which the SGA Act does not require contributions to be paid; shall be referred to a Full Bench for consideration as a special case, unless otherwise allocated by the Chief Commissioner. Exceptions to this process are applications which fall within the Enterprise Arrangements Principle. 11.2 If an application is made that does not fall within Principle 11.1, the Commission will, subject to Principle 11.3: (a) make or vary an award by inserting a clause stating: "Superannuation Legislation - The subject of superannuation is dealt with extensively by federal legislation including the Superannuation Guarantee (Administration) Act 1992 (Cth), the Superannuation Industry (Supervision) Act 1993 (Cth); the Superannuation (Resolution of Complaints) Act 1993 (Cth) and s 124 of the Industrial Relations Act 1996. This legislation, as varied from time to time, governs the superannuation rights and obligations of the parties". (b) if appropriate, ensure that the award contains specification of an employee's earnings (e.g. "ordinary time earnings") which, for the purposes of the SGA Act, will operate to provide a "notional earnings base", and (c) if the award is to continue to prescribe a "flat dollar" amount of employer contribution, ensure that appropriate amounts are inserted so as to give effect to the levels of contribution required from time to time under the SGA Act. 11.3 The Commission may award provisions which differ from those in Principle 11.2: (a) by consent; or (b) in the absence of consent, by arbitration, provided the Commission is satisfied that there are particular factors warranting the awarding of different provisions. Such factors may include: (i) the wishes of the parties; (ii) the nature of the particular industry or enterprise; (iii) the history of the existing award provisions; (iv) relevant decisions of the Commission establishing superannuation principles; and (v) relevant statutory provisions. 11.4 Before any different provisions are awarded under Principle 11.3, either by consent or arbitration, the Commission must be satisfied, on expert evidence, that the award to be made will not contain requirements that would result in an employer not meeting the requirements imposed by the SGA Act. 11.5 Subject to s 124 of the Act, any specification of a fund will carry with it the obligation for an employer to pay contributions at such intervals as are required by the fund. 11.6 In determining applications as to specification of a fund, the Commission will, as appropriate: (a) ensure that any fund specified by it is one into which payment will meet the employer's obligations under the SGA Act; (b) have regard to the Superannuation Industry (Supervision) Act 1993 (Cth) ("the Supervision Act") which provides for the prudent management of certain superannuation funds and for their supervision by the Insurance and Superannuation Commissioner. In particular, the requirement with respect to equal representation of employers and members on what are called "standard employer sponsored funds" (Pt 9 of the Supervision Act) should be noted; (c) have regard to previous decisions of the Commission with respect to the specification of a fund or funds; and (d) have regard to relevant statutory provisions. 11.7 Due to the variety of existing award superannuation provisions and the impact and complexity of the SGA Act, all applications to the Commission may not be capable of being dealt with in accordance with the approach set out above. In any such case it may be appropriate for the application to be dealt with as a special case.

[16]

Equal Remuneration and Other Conditions 12.1 Claims may be made in accordance with the requirements of this Principle 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 the work is performed, have been undervalued on a gender basis. 12.2 The assessment of the work, skill and responsibility required under this Principle is to be approached on a gender neutral basis and in the absence of assumptions based on gender. 12.3 Where the under-valuation 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, 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. 12.6 Any change in wage relativities which may result from any adjustments under this Principle, not only within the award in question but also against external classifications to which the award structure is related, must occur in such a way as to ensure there is no likelihood of wage leapfrogging arising out of changes in relative positions. 12.7 In applying this Principle, the Commission will ensure that any alternative to wage relativities is based upon the work, skill and responsibility required, including the conditions under which the work is performed. 12.8 Where the requirements of this Principle have been satisfied, an assessment shall 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 reflect the wages and conditions of employment previously fixed for the work and the nature and extent of the undervaluation established. 12.9 Any changes made to the award as a result of this assessment may be phased in and any increase in wages may be absorbed in individual employees' overaward payments. 12.10 Care should be taken to ensure that work, skill and responsibility which have been taken into account in any previous work value adjustments or structural efficiency exercises are not again considered under this Principle, except to the extent of any undervaluation established. 12.11 Where undervaluation is established only in respect of some persons covered by a particular classification, the undervaluation may be addressed by the creation of a new classification and not by increasing the rates for the classification as a whole. 12.12 The expression "the conditions under which the work is performed" has the same meaning as in Principle 8.2, Work Value Considerations. 12.13 The Commission will guard against contrived classification and over classification of jobs. It will also consider: (a) the state of the economy of New South Wales and the likely effect of its decision on the economy; (b) the likely effect of its decision on the industry and/or the employers affected by the decision; and (c) the likely effect of its decision on employment. 12.14 Claims under this Principle will be processed before a Full Bench of the Commission, unless otherwise allocated by the Chief Commissioner. 12.15 Equal remuneration shall not be achieved by reducing any current wage rates or other conditions of employment. 12.16 In arbitrating an application made under this Principle, the Commission is required to determine whether or not future State Wage Case general increases will apply to the award.

State Wage Case 2018 [2018] NSWIRComm 1063

At a glance

Court

Decision date

Source

Judgment (22 paragraphs)

Legislation Cited (7)

Cases Cited (16)

Cited By (2)