State Wage Case 2020 (No 2) [2021] NSWIRComm 1079

Solicitors/Representatives: Mr T Costa (Unions NSW) Ms K Smith, Crown Solicitor (IR Secretary) Mr A Dansie (LGNSW) Mr T Kiat (APA) File Number(s): 2020/184245 Publication restriction: No

decision

1. Following the publication of the decision of the Minimum Wage Panel of the Fair Work Commission ("FWC") in Annual Wage Review 2019-20 [2020] FWCFB 3500 ("AWR 2020") on 19 June 2020, the Commission directed the Acting Industrial Registrar, Mr Brendan Bellach, to issue a Summons to Show Cause to various industrial parties.
2. Amongst other things, the Summons, dated 22 June 2020, called upon the parties to show cause why the Commission should not take such action as it thought proper pursuant to Pt 3 of Ch 2 of the Industrial Relations Act 1996 (NSW) ("IR Act") and cl 4 of the Wage Fixing Principles ("WFPs") as determined in the State Wage Case 2019 [2019] NSWIRComm 1065 ("SWC 2019") as set out in Annexure A to Annexure 1 of SWC 2019 ("2019 WFPs").
3. At the directions hearing in relation to the Summons before the Chief Commissioner on 28 October 2020, Unions NSW sought a review of the WFPs as part of the State Wage Case for 2020. The Commission accepted the submission of Unions NSW that, in the interests of ensuring that wage increases in 2021 were passed on in a timely fashion, any changes to the 2019 WFPs should be dealt with separately from increases to the rates of pay and work-related allowances in awards subject to State Wage Case adjustments.
4. Pursuant to sub-s 50(1) of the IR Act, the Commission should adopt the "principles or provisions" of a National decision "unless [the Commission is] satisfied that it is not consistent with the objects of this Act or there are other good reasons for not doing so… for the purpose of awards and other matters under this Act". If the proviso in sub-s 50(1) applies, it is open under sub-s 50(3) for the Commission to adopt the National decision partly, with modification, or only for particular awards.
5. On 2 March 2021, the Full Bench issued a decision, State Wage Case 2020 [2021] NSWIRComm 1015 ("SWC 2020") which: 1. adopted the AWR 2020 as a National decision in relation to 15 industrial awards ("Relevant Awards"), nine of which the Commission was informed were subject to the NSW Public Sector Wages Policy 2011 ("PSWP 2011") and six of which the Commission was informed were not subject to the PSWP 2011; and 2. made orders under s 52 of the IR Act by consent varying the rates of pay and work-related allowances in the Relevant Awards by between 0.3% per annum and 2.5% per annum.
6. The nine Relevant Awards which the Commission was informed were subject to the PSWP 2011 are: 1. Security Industry (State) Award; 2. Motels, Accommodation and Resorts, &c. (State) Award ("Motels' Award"); 3. Restaurants &c., Employees (State) Award ("Restaurants' Award"); 4. Shop Employees (State) Award; 5. Miscellaneous Workers - Kindergartens and Child Care Centres, &c. (State) Award; 6. Health, Fitness and Indoor Sports Centres (State) Award; 7. Transport Industry (State) Award; 8. Miscellaneous Workers Home Care Industry (State) Award; and 9. Clerical and Administrative Employees (State) Award ("PSWP Awards").
7. The six awards which the Commission was informed were not subject to the PSWP 2011 are: 1. Marine Charter Vessels (State) Award; 2. Local Government (Electricians) (State) Award; 3. Nursing Homes, &c., Nurses' (State) Award; 4. Entertainment and Broadcasting Industry - Live Theatre and Concert (State) Award; 5. Local Government Aged Disability and Home Care (State) Award; and 6. Nurses' (Private Sector) Training Wage (State) Award ("Non-PSWP Awards").
8. The parties filed position papers for the purposes of conciliation in relation to the review of the WFPs on the following dates: 1. Unions NSW on 1 March 2021; 2. Australian Paramedics Association (NSW) ("APA") on 3 March 2021; 3. Local Government NSW ("LGNSW") on 8 April 2021; and 4. the Industrial Relations Secretary ("IR Secretary") on 15 April 2021 ("IR Secretary's First Position Paper").
9. On 20 April 2021 the parties met to conciliate in respect of any changes to the 2019 WFPs. At the conciliation a question arose as to the correct interpretation of s 50 of the IR Act.
10. Following the conciliation, a process was established allowing for the parties to file further submissions including as to the interpretation of s 50 of the IR Act, following which the Full Bench would draft proposed revised WFPs ("Proposed RWFPs"), and then the Full Bench would convene a hearing to hear oral submissions from the parties on the Proposed RWFPs and other changes to the WFPs sought by the parties.
11. The parties filed further submissions in respect of changes to the 2019 WFPs as follows: 1. the APA on 4 May 2021 ("APA's Further Submissions"); 2. Unions NSW on 5 May 2021 ("Unions NSW's Further Submissions"); 3. Local Government NSW on 18 May 2021; and 4. the IR Secretary on 18 May 2021.
12. Having considered the submissions filed by each of the parties the Full Bench drafted the Proposed RWFPs. These were forwarded to the parties as an attachment to an email sent by the Industrial Registrar on 23 June 2021.
13. In her email of 23 June 2021, the Industrial Registrar informed the parties: 1. the changes proposed to the WFPs were not confined to those referred to in the parties' submissions and included the suggested removal of Principle 7 - Minimum Wage for Award/Agreement Free Employees and Principle 10 - Enterprise Arrangements; 2. the proposed changes and deletions reflected matters or concerns identified by the Full Bench, including as a consequence of changes to the Commission's jurisdiction since the WFPs were last reviewed in 2010; and 3. in addition to the changes proposed, the Full Bench was giving consideration to removing Principle 11 - Superannuation (Principle 9 in the Proposed RWFPs) and Principle 13 - Economic Incapacity (Principle 11 in the Proposed RWFPs) and the Full Bench invited the parties to make submissions on the ongoing utility of these WFPs and any proposed amendments should these WFPs be retained.
14. On 13 July 2021, the IR Secretary filed written submissions in response to the Proposed RWFPs ("IR Secretary's Third Submissions").
15. On 14 July 2021, the parties made oral submissions in response to the Proposed RWFPs.
16. During the hearing on 14 July 2021, Unions NSW and the IR Secretary each agreed to file with the Commission a research note on Principle 10 - Enterprise Arrangements.
17. On 28 July 2021, Unions NSW filed a document titled "Unions NSW Submissions concerning the Enterprise Arrangements Principle" ("Unions NSW's Enterprise Arrangements Submissions").
18. On 29 July 2021 the IR Secretary filed a document titled "Note Regarding Wage Fixing Principle 10 - Enterprise Arrangements".
19. The parties, in their submissions, refer to the "NSW public sector". In this decision, the Full Bench has used this term to mean: "employees who are subject to 'The NSW Public Sector Wages Policy 2021' ("PSWP 2021")". PSWP 2021 states that it "applies to the government sector, including Public Service agencies, Departments, Executive agencies, and independent statutory bodies, including employees and staff identified in sub-s 5(1)(b)-(f) of the Government Sector Employment Act 2013'".

Existing WFPs - aims and content

1. Before setting out the history and development of the WFPs, it is useful to summarise the relevant 2019 WFPs.

The Preamble

1. The four primary aims of the WFPs are set out in the Preamble: 1. to provide a framework for wages and employment conditions in the government and local government sectors of New South Wales to remain fair and reasonable, and economically sustainable having regard to the objects of the IR 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. to provide a framework that accommodates the interests of employers and employees and their representatives and ensure consistency of approach, certainty and predictability as to fixation of wages and the setting of employment conditions [2] ; 3. to maintain up to date pay and allowances in all operative and non- operative awards within the Commission's jurisdiction [3] ; and 4. to protect the low paid [4] .
2. Sub-principle 1.3 provides that movements in wages and conditions must fall within the WFPs which provide guidance as to how awards may be varied. A key concept in the WFPs is the notion of an arbitrated case. Claims for variations in wages and conditions fall within two categories: those made in accordance with increases determined by the State Wage Case test cases or by consent, and those that do not. Those that do not may only be awarded in an arbitrated case.

Principle 2 - When an Award may be Varied or Another Award Made without the Claim Requiring Consideration as an Arbitrated Case

1. Principle 2 provides that awards may be varied without the need for an arbitrated case where the variation: includes State Wage Case increases (sub-principle 2.2 [5] and Principle 4), incorporates test case standards (Principle 3), adjusts allowances and service increments in accordance with movements in expenses or consistent with State Wage Case decisions (Principle 5), is by consent or by way of approval of an enterprise arrangement (Principle 10), or addresses undervaluation on a gender basis (Principle 12).

Principle 3 - Test Case Standards

1. Principle 3 provides that test case standards may be incorporated into an award and will be assessed as a special case.

Principle 4 - State Wage Case Adjustments

1. Principle 4 deals with the flow on of the AWR through State Wage Case adjustments to State awards which have only been increased by State Wage Case adjustments (sub-principle 4.2(c)).

Principle 5 - Adjustment of Allowances and Service Increments

1. Principle 5 provides for allowances which relate to work or conditions which have not changed other than by State Wage Case adjustments, to be increased by the amount of the State Wage Case adjustment.

Principle 6 - Award Review Classification Rate

1. Principle 6 sets out the process in which the Commission will correct a situation where a classification in an award is below the Award Review Classification Rate ("ARCR"). The ARCR is the rate below which no full-time adult employee, excluding trainees, apprentices and employees on a supported wage or on a probationary rate, should be paid under the relevant award. Since State Wage Case 2014 (No 2) [2015] NSWIRComm 5 ("SWC 2014 (No 2)"), the Full Bench has varied Principle 6 of the WFPs each year by updating the figure in sub-principle 6.1 to equate to the National Minimum Wage ("NMW").

Principle 7 - Minimum Wage for Award/Agreement Free Employees

1. Principle 7 provides that the minimum rate of pay of employees not subject to the terms of an industrial instrument, will be the rate of pay equal to the NMW, as varied from time to time by the FWC.

Principle 8 - Arbitrated Case

1. Although State Wage Case increases under Principle 2 have generally been unavailable to NSW public sector employees since 1991, increases in NSW public sector wages have since that time also been granted by arbitration.
2. Under the WFPs, arbitrations for improved terms and conditions must satisfy Principle 8, unless the increase is allowed elsewhere in the WFPs. The Commission will apply a series of sub-principles which require an applicant to satisfy one or more of the following: 1. Sub-principle 8.2 - Work Value Considerations, allows for award wages to be increased if it can be demonstrated that there have been changes in the nature of the work, skill and responsibility required or the conditions under which work is performed to such an extent that the changes constitute a significant net addition to work requirements so as to warrant the creation of a new classification or upgrading to a higher classification. Under sub-principle 8.2(f) "[t]he time from which work value changes in an award should be measured is the … last work value inquiry or the date of a consent award where parties have agreed pursuant to a consent award the wage increases reflect increases in work value, whichever is the later". Consent awards will be the basis for commencing a new reference period only where the parties have agreed the wage increases reflect increases in work value. 2. Sub-principle 8.3 - Productivity and Efficiency Considerations, which allows increases to be granted where the employees have made a significant contribution to productivity and efficiency measures which have delivered cost savings and/or productivity or efficiency improvements or made a substantial contribution towards the attainment of the objectives of the employer in seeking to become more competitive and/or efficient; 3. Sub-principle 8.4 - Special Case Considerations. The Special Case Principle will be met if the Commission is satisfied that a case is not an ordinary one but has special attributes which warrant its approval despite the restrictive considerations imposed generally by the Principles [6] .
3. Sub-principle 8.5 provides that claims that are based substantially on comparative wage justice, attraction and retention or community standards will only be countenanced on limited grounds.
4. Sub-principle 8.5.2 provides that an Arbitrated Case may be made out on the basis of "a cumulation of the factors referred to in this Principle". This means that an outcome under the Arbitrated Case Principle may be obtained through a multi-factor case in which particular factors satisfy particular sub-principles, but it is not necessary for the whole of a case to satisfy any particular sub-principle: Re Crown Employees (Police Officers - 2009) Award (2012) 220 IR 1 ("Re: Police Award 2009") at [36] and [77].

Principle 9 - Negotiating Principles

1. Principle 9 sets Negotiating Principles which apply to claims that fall within the Arbitrated Case Principle and requires parties to awards to negotiate claims for increases within set timeframes and in good faith.

Principle 10 - Enterprise Arrangements Principle

1. Principle 10 provides for the approval of "Enterprise Arrangements". This Principle was introduced under the Industrial Relations Act 1991 (NSW) in the State Wage Case (1991) 36 IR 362 ("SWC 1991") to support "re-direction of industrial relations in New South Wales towards enterprise negotiation and agreements" [7] . It appears that the Full Bench intended that an "enterprise arrangement" and hence the new Enterprise Arrangements Principle, was to encompass all forms of agreements achieved through enterprise bargaining which, at that time, included: 1. enterprise agreements made and registered with the Commission pursuant to Part 1C of the Industrial Arbitration Act 1940 (NSW); 2. industrial agreements made under s 11 of the Industrial Arbitration Act 1940 (NSW); 3. agreements between parties to enterprise or establishment awards; and 4. agreements by parties at enterprise level facilitated by clauses prescribed in awards pursuant to the Structural Efficiency principle, which was then contained in the WFPs. [8]

Principle 11 - Superannuation Principle

1. Principle 11 provides: 1. that applications for superannuation allowances over and above what is statutorily required under the Superannuation Guarantee (Administration) Act 1992 (Cth) ("SG Act") will be dealt with under the Special Case sub-principle (sub-principle 11.1); 2. for the inclusion of "pro forma" or other provisions in awards that assist employees and employers understand their entitlements and obligations regarding superannuation, respectively (sub-principles 11.2 and 11.2); and 3. the circumstances by which the "pro forma" provisions will be departed from in favour of other provisions (sub-principle 11.3).

Principle 12 - Equal Remuneration and Other Conditions

1. Principle 12 sets out the requirements for claims made to rectify under-valuation of roles on the basis of gender.

Principle 13 - Economic Incapacity Principle

1. Principle 13 provides that an employer may apply to reduce, postpone and/or phase in the application of any increase in labour costs determined under the WFPs on the ground of very serious or extreme economic adversity. Such an application will be processed according to the Special Case sub-principle.

History of the WFPs and adoption of the National decision since the removal of the private sector from the Commission's jurisdiction

1. The parties helpfully set out the history of: the Commission's adoption of the National decision; the passing on by the Commission of wage adjustments set down by the FWC and its predecessors; and the development of the WFPs in their submissions.
2. The 2019 WFPs have their origins in the State Wage Case 1983 (1983) 5 IR 1, which adopted, in whole, the principles enunciated in the Australian Conciliation and Arbitration Commission National Wage Case - September 1983 (1983) 4 IR 429.
3. In adopting the principles of the AWR as the National decision pursuant to s 50 of the IR Act, the Full Bench of the Commission must take into account the nature of that decision is the setting a safety net of fair minimum wages [9] , and whether it is consistent with the objects of the IR Act as set out in s 3, or whether there are other good reasons for not adopting the decision. Central to the union parties' submissions about material changes to the WFPs is whether the AWR should be passed on to all employees within the jurisdiction of the Commission.
4. As early as 1993, in State Wage Case - December 1993 (1993) 52 IR 157 ("SWC December 1993"), the Commission decided that the safety net adjustment provided by the National decision should not be applied to paid rates awards.
5. In State Wage Case - June 1998 (1998) 79 IR 416 unions urged the Commission not to adopt a new federal principle which effectively prohibited the insertion of the safety net increases in federal awards which had been varied above the safety net (an early iteration of what is now sub-principle 4.2(c)). The Commission considered there to be a "general rule that safety net adjustments should be absorbed into all increases other than safety net, minimum rates and State Wage Case adjustments [this being] a state of affairs which is embodied in the existing New South Wales principles". [10]
6. By 2010, the Full Bench decided that there was no scope to adopt federal wage fixing principles because there were none. [11] The Full Bench in State Wage Case 2010 [2010] NSWIRComm 183 ("SWC 2010") stated: "28. … we do not consider it to be an option to abandon the concept of wage fixing principles in order to follow the federal example. Whilst federally such principles may have no utility because of the federal approach to wage fixing and the absence of access to arbitration in the ordinary course, that is not the case under New South Wales law."
7. In SWC 2010, the Commission adopted some provisions of the AWR as a "National decision" within the meaning of ss 48 and 50 of the IR Act for the first time following Fair Work Australia's inaugural Annual Wage Review 2009-10 [2010] FWAFB 4000, (2010) 193 IR 380 ("AWR 2010") stating "29 … we will adopt those provisions of the National decision where we are satisfied that it is consistent with s 50, but we intend to retain the concept of wage fixing principles, albeit amended principles that conform to the changed circumstances we have identified in this decision."
8. The Full Bench responded to the AWR 2010 in three ways: (1) it raised the State Minimum Wage; (2) it increased the ARCR as set in the WFPs (which is explained at [57] below); and (3) it varied the rates and allowances in all awards "other than those awards which contain wage increases awarded since 29 May 1991 which were not safety net, State Wage Case or minimum rates adjustments". [12]
9. The Full Bench in SWC 2010 also recognised that the State Wage Cases had little impact on wages of public sector employees at that time because State Wage Case increases had been inapplicable to awards that had been the subject of pay increases other than safety net increases, State Wage Case adjustments or minimum rates adjustments since 1991. [13]
10. In SWC 2010, Unions NSW argued, amongst other things, that the NSW Public Sector Wages Policy 2007 ("PSWP 2007"), the predecessor of the PSWP 2011, which provided for a basic increase of 2.5 per cent per annum and any increases above this to be funded by employee-related cost offsets, [14] caused the following issues: "(a) The 2.5% has applied regardless of the inflation rate and cost of living changes which have occurred, with the result that it has not served to maintain real wages/salaries. (b) Consequently, unions and their members have, in order to maintain the real value of employees' incomes, been compelled to engage in the process of identifying direct cost offsets to fund additional wage/salary increases. (c) In many cases, such offsets have been difficult to identify, or have required the surrender or diminution of existing conditions of employment and other benefits. (d) Employees have not been unable [sic] to obtain any reward through their remuneration for changes in work value, productivity or efficiency where these have not generated immediate cost savings. (e) The narrow parameters of the Wages Policy and the requirement for approval of increases above 2.5% by the Budget Committee of Cabinet has led to significant problems in negotiations, including extensive delay and a lack of negotiating authority on the part of those representing NSW Government departments and agencies. (f) The Wages Policy has been applied to State-Owned Corporations and other public sector business entities which operate commercially and are not funded by Treasury. This has meant that such entities have been prevented from entering into wages/salaries agreements which they can well afford without any burden on NSW Government finances." [15]
11. Unions NSW proposed in those proceedings that the WFPs should have a number of new or significantly revised features to overcome the issues set out at [47] namely: 1. A new Economic Adjustment Principle, which was intended to replace the existing Principle 8, State Wage Case Adjustments, and to have practical application to all employees in the Commission's jurisdiction and provide a mechanism by which the real value of employees' wages/salaries may be protected against changes to the cost of living. 2. A new Arbitrated Case Principle, which would govern contested applications for increases above the basic economic adjustment. It was to replace the existing Special Case and Work Value Principles and would permit the consideration of claims having regard to a wide range of factors, most notably work value, productivity and efficiency. 3. A modified Minimum Wage Principle, which would explicitly link the State Minimum Wage to the National Minimum Wage. 4. A new set of Negotiating Principles designed to apply in the specific public and local government context. [16]
12. The Full Bench in SWC 2010 accepted that the WFPs required some amendment in order to "have regard to the relevant contemporary circumstances" [17] and made the following remarks: "87 … the Wage Fixing Principles have served the Commission and the parties well over long periods of time. The rationale underpinning the Principles has not fundamentally changed. The Principles provide a coherent set of rules that ensures consistency of approach by the wage fixing tribunal and certainty and predictability in respect of the fixation of wages and the setting of employment conditions. They also ensure that employment conditions are regulated in a way that is economically sustainable. 88 … over the 27 years since the State Wage Case 1983 circumstances have changed and whilst no party sought the abandonment of the Principles it is clear to us that the Principles are in need of refinement. … 90 … the public sector now makes up the bulk of the Commission's jurisdiction… in the order of 320,000. 91 In respect of those employees, the government has chosen to apply a Wages Policy. Although that Policy finds no favour with unions, … it is a Policy the government is entitled to promulgate and pursue. In developing Wage Fixing Principles, the Policy is an important part of the industrial context that needs to be factored in. 92 A further context is the more favourable economic conditions that currently prevail, combined with public sector awards being of a substantially paid rates nature. If, of course, the context changes so may any wage fixing principles. 93 The other major sector subject to the Commission's jurisdiction is local government which consists of about 44,000 employees. Obviously, any new Principles have to be designed to cater for this important sector. The local government sector has an enviable record of consent awards stretching back to 1992. Nothing that is proposed should affect the arrangements in that industry that have benefited employers and employees alike over a long period of time." [18]
13. In a similar process as now, the Commission drafted new WFPs and directed the parties to respond to the proposed draft. The parties provided submissions in response to the proposed draft new WFPs which the Full Bench considered.
14. The Commission made the revised WFPs on 25 March 2011 in State Wage Case 2010 (No. 2) [2011] NSWIRComm 29 ("SWC 2010 (No 2)") ("2010 WFPs"). In so doing, the Full Bench considered the changes to the jurisdiction of the Commission following the enactment of the Industrial Relations (Commonwealth Powers) Act 2009 (NSW) [19] . This is reflected in the aims of the 2019 WFPs [20] .
15. In SWC 2010 (No 2) the Full Bench also "factored in" [21] the impact of the PSWP 2011, albeit that the Commission at that time was not obliged to give effect to the PSWP 2011, as s 146C of the IR Act and the Industrial Relations (Public Sector Conditions of Employment) Regulation 2011 ("PS Regulation 2011") only commenced on 16 and 20 June 2011 respectively [22] .
16. The 2010 WFPs included most of the amendments sought by Unions NSW, with the exception of an "Economic Adjustment Principle". The Full Bench saying: "… The modification appears to have been an afterthought and insufficient justification has been provided to support such an amendment. The LGSA raised a number of objections including that it is contrary to the objects of the Act and inconsistent with other Wage Fixing Principles, it would result in double counting, it is unnecessary, it would result in the ratcheting up of labour costs over time and it is against the public interest. There is some merit in these objections and in the absence of any proper debate in respect of those objections and the concept generally of the Unions NSW proposal, we reject the proposed modification." [23]
17. The Director of Public Employment and LGNSW (formerly referred to as "LGSA") objected to the introduction of the "Productivity and Efficiency Considerations" sub-principle. [24] However, the Full Bench included these as sub-principle 8.3 and stated: "... There are some issues that have been raised in the submissions that may require further consideration, and some which may be considered fundamental to an exercise of discretion in determining a productivity case. We have decided that the appropriate course is to leave the proposed Principle in its current form and to consider, as appropriate, the issues of the kind raised by the DPE and LGSA on a case-by-case basis rather than attempt to predetermine such matters in a vacuum. In this way the Commission will be able to consider the issues in the context of the case before it and to develop and refine the Principle accordingly if that is where the cases lead. In the meantime, we are satisfied the proposed Principle provides an appropriate initial framework in which to consider claims to which the Principle is directed." [25]
18. In SWC 2010 (No 2) sub-principles 4.1 and 4.2 dealing with State Wage Case adjustments were introduced to the WFPs. These included sub-principle 4.2(c) which is in the following terms: (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.
19. Since 2010, all adjustments to awards ordered as part of State Wage Cases have been by consent and have been made only to minimum wage awards. Further, rather than a single "general order" [26] being made for a State Wage Case adjustment which would apply to "all relevant New South Wales awards" [27] , differential orders have been made by reference to specific awards which have not been increased, other than by State Wage Case adjustments.
20. In this period, with limited exceptions, being the employees whose employment is or was covered by the PSWP Awards referred to in [6] above, the rates of pay and allowances of NSW public sector employees, and statutory bodies representing the Crown, have not been increased in accordance with State Wage Case adjustments but have, in the main, increased by 2.5% by consent. Employees of local government entities have not received State Wage Case adjustments as they have been in receipt of increases negotiated between the unions and the employers.
21. The 2010 WFPs form the substance of the 2019 WFPs which are the subject of this review. The practice of reviewing the WFPs as part of the State Wage Case has continued over the past decade, to a much lesser extent than that which occurred in SWC 2010 (No 2) but there have been few changes of substance to the WFPs in that time.
22. One material change since 2010 was that the Commission accepted in SWC 2014 (No 2) that the ARCR should equate to NMW. Since SWC 2014 (No 2), the Full Bench has varied Principle 6 of the WFPs each year by updating the figure in sub-principle 6.1 to equate to the NMW.
23. From State Wage Case 2014 [2015] NSWIRComm 4 ("SWC 2014"), the Commission's annual State Wage Case orders have also provided that adjustments are to be offset against any equivalent over award payments and/or award wage increases other than State Wage Case adjustments.
24. Principle 7, Minimum Wage for Award/Agreement Free Employees, was varied in State Wage Case 2017 [2017] NSWIRComm 1068 ("SWC 2017") to clarify that the minimum rate of pay of employees not subject to the terms of an industrial instrument, will be the rate of pay equal to the NMW, "as varied from time to time by the Fair Work Commission". Since at least 2017 any National decision setting a NMW, flows automatically to any employees in New South Wales who are within the jurisdiction of the Commission, but are not covered by an industrial instrument, without the need for the Commission to make any special order to this effect.

The parties' positions regarding changes to the WFPs

Unions NSW

1. Unions NSW contends that the WFPs are outdated and a substantial review of the WFPs is necessary. Unions NSW asserts that the justification for such a review is found in the Commission's approach in Application for Crown Employees (Public Sector - Salaries 2020) Award and Other Matters (No 2) [2020] NSWIRComm 1066 ("Crown Salaries Case 2020"), in particular in: 1. requiring the unions to rebut the presumption that the existing awards were fair and reasonable; 2. requiring unions to provide financial analysis to justify productivity and efficiency gains to offset the increases sought; and 3. failing to have regard to the way in which s 146C of the IR Act operates over time to constrain wage increases to 2.5% where higher wages are justified in any given year.
2. Unions NSW accepts that the view taken by the Commission in the past has been that State Wage Cases have little relevance to NSW public sector awards as they have been subject to increases other than State Wage Case adjustments [28] . Unions NSW acknowledges that NSW public sector awards fall within the exception to State Wage Case adjustments in sub-principle 4.2(c).
3. Unions NSW notes however, that the words "unless the Commission determines otherwise", in sub-principle 4.2 permit an argument that the State Wage Case adjustment may be available for NSW public sector employees as these words permit the Commission to consider and determine that in any year the exclusions set out in the Principle will not apply.
4. Unions NSW submits that legislative changes over the last decade have seen the scope of the Commission's jurisdiction dramatically narrowed by the removal of private sector employees and the power to fix wages for public sector employees being constrained by the introduction of s 146C of the IR Act. Accordingly, the WFPs should take into account that: 1. the Commission's jurisdiction is now predominantly to regulate NSW public sector employment and the WFPs have not changed significantly since the scope of the Commission's jurisdiction was dramatically narrowed by the removal of private sector employees; 2. the WFPs draw heavily on notions established decades ago for the purpose of regulating wages in all sectors and the current WFPs have not been reconsidered since the amendments to the IR Act which included s146C; 3. State Wage Case increases have for some time been determined by reference to the FWC's decision arising from AWRs conducted under the Fair Work Act 2009 (Cth) ("FW Act"); 4. the majority of employees within the Commission's jurisdiction do not benefit from the presumption in s 50 of the IR Act that AWR increases will flow on to award rates of pay because the WFPs unfairly exclude NSW public sector employees from State Wage Case increases thus there is no good reason for not applying the AWR decisions to NSW public sector awards; and 5. the consent arrangements that have applied in recent years concerning movements in NSW public sector wages did not apply in 2020 or at the time Unions NSW's Further Submissions were filed. [29]
5. Unions NSW propose three alternative approaches to varying the WFPs set out below.

Option 1 - Abolish the WFPs

1. Unions NSW does not press for the abolition of the WFPs but acknowledges that an argument may be put that having two constraints, the WFPs and the declared policy pursuant to s 146C of the IR Act, is unfair and too much limitation on the requirement in s 10 of the IR Act that the Commission's awards be fair and reasonable. Unions NSW notes that one way to alleviate the purported unfairness is to abolish the WFPs and simply apply the dictates of the IR Act to public sector wages.
2. Unions NSW recognises, in favour of keeping the WFPs, that the WFPs have been a long-standing aid in the exercise of the Commission's discretion and point to the extracts from SWC 2010 set out above at [49] in support of keeping the WFPs.

Option 2 - Varying the principles to permit flow on of the AWR to all awards

1. Unions NSW submits that the matters set out in [65] above are best addressed by the Commission removing the restriction on public sector awards receiving increases in wages equal to the increases in the modern award rates in the AWR and by reviewing other Principles to permit claims above the AWR.
2. The annual State Wage Case should consider, in accordance with s 50 of the IR Act, whether, in any particular year, there is good reason for not applying the AWR decision for all employees in the jurisdiction rather than excluding those for whom increases other than State Wage Case adjustments have been made. This would include consideration of whether any declared policy affects the jurisdiction to flow on the AWR.

Option 3 - Varying the Principles to Maintain the Real Value of Wages

1. Unions NSW suggest a third approach whereby the WFPs are amended to provide for annual increases which maintain, as a minimum, the real value of wages. Unions NSW submits that the WFPs should be varied to allow this to occur whether or not Option 2 is accepted by the Full Bench.
2. In Unions NSW's Further Submissions, it sets out the three changes to the WFPs it proposed to the Full Bench in the review of the WFPs conducted in SWC 2010 which are referred to at [48] above: a new Economic Adjustment Principle; a revised Arbitrated Case Principle; and, a new set of Negotiating Principles. Unions NSW proposes similar amendments now and says that the changes since 2010 and the approach taken by the Commission in the Crown Salaries Case 2020 justify these amendments at this time.
3. Unions NSW proposes an Economic Adjustment Principle to apply to all awards in the Commission's jurisdiction which would protect the real value of wages against inflation. Such a principle was rejected by the Full Bench in SWC 2010 (No. 2) [30] . Unions NSW argues that the Crown Salaries Case 2020 and the other matters at [62] and [65] evidence the necessity of this principle at this time.
4. Unions NSW also seeks a variation to the Arbitrated Case Principle similar to what it sought in 2010 to permit further claims having regard to a wider range of factors, including attraction and retention issues, and labour market issues in addition to work value, and productivity and efficiency.
5. Unions NSW again proposes revising the negotiating principles to encourage negotiations towards consent awards for public sector and local government employees. These proposed changes include the commencement of negotiations three months before the expiry of existing awards, the involvement of union delegates in negotiations, representation by persons with authority, timely responses to claims, and a right to access the Commission for assistance by way of conciliation and arbitration.
6. Annexed to Unions NSW's Further Submissions is a revised set of WFPs which include the matters set out above. Many of the other proposed changes were not explained in the oral or written submissions of Unions NSW. The Full Bench has had regard to the revised set of WFPs but has concentrated its consideration on the matters raised by Unions NSW in its oral and written submissions.

Unions NSW's submissions in response to the Proposed RWFPs

1. At the hearing following the circulation of the Proposed RWFPs, counsel for Unions NSW, Mr Slevin, acknowledged that the Commission had not included in the Proposed RWFPs, automatic access to the State Wage Case adjustment and the passing on of the AWR each year for NSW public sector employees [31] , nor changing the Arbitrated Case Principle to permit access to a cost of living adjustment, without needing to meet the other requirements in the Arbitrated Case Principle, as proposed by Unions NSW.
2. Mr Slevin reiterated Unions NSW's concern that the hurdles imposed by the Arbitrated Case Principle are too high and do not meet the fair and reasonable test. He asserted that the Productivity and Efficiency sub-principle places too high an onus on the applicant and the Special Case sub-principle requires that if a consent position cannot be reached then unions must prove each year that the circumstances require special consideration in order to obtain an annual cost of living wage increase.
3. On the basis that the Full Bench had indicated in the Proposed RWFPs that it was unlikely that it would accept Unions NSW's proposal to pass on the AWR automatically to public sector or any employees. Mr Slevin proposed an alternative change to clarify further sub-principle 4.2(c), namely to specify that only the 15 awards referred to at [5(1)] above will receive State Wage Case adjustments and the flow on of the AWR. Mr Slevin did not address whether the Commission should deal differently with awards which are subject to policies declared pursuant to s 146C of the IR Act.
4. Unions NSW did not make submissions about the Commission's proposal to remove Principle 7 - Minimum Wage for Award/Agreement Free Employees and Principle 13 - Economic Incapacity.
5. Unions NSW does not support, and sees no reason for, the Commission's proposal to remove the Enterprise Arrangements Principle or the Superannuation Principle. Mr Slevin submitted that currently there are only five gateways to arbitration in the WFPs: the Arbitrated Case Principle which includes the three sub-principles, the Enterprise Arrangements Principle, which he says allows for arbitration at sub-principle 10.7, and the Superannuation Principle, which he says allows for arbitration at sub-principle 11.1. Unions NSW does not support any reduction in access to arbitration in the WFPs.

Principle 10 - Enterprise Arrangements

1. Unions NSW says that the Enterprise Arrangements Principle, at sub-principle 10.7, provides access to conciliation and to arbitration without needing to meet the hurdles in the Arbitrated Case Principle. Sub-principle 10.7 is in the following terms: 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. (Emphasis added)
2. Mr Slevin submitted that sub-principle 10.7 should be read such that arbitration "in accordance with these Principles and the Act" does not mean in accordance with the WFPs generally but in accordance with the "Enterprise Agreement Principle". This interpretation supports Unions NSW's submission that the Enterprise Arrangements Principle is itself a gateway to arbitration. Mr Slevin referred to sub-principle 2.1 in support of this interpretation which provides that where an application is made to vary an award or make a new award "to approve an enterprise arrangement reached in accordance Principle 10" it may be made without requiring consideration as an Arbitrated Case.
3. Mr Slevin agreed with a proposition put by Commissioner Sloan at the hearing that "the enterprise arrangements principle is somewhat of an anachronism", because under the current legislation the parties can either agree to the terms of an enterprise agreement in accordance with the IR Act, or if they cannot reach agreement, they may make an application to the Commission for an award, and even if the Enterprise Arrangements Principle, and in particular sub-principle 10.7 were retained, the outcome of the arbitration will not be anything other than an award. However, Mr Slevin continued to press for the retention of the Enterprise Arrangements Principle.
4. Following the hearing, Unions NSW conducted a review of the Commission's awards to establish the level of use of the Enterprise Arrangements Principle. Unions NSW identified nine enterprise awards which remain in effect within the jurisdiction of the Commission. The Broken Hill City Council Consent Award 2018 is the only award which makes direct reference to the Enterprise Arrangements Principle. [32]
5. Unions NSW's review also referred to three cases since 2000 in which the Enterprise Arrangements Principle was referenced: Australian Jockey Club Track Maintenance and Ancillary Staff Royal Randwick Award 2001 [2001] NSWIRComm 191, Seamen's Union of Australia, New South Wales Branch and Anor and Captain Cook Cruises (NSW) Pty Ltd [2005] NSWIRComm 360 ("Captain Cook Cruises"), and New South Wales Local Government, Clerical, Administrative, Energy Airlines and Utilities Union v Warringah Council [2015] NSWIRComm 1012 ("Warringah").
6. Unions NSW submits that the awards and decisions referred to in [86] are evidence that the Enterprise Arrangements Principle has played, and continues to play, a role in the Commission's award making process and it cannot be described as moribund.
7. Unions NSW does not support the alternative proposal made at the hearing to retain only sub-principle 10.7 as, it submits, to do so would result in a mechanism permitting conciliation and arbitration in an ill-defined way.

Principle 13 - Superannuation

1. Unions NSW does not support the Commission's proposal to remove the Superannuation Principle. Unions NSW says that if there is a claim in relation to superannuation then under the 2019 WFPs it will automatically proceed to arbitration under the WFPs. The removal of the Superannuation Principle would require the moving party to establish a Special Case for the arbitration to proceed.
2. Unions NSW agrees with the IR Secretary's submissions against the removal of the Superannuation Principle summarised at [143] below. Responding to questions from Commissioner Sloan about the appropriateness of the Commission dealing with the increasingly complex area of superannuation under the federal legislation, Mr Slevin noted that this matter is accommodated by sub-principle 11.6(d), which requires the Commission to have regard to relevant statutory provisions and the question of choice of funds is accommodated by sub-principle 11.6(c).

Principle 4 - State Wage Adjustments

1. The APA submits that each AWR should trigger a process under sub-s 50(1) of the IR Act whereby it is presumed that the principles and provisions of that National decision will be adopted with respect of all awards under the Commission's jurisdiction. The presumption will be rebutted if to do so would be inconsistent with the objects of the IR Act or there is some other good reason against doing so. This should include, but not be limited to, State Wage Case adjustments for all awards including public sector awards consistent with the increase determined by the AWR.
2. Read in this context, sub-principle 4.2(c) of the WFPs sets out an exception to this approach that is consistent with the provision in s 50(1). The fact that an award has already been adjusted in the relevant period is presumed by sub-principle 4.2(c) to be a good reason not to adopt the principles or provisions of a National decision with respect to that award, or to render doing so inconsistent with the objects of the IR Act.
3. The APA submits that sub-principle 4.2(c) should not be read to exclude an award from a State Wage Adjustment solely on the basis that the award has in its entire history had its wage rates otherwise increased. Such a broad interpretation would put the clause at odds with the intent of Ch 2 Pt 3 of the Act. Such an approach, the APA submits, is coherent with the balance of the WFPs, which directs the parties to how wage increases can be sought in addition to increases that reflect generalized economic conditions by reference to specific productivity, work value or other special changes within a workplace.
4. The APA submits further that the threshold for employers to make out a case for the reduction, postponement or phasing in of any increase determined under the WFPs under Principle 13 - Economic Incapacity on the ground of "very serious or extreme economic adversity" should apply to employers who wish to make the same submission in response to a wage adjustment application.
5. The balance of APA's submissions concentrates on sub-principle 8.3, Productivity and Efficiency Considerations and changes in respect of good faith bargaining and negotiation.

Sub-principle 8.3 - Productivity and Efficiency Considerations

1. Sub-principle 8.3 provides that measures may be relied on to support an arbitrated wage increase "provided that such measures, savings or improvements have not already been taken into account in previous wage adjustments."
2. Under sub-principle 8.3 the applicant for an award is required to identify productivity and efficiency measures that: 1. have delivered substantial costs savings; and/or 2. productivity or efficiency improvements; or 3. have made a substantial contribution towards the attainment of the objectives of the agency or department in seeking to become more competitive or efficient.
3. The APA submits that (2) and (3) above should not require the demonstration of cost savings. They are inquiries directed at the capacity of an agency to attain its objectives with a given amount of resources. Such improvements should be considered by reference to the counter-factual, i.e. the likely position if the workplace change is not implemented. Measures may indirectly lead to cost savings, in the sense that without the productivity or efficiency measure being implemented, the improvement or maintenance of service delivery would not be possible without increasing the resourcing available to the agency. However, cost savings need not be directly or strictly demonstrated to meet the requirements of sub-principle 8.3. Whether such savings exist only becomes a necessary question when the wage increase is large enough to attract the application of cl 6(1)(a) of the PS Regulation 2014.
4. The APA submits that the submissions in [98] above appear to have been accepted by the Full Bench in the Crown Salaries Case 2020, which at [54] cited the Full Bench's consideration of the sub-principle in Re: Police Award 2009, which relevantly at [513(b)] noted that in recognising the more efficient attainment of the Crown's objectives, the sub-principle: "appears to recognise that Government departments and agencies providing services to the public may have their productivity and efficiency measured by reference to their service objectives, rather than just by reference to notions of cost and profit which would apply to a private sector business."
5. Later in the Crown Salaries Case 2020, the Full Bench accepted the employers' submission that the case under sub-principle 8.3 should be rejected. After summarising the employers' submissions, the Full Bench concluded at [59]: "We accept the Employers' submissions. The position advanced by the Applicants effectively asks the Commission to accept, without any financial analysis, that the putative productivity and efficiency gains would at least offset the increases claimed in the Joined Applications. That does not properly discharge the onus that the Applicants bear."
6. The APA asserts that it is possible for this statement by the Full Bench to be mistakenly understood as setting a precedent that cases run under sub-principle 8.3 must include financial analysis showing that the putative productivity and efficiency gains would at least offset the increases claimed.
7. To avoid potential confusion, the APA submits that the sub-principle should clearly state that demonstrations of productivity and efficiency improvements need not include any direct evidence of cost savings or notions of cost and profit which would apply to a private sector business. Rather, consideration will be given to the objectives of the employer, most likely a government sector agency with objectives relating to matters such as service delivery, policy development, integrity, public health outcomes, and other matters of public interest.
8. The APA asserts that claims made by a government agency regarding the efficiency or productivity outcome expected of a particular workplace change when consulting with unions about such change should be able to be relied upon by unions bringing claims under sub-principle 8.3. Often, only the agency responsible for the workplace change will be able to measure its success in terms of efficiency or productivity after implementation. If such post-implementation evaluation is not performed by an agency, its claims during an arbitrated wage claim that predicted efficiency outcomes never eventuated should be viewed with suspicion. The APA submits that the sub-principle could be strengthened to recognise these matters.
9. The APA submits that the intention of sub-principle 8.3 is similar to sub-principle 8.2(f), relating to work value changes referred to above at [30(1)]. A sub-clause with a similar intent to sub-clause 8.2(f) should be inserted into sub-principle 8.3 to clarify that productivity and efficiency improvements that are advanced in support of a wage claim will only be discounted insofar as they have been specifically: 1. accounted for in a previous decision of the Commission in relation to a wage adjustment; or 2. nominated as the basis for a wage adjustment in a consent award.
10. The APA says that the amended wording of the Productivity and Efficiency sub-principle proposed in the IR Secretary's First Position Paper and accepted by the Full Bench for the purpose of the Proposed RWFPs which is set out below at [121] and [122] does not resolve the issue. The APA suggests the following amendment: … provided that such measures, savings or improvements have not already been taken into account in previous wage adjustments by their specific and express inclusion in the reasons of the Commission for making a wage adjustment or in the terms of agreement supporting a wage adjustment by consent. [33]
11. The APA notes that the WFPs include a reference at sub-principles 1.2.1 and 12.13(a) to the requirement under sub-s 146(2)(b) of the IR Act that the Commission consider the state of the economy of NSW in exercising its award making function.
12. The APA submits that a significant component of the evidence and submissions in the Crown Salaries Case 2020 dealt with the Crown's capacity to pay the wage increases sought in the context of a significant crisis in the NSW economy.
13. The APA says that only the Crown, and not the Commission, can decide how it will spend its funds or whether it will use borrowing or revenue raising to increase its funds. The WFPs should allow for direct impacts on the NSW economy and incapacity to pay as relevant considerations and should exclude from consideration submissions and evidence regarding indirect, hypothetical impacts on the NSW economy arising from other ways the Crown or any other employer may wish to spend the same funds.

Economic Adjustment Principle

1. Consistent with Unions NSW's position, the APA asserts that the WFPs should include a presumption that the Commission will at least increase nominal wage rates to account for inflation. The APA says this is consistent with well-established principles reaffirmed in the Crown Salaries Case 2020 and an extension of the presumption that the existing wage rates under an award are fair and reasonable.

Proposed amendments to Principle 9 - Negotiating Principles

1. The APA submits that a new sub-clause should be inserted into sub-principle 9.2 of the WFPs to allow for the early provision of government information relating to matters that may reasonably relate to an award claim as follows: Representative bodies for employees employed by an agency of the Crown should be provided government information by that agency on request insofar as the information requested may reasonably relate to a future claim against the award. Such requests and the provision of information may occur before the formal commencement of negotiations for a new award. The information should only be provided on a confidential basis if it is information that would not be released by the agency if it were subject to an application for the same information under the GIPA Act." [34]

The continued utility of the Wage Fixing Principles

1. The IR Secretary submits that the current WFPs create a coherent framework by which the parties have long structured their cases to bring before the Commission and the WFPs are not, as the union parties assert, a constraint on the Commission's discretion. Rather, the WFPs are "in the nature of guidelines... and cannot add to and do not detract from the Commission's jurisdiction under the Act." [35]
2. The IR Secretary says that departing from the WFPs as guidelines would mean the potential loss of a significant amount of industrial jurisprudence. The WFPs "derive their utility from their consistent and logical application" [36] and such should not be changed without a very considered and cogent rationale.
3. The IR Secretary submits that only minimal amendment to the WFPs is required, principally in response to the AWR 2020, and to remove references to outdated matters, to better acknowledge the impact of s 146C of the IR Act on the State Wage Case adjustments and to correct typographical errors and improve expression. These amendments are set out at paragraph 64 of the IR Secretary's First Position Paper. Many of the facilitative changes are reflected in the Proposed RWFPs. The more substantive changes sought by the IR Secretary in this paper are: 1. changes to Principle 4.2 so that it reads: "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 Stale Wage Case adjustment by the making of a general one or more orders of the Commission pursuant to s 52 of the Act, subject to the following ..." The first amendment reflects how sub-principle 4.2 has been interpreted since its inception in SWC 2015 and the second acknowledges that due to the PSWP 2011 since the SWC 2014 the Commission has made more than one order to implement a State Wage Case adjustment to the relevant awards; 1. the inclusion of the following new Principle 4.2(e): The State Wage Case adjustment in relation to awards which cover public sector employees must be in accordance with the requirements of s 146C of the Act. 1. changes to Principle 5.2 so that it reads: Existing allowances which relate to work or conditions which have not changed other than by State Wage Case adjustments, including shift allowances expressed as monetary amounts and service increments will, if an order is made pursuant to s 52 of the Act and pursuant to Principle 4.2, for a State Wage Case adjustment to be made to the applicable award, be increased by the amount of the applicable State Wage Case adjustment. Such amendment would obviate the need for annual amendment to Principle 5.2 and the need to differentiate between awards which are subject of any extant declared Wages Policy, and those which are not.

Principle 4 - State Wage Case Adjustments

1. The IR Secretary submits that it is inapt to apply the AWR increase to awards which set wages above the NMW, which pursuant to Principle 7 equates to the State Minimum Wage, and which have been the product of anterior decisions of the Commission that have been premised on factors which are not aligned to those in s 284 of the FW Act. For this and further reasons discussed below, the IR Secretary does not consider that there is any need to amend Principle 4.2(c).
2. As the State Wage Case adjustment is made only to "minimum rates" awards, and not to "paid rates" awards, the IR Secretary submits therefore that even if Principle 4 was removed from the WFPs, s 50 of the IR Act would not compel the Commission to apply the AWR increase to all public sector awards. The longstanding practice of the Commission not to pass on the State Wage Case adjustments to paid rates awards does not just stem from the application of the WFPs, and sub-principle 4.2(c) in particular, but also from the correct application of the IR Act and the recognition of the nature of the National decision.
3. Section 50(1) does not mandate the adoption of the National decision, rather the Full Bench must adopt the National decision unless it is "satisfied that it is not consistent with the objects of this Act or that there are other good reasons for not doing so". The IR Secretary submits that as the purpose of the AWR is the fixing of minimum rates, there is "good reason", within the meaning of s 50(1) of the IR Act, for not adopting the AWR to paid rates awards.
4. The "provisions" of a National decision have been historically interpreted by the Commission to be the increases made to the NMW and any minimum rates awards by the AWR. [37] In the AWR 2020, the FWC ordered: 1. a national minimum wage order of $753.80 per week or $19.84 per hour [38] ; and 2. the increase of minimum wages in named modern awards by 1.75% in staggered stages. [39]
5. The IR Secretary submits that for the Commission to adopt the above "provisions" from the AWR 2020, the Commission would be limited to: 1. increasing the State minimum wage so that it equates to the NMW [40] ; 2. awarding increases to minimum wages in State minimum rates awards by 1.75% as currently occurs pursuant to Principle 4; and 3. increasing the ARCR in line with the increase awarded by the FWC, as provided for in Principle 6.
6. The IR Secretary submits that regardless of changes to the industrial legislative and wage fixing landscape, the historical distinction between the treatment of paid rates and minimum rates awards in State Wage Cases and the practice of absorbing safety net adjustments awarded federally, into all increases made in State awards, other than safety net, minimum rates and State Wage Cases adjustments, supports a conclusion that the provisions of the National decision, as that decision is currently constituted, should not and indeed cannot, be passed on to State paid rates awards.
7. This being the case, it would not be appropriate for any change to be made to the WFPs that would result in the outcome of the AWR being applied to paid rates awards, which include most awards covering the public sector.

Response to changes to sub-principle 4.2 in the Proposed RWFP

1. The IR Secretary supports the Full Bench's drafting of the proposed revised sub-principle 4.2 in that it does not make changes such that the State Wage Case adjustment would apply to all awards, as advocated for by Unions NSW and the APA. However, the IR Secretary submits that the chapeau of the proposed new sub-principle 4.2 makes the operation of sub-principle 4.2(c) unclear as, on its terms, it excludes from a State Wage Case adjustment the very awards that sub-principle 4.2(c) states are the only awards to which a State Wage Case adjustment will apply. The Secretary submits that the chapeau of 4.2 in the RWFP should be amended so that it reads as follows: Unless the Commission determines otherwise, and subject to sub-principle 4.2(c), all New South Wales awards (excluding those that are caught by Principle 4.2(c)) will be varied to include a State Wage Case adjustment by the making of one or more orders of the Commission pursuant to s 52 of the Act, subject to the following:

Sub-principle 8.3 - productivity and efficiency measures previously relied on for a wage adjustment

1. The IR Secretary supports a revision to sub-principle 8.3 as advocated by the APA to clarify the impact of previous decisions and consent awards which incorporate increases for productivity and efficiency. The IR Secretary suggested the following amendment to sub-principle 8.3 which was included in the Proposed RWFPs: 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 the time from which such measures, savings or improvements have not already been taken into account in previous wage adjustments are measured is: a) the date of the last adjustment awarded on account of productivity and efficiency; or b) the date of a consent award where parties have agreed pursuant to a consent award that the wage increases incorporate an adjustment made under this Principle; whichever is the later.
2. The IR Secretary considers that the amendment proposed by APA set out at [105] would not provide clarity and, by requiring the parties to agree on a list of specific measures in a "terms of agreement", would add a further element of complexity. The proposal would also complicate future wage negotiations by the need to revisit previous terms of agreement to determine whether improvement measures have already been counted and could lead to disputes about what was intended as being included in any such list.
3. The IR Secretary submits that his proposed amendment is much clearer in its operation as the parties' reference point for what improvements to include is a date and not a list of measures.
4. In response to the APA's concern that the IR Secretary's wording of the proposed change to the productivity and efficiency sub-principle may result in unions being pressured into accepting that an increase was due to productivity and efficiency improvements in order to receive what they regard as a cost of living increases, counsel for the IR Secretary, Ms McDonald, submitted that the union parties could bring the matter to the Commission for arbitration on the question of the basis on which the increase is being awarded to them.

A new Economic Adjustment Principle

1. The IR Secretary submits that the Commission must take care, when setting WFPs, that it does not exceed the power given to it by s 51 of the IR Act and a new Economic Adjustment Principle would constrain the powers of the Commission in a way that the legislature has not seen fit to do. Pursuant to s 10 of the IR Act, the Commission is empowered, subject to Pt 1 of Ch 4, to make awards setting fair and reasonable conditions of employment. If the legislature thought it appropriate and/or necessary for "the real value of award rates of pay" to be maintained over time "having regard to the rate of inflation and changes in the costs of living for employees" it would have said so.
2. The IR Secretary says that sub­principle 8.4 - "Special Case Considerations" allows the Commission to consider a wide range of factors when determining an arbitrated case, including changes in the real value of wages over time and a new Economic Adjustment Principle is not necessary.

Principle 6 - Award Review Classification Rate

1. The ARCR is the rate below which no full-time adult employee should be paid under the relevant award. The IR Secretary submits that the Principle should be amended to remove the need to set the rate at a specific amount each year.

Principle 7 - Minimum Wage for Award/Agreement Free Employees

1. Ms McDonald submitted that the IR Secretary has "no particular difficulty" with the Commission's proposal to remove the minimum wage for award and agreement free employees on the basis that it has no particular application in NSW at this time. However, the IR Secretary considers that it is sensible to retain a State Minimum Wage.
2. The IR Secretary submits that the Minimum Wage for Award/Agreement Free Employees Principle could be redrafted simply to adopt the NMW consistent with the ARCR in order to avoid the need to adjust it year to year.

Principle 9 - Negotiating Principles

1. The IR Secretary submits that the APA's proposed amendment to sub-principle 9.2 of the WFPs pursuant to which the Crown would be required to provide "government information ... on request insofar as the information requested may reasonably relate to future claim against the award" including before any formal commencement of negotiations for a new award, essentially on the same basis as if an application had been made under the Government Information (Public Access) Act 2009 ("GIPA Act") would exceed the power of the Commission to set wage fixing principles pursuant to s 51 of the IR Act.
2. The IR Secretary submits that Principle 9.3(c) already restricts a party from arbitrating unless they have bargained beforehand in good faith and "disclosed relevant information for the purposes of negotiation". If the party prosecuting the arbitration considers that they have not received the information they need, they may seek to obtain that information during the course of the arbitration using the compulsory processes permitted under the IR Act.

Principle 10 - Enterprise Arrangements Principle

1. The IR Secretary has no difficulty with the Enterprise Arrangements Principle being removed from the WFPs.
2. The IR Secretary refers to the purpose behind the introduction of the Enterprise Arrangements Principle, over 30 years ago, to encourage industrial parties to engage in the new process of enterprise bargaining in support of the Commission's proposal to remove the Enterprise Arrangements Principle. Given that parties may always approach the Commission to make or vary an award by consent pursuant to ss 11 and 17(3) of the IR Act, and revised Wage Fixing sub-principle 2.1(d), or the parties may make enterprise agreements pursuant to the provisions of Pt 2 of Ch 2 of the IR Act, the IR Secretary submits that it is difficult to see how the Enterprise Arrangements Principle provides any avenue to parties which is not otherwise available. Further, there is no need for the Commission to be directed to the matters it may consider when considering an application for a consent enterprise award, nor any justification for imposing on the Commission a restraint on the Commission's power to make an appropriate award by consent, in the manner prescribed by sub-principle 10.6.
3. In undertaking research in relation to the Enterprise Arrangements Principle after the hearing, the most recent decision made pursuant to the Enterprise Arrangements Principle that the IR Secretary located was made 11 years ago in Sydney Cricket and Sports Ground Trust (Maintenance Staff) Enterprise Award 2008 [2009] NSWIRComm 196. This decision confirmed that the Enterprise Arrangements Principle was satisfied (at [16]), but no other express mention of the Enterprise Arrangement Principle was made in the decision. The IR Secretary submits that it is difficult to discern whether the Enterprise Arrangements Principle had any substantive bearing on the agreement reached between the parties.
4. The IR Secretary notes that there was no cognate provision to sub-principle 10.7 in the first iteration of the Enterprise Arrangements Principle introduced by SWC 1991. The precursor to current sub-principle 10.7 was inserted into the WFPs in State Wage Case - March 1992 (1992) 41 IR 239, as sub-principle (m) in the following terms: The Commission is available to assist the parties to negotiations for an enterprise arrangement by means of conciliation in accordance with the Industrial Arbitration Act. If any party to such negotiations seeks arbitration of a matter relating to an enterprise arrangement such matter shall be referred to the President who shall, after considering the submissions of the parties, determine whether the matter should be dealt with by a single member of the Commission or by the Commission in Court Session. [41]
5. In reply to Unions NSW's assertion that sub-principle 10.7 is a gateway to arbitration, the IR Secretary referred to the meaning and application of sub-principle (m) as discussed in Re Crown Employees (Administrative and Clerical Officers) (State) Award [No 2] (1993) 52 IR 243, where the Full Bench stated: "Whilst the Enterprise Arrangements principle does provide for arbitration, such arbitration is to be understood as being arbitration to assist an otherwise consensual position. We do not see that principle as operating in other than a peripheral manner in this case."
6. The IR Secretary also referred to Captain Cook Cruises, and the observation by the Commission in relation to then sub-principle 11(g) that: "There can be no doubt that the Commission has the power to make an enterprise arrangement being an award, as a last resort, by arbitration when the parties are unable to agree to its terms."
7. The IR Secretary says that such an observation is hardly remarkable and was not dependent upon the existence of sub-principle 11(g); the arbitral power to resolve a dispute as to the terms of an award, where one or both parties want an award made, exists under the IR Act in any event. Sub-principle 10.7 simply has no work to do.
8. The IR Secretary says that this is further confirmed by the approach taken by the Commission in Warringah, a decision which is relied upon by Unions NSW in support of retention of the Enterprise Arrangements Principle. Following the termination of an enterprise agreement, the union had made an application for an interim award, which was said to be brought, amongst other bases, under the Enterprise Arrangements Principle. The Commission held that the Enterprise Arrangements Principle can only be invoked for arrangements agreed between the parties. As there was no agreement between the parties, it could not be brought on that basis. The Commission stated at [17]: "I turn first to the submission that the award sought could be made pursuant to the Enterprise Arrangements principle. I do not see that it could. That Principle applies only to arrangements agreed between parties: Principle 10.3. Here there is no such agreement. The Enterprise Arrangements principle cannot be invoked in this case."
9. The Commission proceeded to arbitrate the application for the new award under the Special Case Principle although the Commission ultimately declined the union's application.
10. In the circumstances, the IR Secretary submits that sub-principle 10.7 does not provide an avenue to arbitration beyond that which exists under the IR Act and the IR Secretary considers that the Enterprise Arrangement Principle no longer serves any useful purpose and may be removed from the WFPs.

Principle 11 - Superannuation Principle

1. The IR Secretary submits that the Superannuation Principle should be retained as it still has utility because: 1. it clarifies that applications for superannuation allowances over and above what is statutorily required under the SG Act will be dealt with under the Special Case sub-principle; 2. it provides for the inclusion of 'pro forma' or other provisions in awards that assist employees and employers understand their entitlements and obligations regarding superannuation, and ensures that awards contain a clear statement to allow for the calculation of superannuation; and 3. it sets out the circumstances by which the 'pro forma' provisions will be departed from in favour of other provisions setting out employees' and employers' entitlements.

Principle 13 - Economic Incapacity

1. The IR Secretary submits that the Economic Incapacity Principle still has a role to play and should not be removed from the WFPs.

Other amendments to the Proposed RWFPs

1. Other than as set out above, the IR Secretary agrees with the revisions in the Proposed RWFP.

Departing from the National Decision

1. LGNSW submits that the WFPs should not be amended unless there are clear and cogent reasons for doing so and Unions NSW and APA have not established a proper basis for a major review or revision of the WFPs.
2. LGNSW contends that the case outlined for change in Unions NSW's Further Submissions is substantially based on their dissatisfaction with: 1. the decision of the Commission to award only a 0.3% increase in wages to applicable NSW public sector awards in Crown Salaries Case 2020; 2. s 146C of the IR Act and the PS Regulation 2014, which limit increases in remuneration and other conditions under public sector awards to a maximum of 2.5% per annum, unless sufficient employee-related cost savings are achieved to offset the increase beyond 2.5% per annum ("Public Sector Remuneration Cap"); and 3. PSWP 2021, which purports to limit future increases in remuneration and other conditions under public sector awards to a maximum of 1.5% per annum, unless sufficient employee-related cost savings are achieved to offset the increase beyond 1.5% per annum.
3. LGNSW submits that abolishing the WFPs or substantially amending them in the manner currently proposed, will not overcome the Public Sector Remuneration Cap and therefore the union parties have not made out a reason for substantial change.
4. LGNSW also agrees with the observations of the IR Secretary that the current WFPs create a coherent framework by which the parties have long structured their cases to bring before the Commission and departing from these guidelines would mean the potential loss of a significant amount of industrial jurisprudence that has assisted the parties. [42]

Principle 4 - State Wage Case Adjustments

1. LGNSW submits that the Commission, when considering whether to adopt a National decision of the FWC pursuant to s 50 of the IR Act, may depart from the National decision. LGNSW says that sub-principle 4.1 indicates the prima facie flow-on of AWR decisions of the FWC to relevant New South Wales awards, by providing that State Wage Case proceedings are to commence with the Commission issuing a notice to the industrial parties to show cause why AWR decisions of the FWC should not be flowed on to relevant New South Wales awards, qualified by sub-s 50(1) of the IR Act.
2. LGNSW says that the Commission's discretion to adopt National decisions wholly or partly and with or without modifications, and generally for all awards or other matters or only for particular awards or other matters, is well established. Whilst in the current proceedings the focus has been on the Commission exercising its discretion to increase wage rates in New South Wales awards by a lesser quantum than the AWR decision of the FWC, it should not be overlooked that such discretion has the potential to result in the Commission increasing wage rates in NSW awards by a greater quantum than the AWR decision of the FWC [43] .
3. LGNSW submits that Principle 4 should be amended to clearly indicate: 1. which NSW awards automatically receive State Wage Case adjustments by way of a general order; and 2. when other NSW awards that do not automatically receive State Wage Case adjustments by way of a general order may nevertheless be considered for a State Wage Case adjustment upon application by an industrial party.

Sub-principle 4.2

1. LGNSW supports the position of the IR Secretary, which includes a slight rewording of 4.2.

New Economic Adjustment sub-principle

1. LGNSW does not support the inclusion of a new Economic Adjustment Principle or a mechanism by which all awards move to maintain the real value of wages, for the reasons set out by the IR Secretary, in particular that this goes beyond what the Parliament intended.
2. LGNSW submits that the maintenance of real wages is an important factor to consider when the Commission is considering whether to adopt AWR decisions and the existing WFPs and the IR Act provide ample opportunity for the non-erosion of real wages to be considered. One of the primary aims of the WFPs is to provide a framework under which wages and conditions in government and local government sectors of New South Wales remain "fair and reasonable in accordance with the requirements of the Act, and economically sustainable having regard to the obligation of the Commission to take into account the public interest and, in doing so, having 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 decision on that economy". If State Wage Case determinations were to result in real wages being eroded over time the industrial parties can bring an Arbitrated Case pursuant to the Principle 8 of the existing WFPs.

New attraction and retention sub-principle

1. LGNSW does not agree that attraction and retention should be included as a new criterion in the Arbitrated Case Principle. How employers attract and retain staff is not limited to wages. There can, and often are, many factors at play, such as fluctuations in labour market demand and supply, geographic factors, economic activity and the general health of the economy, and other variables that comprise the total reward to the employee for their labour.

Changes to sub-principle 8.3 - Productivity and Efficiency Considerations

1. LGNSW supports the amendment of sub-principle 8.3 proposed by the IR Secretary as set out at [122] above, which is included in the Proposed RWFPs, as it will ensure there is: 1. no discounting of productivity and efficiency considerations in instances where an award is varied only to reflect State Case adjustments; and 2. no double counting of productivity and efficiency considerations which have been accounted for in a previous decision of the Commission in relation to a wage adjustment.

Principle 9 - Good Faith Bargaining and Negotiating Principles

1. LGNSW submits that the APA's proposed amendment to sub-principle 9.2(a) concerning good faith bargaining and negotiation is not required. LGNSW supports the position of the IR Secretary at paragraphs [131]-[132] above. LGNSW also notes that the Commission has the power to order that Pt 21 of the Uniform Civil Procedure Rules 2005 (NSW) ("UCPR") apply to any proceedings, enabling a party to issue Notices to Produce. This, it is submitted, provides an appropriate mechanism for achieving the outcome sought by the APA without amending the WFPs.

Principle 10 - Enterprise Arrangements

1. LGNSW does not have a strong view as to whether the Enterprise Arrangements Principle should be retained but Mr Dansie of LGNSW agreed with an observation made by Commissioner Sloan at the hearing to the effect that the Enterprise Arrangements Principle is an "anachronism" given the provisions of the IR Act.
2. Mr Dansie noted that if an industrial dispute arose in relation to enterprise arrangements or agreements, then the parties have the ability to apply to the Commission for an award.
3. Mr Dansie also noted that Local Government entities, in particular county councils, typically make their applications for enterprise awards pursuant to the IR Act, not pursuant to the WFPs. LGNSW submits therefore that even if Principle 10 - Enterprise Arrangements was removed, there would not be a detrimental impact on Local Government entities being able to apply for an enterprise award under the IR Act.

Principle 12 - Superannuation

1. LGNSW does not have a strong position in relation to the Superannuation Principle but Mr Dansie noted that there are Local Government entities with enterprise awards that contain entitlements to superannuation above the minimum required by the SG Act.

Principle 13 - Economic Incapacity

1. LGNSW is strongly opposed to the removal of the Economic Incapacity Principle, despite its rare use. At the hearing, Mr Dansie referred to the use of the Economic Incapacity Principle in 2002 and 1998 and submitted that Local Government entities had contemplated the use of the Economic Incapacity Principle during COVID-19 shutdowns [44] . Mr Dansie suggested deferring removal of the Economic Incapacity Principle until a later Stage Wage Case to allow the parties to provide more considered submissions on this matter.

Is there a case to abolish or for a substantial review of the WFPs?

1. Unions NSW and the APA contend that a substantial review of the WFPs is necessary. The unions parties' reasoning as set out above, is, in essence, that the Commission's reliance on the WFPs in the Crown Salaries Case and in Applications for Variations to Crown Employees (Police Officers - 2017) Award and Paramedics and Control Centre Officers (State) Award [2021] NSWIRComm 1040 ("Police and Paramedics Awards 2020") combined with the effect of the NSW Government's Wages Policy since 2011 has led to unfair outcomes.
2. As already stated, Unions NSW noted that one option to remedy what it submitted was the unfair impact of the WFPs is to abolish the WFPs but it did not press for this outcome.
3. Abolishing or substantially amending the WFPs which are "guidelines... and cannot add to and do not detract from the Commission's jurisdiction under the [IR] Act", [45] will not overcome the effect of s 146C of the IR Act and the PS Regulation 2014. Further, it might result in the loss of a significant amount of industrial jurisprudence that has assisted parties and the Commission over many years.
4. The matters relied on by Unions NSW set out at [62] and [65] above do not affect the rationale underpinning the WFPs. The role of the Commission in wage setting has not changed so fundamentally so as to disturb the position outlined by the Full Bench in SWC 2010 at [87], reproduced at [49] above.
5. The WFPs have developed over time, in the context of relevant economic, industrial and social circumstances. Changes to the existing WFPs must continue to have regard to the relevant contemporary circumstances. [46] The WFPs should not be changed without a very considered and cogent rationale as the WFPs "derive their utility from their consistent and logical application". [47]
6. Unions NSW and the APA rely heavily on the effect of the NSW Government's Wages Policy as justification for substantial change to the WFPs. Relevantly, however, in SWC 2010 (No 2) the Full Bench "factored in" the impact of the then Wages Policy, PSWP 2011, [48] and the cap on increases to employee-related costs of 2.5% applied under that policy.
7. The current Wages Policy, PSWP 2021, purports to cap employee-related cost increases at 1.5%. However, PSWP 2021 is not a policy declared by the regulations pursuant to s 146C of the IR Act and while informing the Commission of the Government's wages decision and setting the benchmark for bargaining, it does not constrain the Commission's wage-setting power beyond the constraints that were considered by the Full Bench in SWC 2010.
8. The Full Bench acknowledges that significant restraint was imposed by it on public sector wages in the Crown Salaries Case and Police and Paramedics Awards in the specific circumstances of the Covid-19 pandemic. However, the application of the WFPs in those circumstances and the outcomes of those cases do not, of themselves, justify the abolition of the WFPs, the more fundamental changes sought by the union parties to be made to the WFPs or the essentially "default" application of the National decision. These matters are addressed below.

Principle 4 - Wage Case Adjustments

1. Unions NSW and the APA have not made out a proper reason to depart from the longstanding approach of the Commission not to pass on the AWR to paid rates awards.
2. Sub-section 50(1) does not mandate the adoption of the National decision, rather, the Full Bench "must adopt the principles or provisions of the National decision for the purposes of awards and other matters under this Act" unless it is "satisfied that it is not consistent with the objects of this Act or that there are other good reasons for not doing so".
3. Even if Principle 4 were to be removed from the WFPs, s 50 of the IR Act would not compel the Commission to apply the AWR increase to all public sector awards.
4. As the purpose of the AWR is the fixing of minimum rates, there is "good reason", within the meaning of s 50(1) of the IR Act, for not adopting the National decision with respect to paid rates awards. The AWR is not a decision which has a bearing on the fair and reasonable conditions of employment of persons employed under awards which provide for rates above minimum rates. Consistent with this, State Wage Case increases have not been applied to awards that had been the subject of pay increases other than safety net increases, State Wage Case adjustments or minimum rates adjustments since 1991. The Full Bench does not see a reason to change this approach at this time.

Sub-Principle 4.2

1. The Full Bench has reconsidered sub-principle 4.2 in the Proposed RWFPs. We agree with Union NSW's proposal to specify the awards that are and will be subject to State Wage Case adjustments in the WFPs.
2. This will ensure that any existing award that should be adjusted pursuant to the State Wage Case adjustment is identified now. It will be presumed that it will adjusted each year unless the Commission is satisfied that there is good reason for not doing so.
3. Any party who wishes to claim that an award not included in the list in the amended sub-principle 4.2 should receive a State Wage Case adjustment in a given year, or on an ongoing basis, would not be excluded from making such a case.
4. The Full Bench does not consider it is necessary, as submitted by the APA, to amend the WFPs to include that evidence will be vigorously tested, as the Commission will ensure that it applies the appropriate evidentiary standard as to whether a good reason has been made out for not adopting the AWR increase.

Public sector awards in the State Wage Case

1. The nine PSWP Awards were increased by consent pursuant to SWC 2020. These are minimum rates awards that have not been the subject of pay increases other than safety net increases, State Wage Case adjustments or minimum rates adjustments since 1991 and were not explicitly addressed by the submissions of any of the parties. With the exception of the Motels' Award [49] and the Restaurants' Award [50] which has been rescinded, the Full Bench has included these awards in the new sub-principle 4.2. This is a matter that the Commission will revisit in a future State Wage Case.

Principle 6 - Award Review Classification Rate

1. The Full Bench agrees with the IR Secretary's suggested amendment and has amended the Award Review Classification Rate Principle to remove the need to set the rate at a specific amount each year.

Principle 7 - Minimum Wage for Award/Agreement Free Employees

1. Under Principle 7, the State Minimum Wage is automatically adjusted in line with the NMW, so there is no need for the Commission to expressly adopt the provision of the National decision in any year. The Commission has suggested removing this Principle on the basis that it has no particular application in NSW at this time.
2. No party explicitly objected to the removal of this Minimum Wage for Award/Agreement Free Employees Principle in response to the Proposed RWFPs. In oral submissions the IR Secretary submitted that it would be sensible to retain a State Minimum Wage.
3. In circumstances where the parties did not make any considered submission on the Minimum Wage for Award/Agreement Free Employees Principle the Full Bench has determined not to remove it this year. However, we have amended it to remove the need to set the rate at a specific amount each year.

Proposed new Economic Adjustment Principle

1. The Arbitrated Case Principle proposed by Unions NSW in 2010 was largely accepted by the Full Bench [51] . As observed at [53] above, the Full Bench did not accept the Economic Adjustment Principle proposed by Unions NSW.
2. Unions NSW and the APA rely on changed circumstances and the approach taken by the Full Bench in, and the outcome of, the public sector salaries cases last year to justify the inclusion of an Economic Adjustment Principle in the WFPs now.
3. The proposed new principle would, amongst other things, require an annual State decision pursuant to s 51 to set a standard economic adjustment to rates of pay in State awards generally having regard to the need to maintain the real value of award rates of pay having regard to changes in the cost of living for employees.
4. The Commission needs to take care, when setting the WFPs, that it does not exceed the power given to it by s 51 of the Act. The existing Special Case Considerations sub-principle allows the Commission to consider a wide range of factors when determining an arbitrated case, including changes in the real value of wages over time, while allowing the Commission sufficient scope to ensure that it does not, in the circumstances of the matter before it, act contrary to the objects and requirements of the IR Act. This was clearly established in Police and Paramedics Awards 2020 [52] and Crown Salaries Case [53] .
5. We do not accept that requiring the unions to rebut the presumption that the existing awards were fair and reasonable and the Full Bench's determination in the Crown Salaries Case including that "having regard to all of the economic considerations we do not accept that an outcome that would see a decrease in the real earnings of employees would be fair and reasonable" [54] support the union parties' position. The Full Bench's decisions in Crown Salaries Case 2020 and Police and Paramedics Awards reflect that an adjustment on the basis of cost of living increases will be made in the appropriate circumstances without locking in a process which "would result in the ratcheting up of labour costs over time … against the public interest" [55] .
6. Further, such a sub-principle would constrain the powers of the Commission in a way that the legislature has not seen fit to do. Pursuant to s 10 of the IR Act, the Commission is empowered, subject to Pt 1 of Ch 4, to make awards setting fair and reasonable conditions of employment. If the legislature thought it appropriate and/or necessary for the real value of award rates of pay to be maintained over time having regard to changes in the costs of living for employees, it would have said so.

Attraction and retention issues

1. The Full Bench in 2010 also did not accept the proposal that it would permit attraction and retention issues to be considered, in a context where the majority of employees within the NSW industrial jurisdiction were covered by awards that operate such that over-award payments were unavailable to resolve labour market issues which arose.
2. As LGNSW submits, how employers attract and retain staff is not limited to wages. There can, and often are, many factors at play. We have not been convinced that the WFPs should be changed to permit such claims.

Evidence in support of productivity and efficiency claims

1. The requirement to identify productivity and efficiency measures that have delivered substantial costs savings is one of three possible ways for employees to demonstrate a basis for an increase to wages and salaries or improvements in employment conditions without having to demonstrate a special case.
2. In support of the proposed new Economic Adjustment Principle and other changes, Unions NSW asserts that, in the Crown Salaries Case, the Commission required unions to provide financial analysis to justify productivity and efficiency gains to offset the increases sought and failed to have regard to the way in which s 146C of the IR Act operates over time to constrain wage increases to 2.5% where higher wages are justified in any given year.
3. The APA submitted that the remarks of the Full Bench in Crown Salaries Case 2020 at [17] could potentially be construed to set a precedent whereby cases run under sub-principle 8.3 must include financial analysis showing that the putative productivity and efficiency gains would at least offset the wage increases claimed.
4. With respect to the financial analysis to justify productivity and efficiency grounds, the Court of Appeal in Public Service Association and Professional Officers' Association Amalgamated Union of New South Wales v Industrial Relations Secretary of New South Wales [2021] NSWCA 64 determined: "49. Insofar as it was put, in support of ground three, that the reasoning amounted to a misconstruction of the Act, by requiring a demonstrable and quantifiable benefit before an increase was made within the 2.5% cap, once again the ground is not made out. It is true that the reasons use the word "offset" and in part resemble the language of cl 6(1)(b) of the 2014 Regulation. But the reasons must always be read in the context of the submissions they are resolving. The language which the Commission used was apt to describe what it regarded as the submission's essential deficiency, which was that the plaintiffs had merely assembled a long list of instances of enhanced efficiency and productivity across the entirety of the public sector without providing any detail as to their breadth, and without quantifying the benefit, and without providing any great assistance on whether any trend could be derived across the board. 50. It was necessary in order for paragraph 8.3 of the Wage Fixing Principles to be engaged for the costs savings and/or productivity or efficiency improvements to be characterised as "substantial". Whether or not that was so was a matter for the Commission. It fell to be addressed by reference to the fact that the plaintiffs sought an across-the-board remuneration increase. The inherent difficulty with pointing to a range of discrete instances of efficiency and productivity savings, which did not apply across-the-board, and which were unaccompanied by any analysis which enabled their cumulative effect to be assessed in order to justify an across-the-board remuneration increase, is obvious. One way of addressing that difficulty is, as the Commission indicated, to quantify the effect of the discrete instances. There may be other ways of doing so. But there was nothing contrary to the statute in the Commission acceding to the Employers' submission that the instances amassed by the plaintiffs were not sufficient to engage paragraph 8.3 of the Wage Fixing Principles so as to justify an across-the-board increase. 51. These grounds are not made out."
5. Financial analysis may be required if the employees seek to demonstrate that, through their significant contribution, substantial costs savings have been delivered. The evidence required to establish one or both of the other two bases upon which an increase under the sub-principle may be warranted will depend upon the circumstances. However, we do not consider that the amendment sought by the APA is necessary.
6. We agree with the submissions made by the APA that statements made by a government agency as to the predicted efficiency or productivity improvements that will result from a workplace change may be useful evidence for a claim under the Productivity and Efficiency sub-principle. In circumstances where no robust evaluation of the productivity or efficiency improvements resulting from a workplace change has been performed by the government agency responsible for the change, it may be sufficient for the applicant to rely on evidence that does not rise above the level of anecdotal reportage and/or simple analysis of incomplete data. However, we do not agree that this should be included in the WFPs. The extent to which such material may be adduced, and its probative value, can only be determined in the light of the case then before the Commission.

Time from which productivity and efficiency claims should be measured

1. As foreshadowed in the Proposed RWFPs we agree with the APA that sub-principle 8.3 should be amended to identify the time from which the improvements are to be measured. We accept that the amendment should be in the form suggested by the IR Secretary and set out at [122].

Changes to Principle 9 - Negotiating Principles

1. Consistent with the submissions advanced by Unions NSW, the Full Bench agrees that negotiations for new or varied awards should commence well in advance of the expiry of the award and we have included a requirement to commence negotiations three months in advance.
2. The other changes proposed by Unions NSW, namely the involvement of union delegates in negotiations and representation by persons with authority, timely responses to claims, and a right to access the Commission for assistance by way of conciliation and arbitration, are unnecessary. The rights of representatives are protected under the IR Act. The objects of the IR Act include: the promotion of participation in industrial relations by employees and employers at an enterprise or workplace level [56] , encouragement of participation in industrial relations by representative bodies of employees and employers and the responsible management and democratic control of those bodies, [57] and facilitation of appropriate regulation of employment through awards, enterprise agreements and other industrial instruments [58] . In our view, the Negotiating Principles Principle provides sufficient guidance in respect of good faith bargaining and the rights of representatives in the context of the statutory provisions.
3. The APA submits that a new sub-clause should be inserted into sub-principle 9.2 of the WFPs to allow for the early provision of government information as set out at [110] above.
4. We agree with the IR Secretary that the proposed amendment to sub-principle 9.2 which would require the Crown to provide "government information ... on request insofar as the information requested may reasonably relate to a future claim against the award" would exceed the power of the Commission to set wage fixing principles pursuant to s 51 of the IR Act.
5. Principle 9.3(c) already restricts a party from prosecuting arbitration unless they have bargained beforehand in good faith and "disclosed relevant information for the purposes of negotiation". If the party prosecuting the arbitration considers that they have not received the information they need, they may seek to obtain that information during the course of the arbitration using the compulsory processes permitted under the IR Act.
6. Further, as LGNSW submits, the Commission has the power to order that Pt 21 of the UCPR applies, allowing for parties to issue Notices to Produce. This provides an appropriate mechanism for achieving the outcome sought by the APA without amending the WFPs.

Removal of Principal 10 - Enterprise Arrangements

1. In the Proposed RWFP the Full Bench suggested removing the Enterprise Arrangements Principle.
2. The Enterprise Arrangements Principle was introduced in SWC 1991 to encourage industrial parties to engage in enterprise bargaining. Since that time the Commission's jurisdiction has changed significantly and the number of active awards has diminished as a consequence. There is no longer a need for the Commission to encourage private sector employers and employees to enter into enterprise specific arrangements for their mutual benefit. Parties who remain in the New South Wales jurisdiction may always approach the Commission to make or vary an award by consent pursuant to ss 11 and 17(3) of the IR Act, and parties may make enforceable enterprise agreements pursuant to the provisions of Pt 2 of Ch 2 of the IR Act.
3. Unions NSW resists the removal of this principle primarily on the basis that it would remove a gateway to arbitration. We do not accept that the construction of Principle 10, in particular the construction of "these Principles and the Act", urged by Unions NSW, is correct. The use of "these" and the use of the plural in "Principles" make it clear that this provision refers to arbitration in accordance with the WFPs generally. This interpretation is consistent with sub-principle 2.1 which refers to enterprise arrangements "reached" which, in our view, is intended to capture consent arrangements. We do not accept Unions NSW's submission that the Enterprise Arrangements Principle is itself a gateway to arbitration. In any event, as Mr Slevin accepted, any arbitration would result in the Commission determining whether an award should be made in accordance with the IR Act.
4. The Enterprise Arrangements Principle does not provide any avenue to parties which is not otherwise available for the setting of terms and conditions of employment. There is no need for the Commission to be directed to the matters it may consider when considering an application for a consent enterprise award, nor any justification for imposing on the Commission a restraint on the Commission's power to make an appropriate award by consent, in the manner prescribed by sub-principle 10.6.
5. Accordingly, we have removed the Enterprise Arrangements Principle from the WFPs.
6. As required pursuant to sub-s 33(1) of the IR Act, the principles to be followed by the Commission in determining whether to approve enterprise agreements are set out in Review of the Principles for Approval Of Enterprise Agreements 2018 [2018] NSWIRComm 1064. A review of these principles will be undertaken this year in accordance with the three-year requirement in sub-s 33(3) of the IR Act.

Retention of Principal 11 - Superannuation

1. Although no party supported the removal of this Principle, the parties did not make overly persuasive submissions in support of its retention. In the circumstances, including the acknowledgement by LGNSW that there are Local Government entities with arrangements above the minimum required by the SG Act, the Full Bench has decided not to remove the Principle at this time. The Full Bench will consider this further in a future State Wage Case.

Retention of Principal 13 - Economic Incapacity

1. The Full Bench has considered the submissions of the parties, in particular LGNSW, in respect of the proposed removal the Economic Incapacity Principle. The Full Bench has determined not to remove the Economic Incapacity Principle at this time and to allow the parties to make considered submissions with respect to this principle in a future State Wage Case.

Minor and/or facilitative changes

1. In addition to the matters addressed above, the Full Bench has made facilitative changes to the WFPs which have not been addressed in this decision. Each of these changes was identified in the Proposed RWFPs and the parties have had the opportunity to raise objections to these changes.

Orders

1. The Commission makes the following orders: 1. Pursuant to sub-s 51(1) of the Industrial Relations Act 1996, the Commission's Wage Fixing Principles are as set out in Annexure A to this decision which operate on and from 18 October 2021 2. The Principles in Order 1 supersede the Wage Fixing Principles set out in Annexure A to Annexure 1 to the State Wage Case 2019 [2019] NSWIRComm 1065. Chief Commissioner Constant, Commissioner Murphy, and Commissioner Sloan

Annexure A The Full Bench makes the following Principles:

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 allowances; and 1.2.4. to protect the low paid. 1.3. Movements in wages and conditions must fall within the following Principles.

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: a) to incorporate test case standards in accordance with Principle 3; b) to adjust wages consistent with any relevant State Wage Case in accordance with Principle 4; c) to adjust allowances and service increments in accordance with Principle 5; 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.

Test Case Standards Test case standards established and/or revised by a Full Bench of the Commission may be incorporated into an award in accordance with the Act. Where disagreement exists as to whether a claim involves a test case standard, those asserting that it does must make an application for a special case.

State Wage Case Adjustments 4.1. Following the completion of an Annual Wage Review by the Fair Work Commission, the Commission will issue a notice to show cause why that 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, the following New South Wales awards: (1) Security Industry (State) Award ("Security Industry Award"); (2) Shop Employees (State) Award; (3) Miscellaneous Workers - Kindergartens and Child Care Centres, &c. (State) Award; (4) Health, Fitness and Indoor Sports Centres (State) Award; (5) Transport Industry (State) Award; (6) Miscellaneous Workers Home Care Industry (State) Award; (7) Clerical and Administrative Employees (State) Award; (8) Marine Charter Vessels (State) Award; (9) Local Government (Electricians) (State) Award; (10) Nursing Homes, &c., Nurses' (State) Award; (11) Entertainment and Broadcasting Industry - Live Theatre and Concert (State) Award; (12) Local Government Aged Disability and Home Care (State) Award; and (13) Nurses' (Private Sector) Training Wage (State) Award (collectively "Relevant Awards") will be varied to include a State Wage Case adjustment by the making of one or more orders of the Commission pursuant to s 52, and where relevant, s 146C 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 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." 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) A party may seek a State Wage Case adjustment to an award other than the Relevant Awards. An applicant for such an adjustment will be required to provide evidence about the history of adjustments to the rates of pay in the subject award since 1991. d) Unless the Commission determines otherwise, 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. e) The State Wage Case adjustment may apply where the rates in an award have increased in accordance with the Work Value Considerations at 8.2(a) of the Arbitrated Case Principle and/or 11.16 of the Equal Remuneration Principle.

Adjustment of Allowances and Service Increments 5.1. Existing allowances which constitute a reimbursement of expenses incurred may be adjusted from time to time where appropriate to reflect relevant changes in the level of such expenses. 5.2. If an order is made pursuant to s 52 of the Act and pursuant to Principle 4.2. for a State Wage Case adjustment to be made to the applicable award, existing allowances which relate to work or conditions which have not changed other than by State Wage Case adjustments, including shift allowances expressed as monetary amounts and service increments, will be increased by the amount of the applicable State Wage Case adjustment. 5.3. Existing allowances for which an increase is claimed because of changes in the work or conditions will be determined in accordance with the relevant provisions of the Arbitrated Case Principle if there is no consent. 5.4. New allowances to compensate for the reimbursement of expenses incurred may be awarded where appropriate having regard to such expenses. 5.5. Where changes in the work have occurred or new work and conditions have arisen, the question of a new allowance, if any, will be determined in accordance with the Arbitrated Case Principle. 5.6. New service increments may only be awarded to compensate for changes in the work and/or conditions and will be determined in accordance with the relevant provisions of the Arbitrated Case Principle.

Award Review Classification Rate 6.1. The Award Review Classification Rate is the rate below which no full-time adult employee (excluding trainees, apprentices and employees on a supported wage or on a probationary rate) may be paid under the relevant award. 6.2. Unless the Commission determines otherwise, the Award Review Classification Rate is the rate of pay equal to the National Minimum Wage, as varied from time to time by the Fair Work Commission. 6.3. Where a classification in an award is below the Award Review Classification Rate the following process will apply on application: a) The award will be listed for a mention at which the parties will report as to: (i) how the Award Review Classification Rate will be achieved, or (ii) whether the award is obsolete. b) The Commission may direct the parties to confer in order to set a program for an updating of the award to reflect the Award Review Classification Rate. c) If the parties to the award do not appear at this mention referred to in (a) above, the Commission will request the parties to the award to show cause why the award should not be considered obsolete and rescinded under s 17(3) of the Act. d) Where no agreement is reached with respect to the matters in (a) above, the Commission will re-list the matter in order to conciliate the issues in dispute. e) If the attempt at conciliation is unsuccessful the Commission will arbitrate any outstanding issue(s).

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 will 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) is 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) is 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) is 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) will 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) will 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) will 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.

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 will, 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 8.2 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 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 8.2 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 the time from which such measures, savings or improvements are measured is the later of: a) the date of the last adjustment awarded on account of productivity and efficiency; or b) the date of a consent award where parties have agreed pursuant to a consent award that the wage increases incorporate an adjustment made under this Principle. 8.4 Special Case Considerations A claim for increases in wages and salaries, or changes in conditions in awards, other than those allowed elsewhere in the Principles, and which is not based on work value and/or productivity and efficiency pursuant to this Principle, will be processed as a special case in accordance with the principles laid down in Re Operational Ambulance Officers (State) Award [2001] NSWIRComm 331; (2001) 113 IR 384 and the cases referred to in that case at [165]-[168]. 8.5 Exclusions 8.5.1 Claims that are based substantially on comparative wage justice, attraction and retention or community standards will not be countenanced except as provided in Re Public Hospital Nurses (State) Award (No 3) [2002] NSWIRComm 325; (2002) 121 IR 28 and Re Health Employees Pharmacists (State) Award [2003] NSWIRComm 453; (2003) 132 IR 244. 8.5.2 There will be no double counting, provided however, that an Arbitrated Case claim may rely upon a cumulation of the factors referred to in these Principles.

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 will be followed with respect to claims under Principles 8 and 11. 9.2 In respect of the commencement of negotiations for a new award: a) At least three months 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 11. b) 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, negotiations must begin within 28 days unless it is agreed by the parties to commence negotiations at a later time. c) 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. 9.3 Subject to the provisions of the Act, and unless the Commission otherwise determines, a party is not entitled to prosecute arbitration unless the party has bargained beforehand in good faith. 9.3.1 In particular, parties are expected to have : 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. 9.3.2 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. 10. Superannuation 10.1 An application to make or to vary an 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; will be referred to a Full Bench for consideration as a special case, unless otherwise allocated by the Chief Commissioner. 10.2 If an application is made that does not fall within Principle 10.1, the Commission will, subject to Principle 10.3: 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. 10.3 The Commission may award provisions which differ from those in Principle 10.2: (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. 10.4 Before any different provisions are awarded under Principle 10.3, 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. 10.5 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. 10.6 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. 10.7 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.

11. Equal Remuneration and Other Conditions 11.1 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. 11.2 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. 11.3 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. 11.4 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. 11.5 The assessment of wage rates and other conditions of employment under this Principle is to have regard to the history of the award concerned. 11.6 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. 11.7 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. 11.8 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 reflect the wages and conditions of employment previously fixed for the work and the nature and extent of the undervaluation established. 11.9 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' over-award payments. 11.10 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. 11.11 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. 11.12 The expression "the conditions under which the work is performed" has the same meaning as in Principle 8.2, Work Value Considerations. 11.13 The Commission will guard against contrived classifications and over-classification of jobs. 11.14 Claims under this Principle will be processed before a Full Bench of the Commission, unless otherwise allocated by the Chief Commissioner. 11.15 Equal remuneration will not be achieved by reducing any current wage rates or other conditions of employment. 11.16 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.

12. Economic Incapacity 12.1 Any employer or group of employers bound by an award may apply to, temporarily or otherwise, reduce, postpone and/or phase in the application of any increase in labour costs determined under the Principles on the ground of very serious or extreme economic adversity. The merit of such an application will be determined in the light of the particular circumstances of each case and any material relating thereto shall be vigorously tested. Significant unemployment or other serious consequences for the employees and employers concerned are significant factors to be taken into account in assessing the merit of any application. 12.2 Such an application will be processed according to the Special Case Principle. 12.3 Any decision to temporarily reduce or postpone an increase will be subject to a further review, the date of which will be determined by the Commission at the time it decides any application under this Principle.

13. Transitional provisions 13.1 These Principles will apply to: (a) any application to make or vary an award that is made on or after the date of commencement of these Principles; and (b) any such application filed prior to that time where the hearing of the matter has not commenced as at the date of the commencement of these Principles (directions hearings will not count for this purpose). 13.2 These Principles will not operate in respect of awards that are still within their nominal term on the date these Principles commence to operate. In such cases the Principles which are Annexure A to Annexure 1 to the State Wage Case 2019 [2019] NSWIRComm 1065 ("the former Principles"), will apply. Subject to 13.1(b) the former Principles will apply to any application made in respect of such awards as well as any part-heard proceedings.

14. Duration These Principles will operate on and from 18 October 2021 until further order of the Commission.

Endnotes

1. Sub-cl 1.2.1 of the WFPs.
2. Sub-cl 1.2.2 of the WFPs.
3. Sub-cl 1.2.3 of the WFPs.
4. Sub-cl 1.2.4 of the WFPs.
5. Sub-principle 2.2 refers to increases under previous State Wage Case. The Full Bench has removed this sub-principle on the basis that it is otiose
6. The principles for making out a special case are set out in Re Operational Ambulance Officers (State) Award [2001] NSWIRComm 331; (2001) 113 IR 384 at [165]-[168]. See also Re Transport Industry (State) Award (1996) 95 IR 126 at 130-131.
7. SWC 1991 at 363.
8. SWC 1991 at 406.
9. Section 284 of the Fair Work Act 2009 (Cth).
10. SWC December 1993 at 439.
11. SWC 2010 at [27].
12. As set out in Order 2 at [105].
13. SWC 2010 at [74]:
14. SWC 2010 at [75].
15. SWC 2010 at [76].
16. SWC 2010 at [67].
17. SWC 2010 at [89].
18. SWC 2010 [87] - [93].
19. SWC 2010 (No 2) at [7].
20. The aims of the WFPs are set out at [20].
21. SWC 2010 at [91].
22. Pursuant to s 146C of the IR Act, the Commission must give effect to any declared government policy on the conditions of employment of public sector employees as set out in cl 6 of the Industrial Relations (Public Sector Conditions of Employment) Regulation 2014 ("PS Regulation 2014"), which replaced the PS Regulation 2011.
23. SWC 2010 (No 2 at [14].
24. SWC 2010 (No 2) at [6] - (10].
25. SWC 2010 (No 2) at [16].
26. See SWC 2010 at [57] and [60].
27. Excluding those that are caught by Principles 4.2(c) and 14, as is envisaged by Principle 4.2.
28. SWC 2010 at [74] and set out at [22] above
29. The declared policy for the purpose of s146C of the IR Act permits employee-related cost increases up to 2.5% pa. NSW Government policy and practice between 2012 and 2020 was to offer 2.5% increases each year. In 2020, NSW Government policy was a wage freeze. This led to claims by unions for increases of 2.5%. These claims were arbitrated by the Commission. The PSWP 2021 purports to cap increases at 1.5%. However, PSWP 2021 is not a policy declared by the Regulations and consent awards covering NSW Government employees made or varied in 2021, in the main, contained increases of 2.5% inclusive of superannuation increases.
30. As set out at [52] above.
31. With the exception of those covered by the nine awards referred to in [6].
32. Unions NSW's Enterprise Arrangements Submissions at par 10 - 11 and Attachment "A".
33. APA's Further Submissions at par 8.
34. APA's Further Submissions at par 9.
35. Applications for Variations to Crown Employees (Police Officers - 2017) Award and Paramedics and Control Centre Officers (State) Award [2021] NSWIRComm 1040 ("Police and Paramedics") at [29]
36. Police and Paramedics at [30]
37. See State Wage Case 2004 [2004) NSWIRComm 148 at [6], for example, which records the decision of the Commission to "... grant an increase in rates of pay by the amount of $19.00 and will adjust relevant allowances by 3.5 per cent in State Awards, in accordance with the provisions of s 50 of the Act, having given consideration to the National decision"; see also State Wage Case 2020 [2021] NSWIRComm 1015 at [25] recording the Full Bench's order adopting the "provisions" of the National decision "insofar as it provided for a 1.75% increase".
38. See AWR 2020 at [465].
39. See AWR 2020 at [466] onwards.
40. Under current Principle 7, the State minimum wage is automatically adjusted in line with the NMW, so there is no need for the Commission to expressly adopt the provision of the National decision in this regard.
41. State Wage Case - March 1992 at 319. The current wording was introduced by the State Wage Case - December 1994 (1994) 57 IR 1 at 44, but for reasons that are not stated.
42. LGNSW Further Position paper at par 5
43. See for example State Wage Case - August 1997 (1997) 73 IR 200 in which the Commission considered an application by the Labor Council of New South Wales (now Unions NSW) for the Commission to depart from the National decision (which provided for a $10/week arbitrated safety net adjustment) and to instead award a $20/week arbitrated safety net adjustment to New South Wales awards. The Commission accepted the submissions of all of the parties that the Commission can, when exercising its discretion under s 50 of the Act, determine a greater wage increase for New South Wales awards than the National decision.
44. However, Mr Dansie informed the Commission that due to the New South Wales Government announcing a $395 million economic stimulus package for Local Government, and the centrepiece of that package being an amount of approximately $112 million set aside for a job retention allowance, the Economic Incapacity Principle was not invoked in 2020.
45. Police and Paramedics Awards 2020 at [29]
46. SWC 2010 at [89]
47. Police and Paramedics Awards 2020 at [30]
48. SWC 2010 at [91]
49. See Re Motels, Accommodation and Resorts, &c. (State) Award [2021] NSWIRComm 1056
50. Short Minutes of Order rescinding the Restaurants' Award were signed by Commissioner Sloan on 14 October 2021.
51. SWC 2010 at [98].
52. See in particular [79] and [221].
53. See in particular [30] and [75].
54. Crown Salaries Case 2020 at [155].
55. SWC 2010 (No 2) at [14]
56. Sub-s 3(c)of the IR Act.
57. Sub-s 3(d) of the IR Act.
58. Sub-s 3(e) of the IR Act.

Amendments 15 December 2021 - Correction of the Award name in Paragraph [6] and Principle 4.2 08 March 2022 - Correction made to

1. Miscellaneous Home Care Industry (State) Award to Miscellaneous Workers Home Case Industry (State) Award at Paragraphs [6(8)] and in Annexure A 4.2 (6)
2. Local Government Aged Disability and Homecare (State) Award to Local Government Aged Disability and Home Care (State) Award at Paragraph [7(5)] and in Annexure A 4.2 (12) DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 08 March 2022