State Wage Case 2024 (No 3) [2024] NSWIRComm 19

Introduction

1. The Industrial Relations Act 1996 (NSW) confers on the Commission powers to resolve disputes by making awards that set conditions of employment by reference to the simple criteria that they be fair and reasonable. It does so in simple and direct language, unburdened by the myriad of mandatory considerations found in the equivalent federal legislation ten times its size. [1]
2. That wide and largely unfettered discretion creates the need for principles, to guide Commission members sitting at first instance [2] and assist parties to understand how applications will be determined. The Commission has made Wage Fixing Principles as a framework to set wages and employment conditions since State Wage Case 1983. [3]
3. In 2011 the NSW Government imposed, by means of s 146C of the Industrial Relations Act and the Industrial Relations (Public Sector Conditions of Employment) Regulation 2011, a "wages cap" which prevented the Commission from increasing public sector wages by more than 2.5% per annum unless it could be shown that there were employee-related cost savings or productivity increases. The Wage Fixing Principles had little work to do during this period, save for the Equal Remuneration Principle which prevailed over the wages cap as a declared "paramount policy" under clause 5(b) of the former Industrial Relations (Public Sector Conditions of Employment) Regulation 2014. [4]
4. The 2023 amendments that reinstated the Presidential Members of the Commission also repealed s 146C. [5] Thus, the restriction on the Commission's broad power to arbitrate has been lifted, giving renewed purpose to the Wage Fixing Principles. The amendments also require the Commission to consider two new matters when exercising our powers: first, the object of encouraging strategies to attract and retain skilled staff where there are skill shortages, and second, the fiscal position and outlook of the Government when we exercise a function about public sector employees. [6]
5. We have determined, pursuant to s 51 of the Industrial Relations Act, that we should make a State decision setting, in new terms, principles to guide the making and varying of awards, being satisfied that to do so is consistent with the Act's objects and that there are good reasons for doing so. We have named these principles "Award Making Principles" instead of "Wage Fixing Principles", as that better describes their purpose and effect (we refer to both in this decision as the Principles). Henceforth, pursuant to s 21, award conditions are to be set by reference to these Principles.
6. The form of the Principles that we are presently minded to make are set out as Annexure A to this decision. During the hearing the parties requested that they be given an opportunity to comment on the text before the new Principles are finalised. At the conclusion of this decision we make a direction to allow for that to occur.

Procedural background

1. The Commission initiated these proceedings on its own motion on 14 June 2024 following the decision of the Expert Panel of the Fair Work Commission (FWC) to increase the National Minimum Wage and all modern award minimum wages by 3.75%, effective from 1 July 2024, in Annual Wage Review 2023-24 ("AWR 2024"). [7]
2. Pursuant to s 50 of the Industrial Relations Act a Full Bench of the Commission must give consideration to such a National decision as soon as it is practicable and determine whether to adopt the principles or provisions of that decision.
3. As set out in the subsequent Statement issued by the Full Bench in State Wage Case 2024, [8] the Commission determined to proceed in two distinct stages.
4. In the first stage of the proceedings we determined to adopt the decision of the Expert Panel in AWR 2024 for the purposes of ss 50 and 52 of the Industrial Relations Act in respect of three categories of relevant awards. [9]
5. This decision addresses the second stage of the proceedings, namely a broad review of the form and content of the Commission's Principles, which were last published as Annexure A to State Wage Case 2022. [10]
6. As noted in State Wage Case 2024 [11] at [15], since the Principles were last considered, the Industrial Relations Amendment Act 2023 (NSW) has reformed the Commission and restored its wage fixation functions. In addition to reconstituting the Commission and re-establishing the Industrial Court of New South Wales, the amending Act also: 1. abolished the requirement for the Commission to give effect to government policy on adjusting wages for public sector employees as contained in former s 146C of the Act; 2. introduced the object of encouraging strategies to attract and retain skilled staff where there are skill shortages (s 3(i)); 3. requires the Commission to have regard to the fiscal position and outlook of the Government; and 4. established a new stream of "mutual gains bargaining" in Chapter 2A of the Act. This has coincided with the Government publishing a new approach to bargaining within the public sector, titled NSW Government Fair Pay and Bargaining Policy 2023. [12]
7. By that Statement the Full Bench directed interested parties to file written submissions addressing 11 matters, namely: 1. whether to retain Wage Fixing Principles in whole or in part; 2. whether to retain the onus on applicants seeking different conditions or rates of pay to rebut a presumption that existing awards set fair and reasonable terms and conditions of employment; 3. whether and to what extent there ought to be a principle addressing increases to maintain the real value of award rates of pay having regard to the rate of inflation and changes in the cost of living for employees, and if so, whether it should apply generally or be limited to employees on low wages; 4. whether and to what extent principle 7 (Minimum Wage for Award/Agreement Free Employees) ought to be amended, or some other mechanism introduced to set an appropriate minimum rate of pay to be applied to low wage employees at a base grade in an award; 5. whether there ought to continue to be a separation of general work value considerations from increases to wages based on gender-based undervaluation; 6. whether to retain a Special Case Principle, and if so whether the circumstances that establish a Special Case ought to be better defined; 7. whether and to what extent principle 8 (Arbitrated Case) ought to be amended, or some other mechanism introduced to permit the consideration of claims based on the attraction and retention of skilled staff where there are skill shortages and having regard to the effective and efficient delivery of services; 8. whether and to what extent one or more of the Principles ought to be amended in light of the Commission's obligation to have regard to the fiscal position and outlook of the Government and the likely effect of the exercise of the Commission's function on the fiscal position and outlook; 9. whether and to what extent subprinciple 8.3 (Productivity and Efficiency Considerations) ought to be amended, or some other mechanism introduced to expand, clarify and/or refine the concept of public sector productivity and efficiency and, in particular, the relevance of and relationship between improvements in the quality of public sector services and employee-related costs; 10. whether and to what extent principle 9 (Negotiating Principles) ought to be retained or revised in light of the mutual gains bargaining provisions in the Act. The Commission is particularly interested to receive submissions addressing the appropriateness and operation of "no extra claims" clauses in agreements in light of the mutual gains bargaining scheme and whether there ought to be a model "no extra claims" clause; and 11. whether the following Principles ought to be removed from the Wage Fixing Principles: 1. principle 10 (Superannuation); and 2. principle 12 (Economic Incapacity).

The hearing

1. The evidence in the proceedings was limited to an affidavit tendered by Local Government NSW (LGNSW) of Mr Adam Dansie which addressed the impact of State Wage Case decisions and changes to the Commission's Principles on various State awards to which LGNSW was a party. The affidavit was tendered in support of a submission that any change to the industrial relations system must have regard to the scope, complexity, reach and distinctiveness of local government. In summary, it provided that over the years the Principles have had a positive impact on the terms and conditions of employment for local government employees and the specific needs of LGNSW.
2. Prior to the hearing, the Industrial Relations Secretary (Secretary) had filed two affidavits from senior staff of NSW Treasury, each annexing the same document, prepared in the style of an expert report, titled "Productivity Considerations". The document contained a series of conclusory opinions as to what constitutes productivity and efficiency improvements in the public sector. In circumstances described in more detail below, the Secretary ultimately did not read the affidavits, and instead invited the Commission to treat their attached document as a submission.
3. Following the conclusion of the oral hearing parties were given leave to file supplementary notes in respect of certain issues. The last note was received on 31 October 2024.

Industrial Relations Secretary

1. The Secretary contended that the current Principles should be retained in whole, subject to discrete alterations to reflect the amendments made to the Industrial Relations Act and to support the objectives of the Act, which are described below.
2. The Secretary submitted there was no necessity for a distinct principle mandating consideration of inflation and cost of living changes, contending this could be addressed already under the Industrial Relations Act and the existing Principles.
3. The Secretary otherwise contended that the following aspects of the existing Principles ought to be amended: 1. the Preamble to reflect the new wording of s 146(2)(c) of the Industrial Relations Act; 2. principle 8 (Arbitrated Case) to remove the exclusion of attraction and retention issues in subprinciple 8.5.1; 3. subprinciple 8.3 (Productivity and Efficiency Considerations) to clarify the principle by including examples of what are and what are not productivity and efficiency improvements; 4. principle 9 (Negotiating Principles) to refer to the Mutual Gains Bargaining process and the inclusion of a "no extra claims" clause; and 5. principle 8.4 (Special Case Considerations) to include in the principle itself the principles laid down in Re Operational Ambulance Officers (State) Award [2001] NSWIRComm 331; (2001) 113 IR 384.

Local Government and Shires Association of New South Wales (LGNSW)

1. The LGNSW focussed on its unbroken 32-year history of negotiating consent awards for local government. Its primary position was that there should be no changes to the Principles that would endanger that successful approach to resolving industrial relations for local government employees and employers. For that reason, the LGNSW opposed the introduction of a principle that would give rise to automatic increases to maintain the real value of award rates of pay, on the basis that such a principle would disincentivise local government industrial parties from negotiating salary increases. It also submitted that principle 8.3 relating to wage increase claims due to improved productivity and efficiency should either be abolished or amended so as to not apply to local government claims, owing to the difficulty in assessing improvements in efficiency across different councils, the skills-based classification of workers in awards, and the ability for workers to access wage increases through individual performance assessments.
2. The LGNSW adopted a similar position to the Secretary on most other issues. It was unique in submitting that principle 7 should be abolished, on the basis that it did not believe that there were any non-award employees employed within the jurisdiction of the Commission.
3. The LGNSW otherwise contended for the following amendments: 1. to amend the Preamble to reflect the Commission's obligation to consider the fiscal position and outlook of the Government when considering a claim about public sector employees; 2. to draft a new Mutual Gains Principle, if the Commission is minded to retain the Negotiation Principle; 3. to develop a model no extra claims clause; and 4. to remove principle 10 (Superannuation). Instead, principle 8.4 (Special Case Considerations) should be amended to include superannuation.

Unions NSW

1. Unions NSW contended that the current Principles have been applied as an arbitrary fetter on the exercise by the Commission of its functions and are no longer fit for purpose. They require reconsideration and, if they are to be retained, they should be reformed.
2. Unions NSW opposed the inclusion of a no extra claims clause in the Principles on the basis that such provisions cannot interfere with the Commission's jurisdiction and therefore lack utility.
3. Unions NSW opposed the retention of the Special Case Principle "if an applicant agitating a 'special case' is required to demonstrate as a threshold matter or condition precedent that the case has 'special attributes' or is 'out of the ordinary'", on the basis the principles should not be construed as imposing "restrictions".
4. It submitted that a principle accounting for the maintenance of real wages should be adopted and proposed a new Arbitrated Case clause to give effect to this.
5. Unions NSW otherwise contended that the following aspects of the existing principles ought to be amended: 1. the Preamble, to state that the Principles cannot operate to constrain the exercise of the Commission's award making and varying functions and also to allude to the Commission's obligation to have regard to the fiscal position of the Government; 2. subprinciple 8.5.1, to have exclusions removed; 3. principle 8.3 (Productivity and Efficiency Considerations), to refer to a broader and more nuanced assessment of productivity and efficiency which should be undertaken by the Commission in light of the unique situation and circumstances of public sector employee roles by removing the requirement that any productivity or efficiency improvements be connected with achievement of the objectives of the employer "seeking to become more competitive or efficient"; 4. principle 9 (Negotiating Principles), to require the employer, if the State government or an emanation of the State government, to provide economic, financial and demographic information for employees covered by the proposed award; and 5. principle 11 (Equal Remuneration and Other Conditions), to ensure that work-value criteria are stripped of biases against women workers in historically undervalued professions and to acknowledge the potential for historical wage fixing principles to have reflected or reproduced gender inequalities and gender-based undervaluation of work.

Fire Brigade Employees Union of New South Wales (FBEU)

1. The FBEU proposed a complete recast of the Principles, arguing that the Principles in their current form are not fit for purpose but cannot be simply amended.
2. The FBEU concurred with Unions NSW and the Australian Paramedics Association (NSW) (APA) that there ought to be a principle directing the Commission to ensure that wages maintain their real value over time but went a step further in proposing that there should be a rebuttable presumption that wages will be increased to repair any erosion in real value since the last increase, include a component that is directed at maintaining their real value over the life of the award and allow for real wage growth. The FBEU in oral submissions clarified that this is not intended to set up an entitlement but rather a path for steady wage growth.
3. The FBEU submitted that the Special Case Principle need not be retained. Instead, the FBEU's recast Principles provided general guidance as to matters which could justify a non-routine variation. Similar to Unions NSW, the FBEU submitted that the current subprinciple 8.5 is inconsistent with the new object in s 3(i) in the Industrial Relations Act and that principle 8 (Arbitrated Case) needed to be completely redrafted to simplify and modernise it.
4. The FBEU strongly opposed the amendments proposed by the Secretary to principle 9 (Negotiating Principle), submitting that they had not engaged with the significance of the addition of mutual gains bargaining to the Industrial Relations Act or addressed the difficulties arising in contemporary public sector bargaining. Instead, the FBEU submitted that the Commission should focus on developing a system which allows structural reforms to be negotiated between parties but disincentivises delay and otherwise encourages efficient participation in such process.
5. The FBEU otherwise contended for the following amendments in their recast of the Principles: 1. the Preamble to include that the Commission will have regard to the fiscal position and outlook of the Government in setting award rates of pay and conditions; 2. a reference to the National Minimum Wage in setting minimum wages for award/ agreement free employees; 3. the Commission to have regard to cost savings, service delivery improvements, measures introduced which have contributed to the attainment of the objectives of the body/authority and improvements in outcomes for the general public when assessing whether productivity or efficiency improvements have occurred; 4. inclusion of a Mutual Gains Bargaining Principle identifying the Commission's commitment to mutual gains bargaining, clarifying that such reforms can be introduced via awards without no extra claims clauses or with leave reserved and providing an express pathway for employees to access annual wage increases during bargaining; and 5. removal of the Superannuation and Economic Incapacity Principles.

Australian Paramedics Association

1. The APA contended for the need to incorporate a broader definition of productivity to address service improvements of the sort that might be provided by paramedics and a need for a capacity to obtain information from the employer as to matters relevant to establishing productivity improvements. The APA supported the retention of the negotiating processes set within the Principles with the addition of mutual gains bargaining processes, contending that mutual gains bargaining would become a significant driver of wage fixation.
2. The APA otherwise contended for the following amendments: 1. to amend principle 8 (Arbitrated Case) to remove reference to attraction and retention in subprinciple 8.5.1; 2. to insert a new subprinciple 9.2 to principle 9 (Negotiating Principle) to allow for early provision of government information relating to matters that may reasonably relate to an award claim; and 3. to remove principle 12 (Economic Incapacity).

Historical background and purpose of the Wage Fixing Principles

1. The Commission has used Principles as a framework to set wages and employment conditions since State Wage Case 1983. [13] In that case the Commission adopted the wage fixing principles made by the Australian Industrial Relations Commission (AIRC), the former federal industrial tribunal, in the National Wage Case 1983 [14] arising from the Hawke Government's Prices and Incomes Accord with the Australian Council of Trade Unions (Accord).
2. The AIRC formulated 11 principles to give effect to the purpose of the Accord. The federal principles provided a framework for national wage adjustment whereby parties could obtain regular wage increases, on the condition that parties did not seek further claims, except in accordance with the principles. The principles reflected the views of the parties to the Accord that a wage fixing system should be centralised, maintain real wages for workers and enable the growth of real wages to reflect increased productivity, while minimising inflation and unemployment. [15]
3. Principle 1 established that the AIRC would adjust award pay every six months to keep up with CPI, unless it was persuaded not to do so, and principle 2 required the AIRC to consider, upon application, whether wages should be increased owing to productivity increases. [16] Improvements in pay and conditions beyond those provided by principles 1 and 2 were strictly limited by the remaining principles. [17]
4. To obtain a CPI increase unions had to provide a "no extra claims" undertaking. principle 3 titled "Other Claims" stipulated: "No application for a national wage adjustment to an award will be approved … unless all the unions concerned in the award give an undertaking that for the duration of these Principles they will not pursue any extra claims, award or overaward, except in compliance with the Principles." [18]
5. "No extra claims" clauses in modern awards derive from this principle. They retain their purpose of maintaining industrial stability throughout the life of an award, subject to exceptional circumstances, award variations by consent or where otherwise in accordance with an express term of the award that permits a variation. [19]
6. In the NSW system, the agreed terms of a "no extra claims" commitment have evolved over time to become a commitment that is reflected as a clause in the award itself. Modern "no extra claims" commitments are generally not limited to restricting claims that are not made in compliance with the Principles. Rather, they have usually sought to prevent any claim being made at all.

Whether to retain the Wage Fixing Principles

1. The 11 issues that the parties were asked to address included whether to retain the Principles.
2. All parties supported the retention of the Principles in some form, while seeking alterations to reflect the amendments to the Industrial Relations Act and contemporary economic, industrial, and social circumstances.
3. Two features that distinguish this State's award-making system from the federal wage-fixing system explain the Principles' continuing utility. First, this Commission has the broad power to make an award during the course of an arbitration to resolve an industrial dispute. [43] The FWC's ability to arbitrate the remaining matters at issue between parties who are bargaining for an enterprise agreement is more tightly constrained and is limited to the enterprise agreement-making context and to circumstances where there are no reasonable prospect of the parties reaching agreement. [44]
4. Second, the discretion that is provided to the Commission to do so is largely unconstrained. In contrast, the FWC must consider mandatory objectives in s 134(1), s 284(1) and ss 270 to 275 of the Fair Work Act when making or setting modern awards, minimum wages and intractable bargaining workplace determinations respectively. By comparison, this Commission is required to make awards which set "fair and reasonable conditions of employment for employees" pursuant to s 10 of the Industrial Relations Act, subject to the particular conditions of employment in awards required by Division 2 in Part 1 of Chapter 2. In doing so, this Commission must take into account the public interest and, for that purpose, have regard to the considerations in s 146(2). We take the view that it is appropriate to set out in clear terms in new principle 2 the mandatory considerations that the Commission must take into account when determining an application to make or vary an award.
5. Given that this Commission has a broad discretion to set actual conditions of employment, the Principles ensure a consistent approach to the making and variation of awards and assist the parties to understand how cases will be determined. The retention of the Principles also avoids any misunderstanding that might arise, were they to be removed, that there are no longer established principles that guide the exercise of the Commission's discretion. For example, the Principles act to prevent and discourage unmeritorious claims which are unsupported by long-standing authority, such as those based on comparative wage justice.

What is the effect of the Award Fixing Principles (new Principle 1.1)

1. Having identified the purpose of and the need to retain the Principles, in this section we turn to considering their effect.
2. The Act contemplates the Commission using the Principles to guide the making and varying of awards. Section 51 enables a Full Bench to make a State decision setting "principles or provisions for the purposes of awards and other matters under this Act", if satisfied that it is consistent with the objects of the Act and that there are good reasons for doing so. Subsection 21(2) provides that award conditions are to be set "with due regard to any established principles of the Commission".
3. Consistent with this statutory language, we prefer the Principles to be known as "Award Making Principles".
4. All parties agreed that the Principles could not displace or impair any statutory provisions which regulate how the Commission is to perform its award-making functions. It was suggested by the FBEU, Unions NSW agreeing, that the "Special Case Principle" had a tendency to be considered wrongly by parties, and occasionally the Commission, as something akin to a jurisdictional barrier to an application. The consensus among the Secretary, Unions NSW, the FBEU and LGNSW was that the Principles should function as no more than "guidelines".
5. We understood that submission to convey that the Principles cannot oust or override the Commission's statutory functions, which is correct. However something needs to be said as to what it means for the Full Bench to set "guidelines". The Principles are not simply aspirational statements of intent. They cannot oust or override statutory considerations, but they lose their purpose and utility if they can be departed from without good reason.
6. We propose a new principle 1.1 to clarify the effect of the Principles, as follows: 1. Preamble 1.1 These Principles guide the exercise of discretion when making or varying awards under ss 10 and 17 the Industrial Relations Act 1996 (the Act).
7. Proposed principle 1 makes clear that the Principles exist to guide the exercise of the Commission's discretion when making or varying awards, to ensure that this discretion is applied consistently, and to assist parties to prepare cases with the knowledge of what needs to be established, consistent with s 21(2).

Whether applicants have an onus or must overcome a presumption

1. We affirm the longstanding principle that applicants for the making or variation of awards bear the onus when seeking to alter the status quo to establish a case for doing so. This will usually be both an evidentiary and a persuasive onus, although in some cases, as discussed below, there may be no evidence required. However, the nature and function of this onus is apt to be misunderstood and misapplied if cast in terms of a universally applicable rebuttable presumption that existing awards set fair and reasonable terms and conditions of employment. For this reason, the formulaic application of such a presumption in this context should be avoided. It should not be regarded as a proxy or substitute for the task of ensuring that any award the Commission makes or varies meets the statutory obligation in s 10 to set fair and reasonable conditions of employment for employees. In many cases, the presumption may be usefully applied, especially when faced with an application to remove an existing condition, and in such cases the distinction between it and the evidentiary or persuasive onus will make little practical difference. But for the reasons we set out in this section, the better approach to the task of setting conditions in conformity with s 10 is to focus attention on the need to meet the underlying persuasive onus, rather than to overcome a presumption.
2. Kite AJ in Re Transport Industry - General Carriers Contract Determination [49] succinctly expressed the underlying persuasive onus borne by a party in the context of award-making as follows: "It has long been recognized that Industrial Tribunals are in a different position to the general courts. The duty of the Commission is to make an award or determination which prescribes fair and reasonable rates and conditions. In doing so the Commission is not bound by the rules of evidence or to act in a formal manner but 'is to act according to equity, good conscience and the substantial merits of the case without regard to technicalities or legal forms'. See s 163(1)(c) of the Act. The various authorities referring to the 'onus' born[e] by a party are to be understood in that context. There must be information before the Commission which allows it to be satisfied that the determination or award, if made, will provide just and reasonable rates and conditions. The assessment of the adequacy of that material will vary according to the nature of the case, including the degree of consent, before the Commission: see Re Butchers, Wholesale (Cumberland) Award [1971] AR (NSW) 425 especially at 437-440." (Emphasis added.)

How the Act's mandatory considerations are to be addressed (new principle 2)

1. The parties correctly noted that the Principles do not and cannot oust the mandatory statutory obligations that regulate how the Commission makes and varies awards. They include s 10 of the Act, obliging the Commission to make an award that sets "fair and reasonable conditions" and s 146. Subsection 146(2) provides: 146 General functions of Commission … (2) The Commission must take into account the public interest in the exercise of its functions and, for that purpose, must have regard to - (a) the objects of this Act, and (b) the state of the economy of New South Wales and the likely effect of its decisions on that economy, and (c) for the exercise of a function about public sector employees - the fiscal position and outlook of the Government and the likely effect of the exercise of the Commission's function on the position and outlook.
2. Subsection 146(2)(c) was inserted by the Industrial Relations Amendment Act 2023.
3. The preamble in the existing Principles makes reference to matters that are mandatory considerations. Subprinciple 1.2.1 states: 1. Preamble … 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; … (emphasis added.)
4. The Secretary, LGNSW and FBEU supported amending the preamble to the Principles to reflect new s 146(2)(c). It seems to us to be more appropriate that any document setting out how the award-making discretion is to be exercised should state in clear terms the mandatory considerations to be considered. The addition of s 146(2)(c) is another reason to set out the mandatory considerations in the Principles, to ensure its application.
5. We will include a new principle 2 that will set out the mandatory considerations to which the Commission must have regard when determining an application to make a new award or vary an existing award. This principle, together with the new principle 1, will replace the existing preamble which sets out the purposes of the principles. While there is nothing incorrect about the extant preamble, except that it predates the addition of s 146(2)(c), we consider it preferable that the Principles be limited to identifying the matters that the Commission is to consider when making new awards or varying existing awards. The Principles do not need to set out their purposes, beyond a statement of the mandatory considerations.

Whether to create a new principle addressing changes in the cost of living

1. Long before the adoption of the existing Principles, the Commission considered claims for increases to the rates of wages on the ground that the wages have lost their purchasing power, noting that in such cases "[t]he question will be whether work which was valued correctly when the award was made can be regarded as valued correctly after a decline in the purchasing power of money". [62] Following the adoption of the Principles, inflation has been considered by the Commission when determining what wage increase should be awarded. [63]
2. However, the existing Principles do not refer in terms to inflation or changes in the cost of living. Specifically, they do not contemplate that an application can be based on a change in the value of money over time.
3. This is perhaps surprising in circumstances where the Commission is effectively enjoined to ensure that awards are fair and reasonable. It may be explained by understanding the history of the Principles. As noted earlier, the original principles created in the State Wage Case 1983 were drafted on the understanding that there would be an adjustment on a regular basis to reflect CPI increases (originally, every six months), on the condition that unions gave an undertaking not to pursue additional claims except in compliance with the Principles. In those circumstances there was no need for a principle to permit claims to address the issue of inflation. In State Wage Case March 1987, [64] the Full Bench of the Commission adopted the AIRC's decision in National Wage Case March 1987 [65] to change the Principles significantly. The AIRC removed the principle that award pay would be regularly adjusted in relation to CPI increases. Instead, it adopted a two-tier system, whereby all award wages would be increased by $10 per week, with further wage increases available to parties who could demonstrate that measures had been implemented to improve efficiency in the relevant sector. Since 1987, the Principles have not explicitly provided for award wage increases on the basis of inflation.
4. The Secretary was supportive of maintaining the real value of award rates of pay over time. However, the Secretary opposed the creation of a distinct principle to address the issue. The Secretary's primary concern, it seems, was to avoid the introduction of a process that would create an "inflexible 'principle' that mandates (or prioritises) the maintenance of real wages when fixing wages" and "undermines the important function of the Commission involving the evaluation of multiple considerations", including mandatory factors such as the Government's fiscal position and outlook. In his submissions, the Secretary also referenced the decisions of the Full Bench of this Commission in State Wage Case 2010 (No 2) and State Wage Case 2020 (No 2). [66] In both decisions, the Full Bench rejected specific modifications proposed by Unions NSW to permit the consideration of pay increase claims on the basis of economic considerations including the changing value of money over time, as that could "result in the ratcheting up of labour costs over time and … [be] against the public interest". [67]

Future cost of living adjustments

1. Our consideration above has been directed to the introduction of a new Change in the Value of Money Principle, which can lead to an increase being awarded as an Arbitrated Case.
2. We have given some thought as to how applications to adjust public sector awards in line with changes in the value of money might be conducted efficiently in the future. Cases that require the Commission to consider economic evidence to establish relevant changes in the cost of living, along with consideration of the state of NSW's economy and the Government's fiscal position and outlook are substantial exercises ordinarily involving expert evidence. [73] It would be inefficient for the Commission to have to consider afresh all the relevant evidence every time an application is made to increase wages to a public sector award arising from changes to the cost of living. It would give rise to the real potential that consideration of the issue at different times, and with different evidence, might lead to inconsistency. A case for a CPI increase that involves an award applying to 100,000 public sector employees would give rise to quite different evidence as to the impact it would have on the NSW Government's fiscal position, compared to a case involving an award applying to just 1,000 employees. That may give rise to different outcomes for applications otherwise made on the same basis.
3. One way to address those practical issues in the future would be for the State Wage Case to determine each year a paid rates award adjustment for public sector awards. Such an adjustment would be set having regard to the Annual Wage Review and all of the mandatory considerations.
4. We do not consider it appropriate to automatically apply such an adjustment to public sector awards. The better approach would be for the adjustment to be available upon application and only for awards which are outside of their nominal term, which have not had an increase for 12 months and where bargaining has been attempted but unsuccessful.
5. Such an approach would not prevent the consideration of particular circumstances in individual awards, but it would allow for a common approach to be ordinarily taken. Amongst other benefits, this approach would provide a much higher certainty of outcome and be likely to avoid the need for substantial evidence when considering an application to apply such an adjustment.

Whether to retain existing principle 6 - Award Review Classification Rate

1. The existing principle 6 (Award Review Classification Rate) states: 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).
2. We have considered the relevance of this principle and have determined that the principle should be retained. However, in our view it can be shortened to simplify it and link it to the National Minimum Wage without making any change to its intended effect, which remains to provide a mechanism whereby any rate in an existing award that has fallen below the national minimum rate can be addressed.
3. We have determined to amend the name of the principle and reduce it accordingly. The following clause contains our view as to how those changes ought to be reflected in the text: 6. Minimum Rate of Pay The Commission can vary an award on application or on its own motion where a classification in an award provides a rate of pay below the minimum rate set by the National Minimum Rates Order as made by the Fair Work Commission from time to time.

Whether to retain existing principle 7 - Minimum Wage for Award/ Agreement Free Employees

1. The existing principle 7 "Minimum Wage for Award/ Agreement Free Employees" states: 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.

Whether to amend the Productivity and Efficiency Principle

1. Existing subprinciple 8.3 "Productivity and Efficiency Considerations" reads: 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.
2. Every party submitted that the existing Principle should be varied in some manner.
3. In support of his submissions the Secretary relied upon an exhibit annexed to two affidavits by senior NSW Treasury employees which addressed how "productivity" should be defined. The exhibit took the form of a position paper titled "Productivity Considerations for the Industrial Relations Commission of New South Wales Review of Wage Fixing Principles dated 23 August 2024". It was drafted by staff from the NSW Treasury's Economic Strategy and Productivity Group. The position paper was presented in a manner akin to an expert report, but it was not presented in the form required to be accepted as expert evidence. For example, it did not include the identity or qualifications of the authors or sources of information relied upon during the position paper's preparation. The FBEU identified in advance that it took exception to the position paper being relied upon as expert opinion and wrote to the Crown Solicitor's Office seeking various documents relating to the position paper's preparation. The Secretary responded to confirm that he intended to rely on the position paper as a submission and that the two affidavits of the senior NSW Treasury employees would not be read during the proceedings. As the FBEU submitted in its submissions in reply, this limits the force of the position's paper during these proceedings.

Whether to amend the Special Case Principle

1. The existing subprinciple 8.4 titled "Special Case Considerations" states: 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].
2. All parties other than the FBEU supported the retention of this subprinciple, although the APA was the only party that supported retaining the subprinciple in its current form.
3. The Secretary submitted that the principles established in Re Operational Ambulance Officers (State) Award, [80] and the cases referred to in that decision at [165]-[168], should be included in the subprinciple to avoid ambiguity. LGNSW submitted that a special case should be defined to include claims that are either necessary to address "out of the ordinary" issues or ensure fair and reasonable terms and conditions of employment, and that are in the public interest. Unions NSW submitted that a special case should be broadly defined to be any claim that cannot be made under another principle.
4. The FBEU submitted that it should not be retained in any form. It submitted that the historical justification for the principle, which is that the principle restricts claims for further wage increases in exchange for annual wage increases according to the rest of the Principles, no longer exists; that the principle is sometimes wrongly treated as a faux-jurisdictional prerequisite by the parties, and occasionally the Bench; and that the concept of a "special case" is so ambiguous as to be meaningless.
5. There is much force in the FBEU's submission that the existing principle simply expresses the "proposition that if a party seeks a change based on factors other than the established grounds it will need to persuade the Commission that this is warranted" and the "idea that the Commission will exercise its wage fixation powers in a manner which has regard to the need for structural stability and consistency". Moreover, the summary of cases in which the principle has been applied at [26]-[31] in the Secretary's written submissions tends to demonstrate that it is difficult to discern a clear test that can be readily applied in a consistent manner.

Whether to amend existing subprinciple 8.5.1 dealing with attraction and retention and exclusions

1. It is a long-standing industrial principle that increases in pay will not be awarded to address issues of attraction and retention. [82] That principle is reflected in existing subprinciple 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.
2. The Industrial Relations Amendment Act 2023 amended the objects in section 3 of the Industrial Relations Act to insert, at subsection (i), the object of encouraging "strategies to attract and retain skilled staff where there are skills shortages so as to ensure effective and efficient delivery of services".
3. It was the position of most parties that the words "attraction and retention" in subprinciple 8.5.1 are inconsistent with the new object in subsection 3(i) of the Industrial Relations Act and ought to be removed. We agree. There is also no reason to maintain reference to the two authorities in the subprinciple, as they consider the circumstances in which issues of attraction and retention could in fact be relevant to determining a successful application that relies on existing wage fixing principles. Their removal should not be taken to indicate that they are no longer good authority.
4. The removal of the "attraction and retention" exclusion does not mean the Commission has determined that it will grant wage increases based only on attraction and retention or a shortage of workers. As LGNSW submitted, employers have a range of means to address issues of attraction and retention, of which increasing rates of pay is only one.
5. The long-standing approach of industrial tribunals is to set rates by reference to the value of the relevant work, not the vagaries of market forces which can be affected by a lack of supply. Staff shortages come and go. The flow-on effect of setting wages for the sole purpose of attracting staff was explained in the decision of the Full Bench of this Commission in Re Public Service Board and Public Service Association of New South Wales (Local Courts Anomaly Case), [83] which has been quoted with approval by subsequent Full Benches: [84] "Attraction rates … reflect the problems of management and not the true value of the work required. Furthermore, they can set up within a wages structure pressures towards defensive increases designed to retain staff under challenge from rates elsewhere. … There can arise a circular self perpetuating process of wage enhancement against which we should be on guard."

Whether to amend the Negotiating Principles

1. The existing principle 9 (Negotiating Principles) states: 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.

Whether to add a new obligation on employers to provide relevant information at the outset of bargaining

1. Unions NSW and the APA proposed an additional paragraph to the Negotation Principle recognising that the employer is in a unique position to know certain matters relevant to bargaining that ought to be disclosed at the outset of bargaining. Their proposal would require the employer at the outset to disclose matters affecting the cost of proposed changes, such as the number of employees doing various types of work, along with other matters relevant to particular Principles, such as the extent of changes to productivity. The Secretary accepted that the provision of such information may be of potential utility to allow for the evaluation of options but contended that there was no need for the Principles to contain a provision requiring the procurement of such information because the Government's Fair Pay Bargaining Policy provided that information permitting the evaluation of options would be provided.
2. We are not minded to adopt the broad obligation sought by Unions NSW or the APA. As submitted by the Secretary, the proposed clause is "nebulous and overly broad" and would place an undue burden on Government employers without sufficient precision in the obligation.
3. We are, however, satisfied that we should include a new subprinciple that permits a party to request relevant information which would not be unreasonably refused. In our view it is appropriate that public sector employers provide information that can assist in the formulation of claims or to evaluate options.
4. Disputes about such requests can, like other matters associated with the negotiation process, be addressed through the dispute mechanism in the relevant award (and ultimately determined by the Commission).
5. The following proposed Negotiation Principle, with the changes marked up, contains amendments to the text that give effect to the conclusions reached: 15. Negotiation Principle 15.1 When considering an application for a new award or the variation of an award, including the timetabling of such an application, the Commission will have regard to whether the parties have complied with the following. 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. 15.2 In respect of the commencement of negotiations for a new award: (1) At least three months before the nominal expiry date of an award a party contemplating a major industrial case pursuant to Practice Direction 8A to the award must notify the Commission (where a major industrial case is contemplated pursuant to Practice Direction 8A) and the other relevant parties at least three months before the nominal expiry date of to the award that it is their intention to enter into negotiations for a new award in respect of claims justified under one or more of the Arbitrated Case criteria; pursuant to Principles 8 and/or 11. (2) Tthe 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;. (3) prior to or at the outset of negotiations, a part can make a reasonable request to another party for relevant information to evaluate options or develop claims and that request will not be unreasonably refused; (4) Ddisputes about these procedures will be dealt with in accordance with the dispute resolution procedures in the relevant award applying to the parties to the dispute. 15.3 In respect of any claim to alter existing wages and conditions, including to modernise or consolidate awards, each 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 to bargained beforehand in good faith prior to any arbitration commencing. In particular, parties are expected to have: (1) consider whether to enter into mutual gains bargaining under Chapter 2A of the Act; (2) attended meetings they have agreed to attend and had been be represented at the negotiations by persons capable of giving genuine consideration and reasoned responses to the proposals of other parties and giving reasoned responses to those proposals; and (3) complyied with agreed or reasonable negotiating or meeting procedures; and (4) disclosed relevant information for the purposes of negotiation; and (5) responded to each other's claims and/or counter claims in a reasonable and timely manner; and. (6) to the extent that agreement is reached, apply by consent to the Commission to make a new award or vary an award to give effect to that agreement. 15.4 These good faith bargaining requirements do not require a party to: (1) a party to make concessions during bargaining; or (2) to reach agreement on the terms that are to be included in the agreement. 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. 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. 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. (Emphasis added to indicate the amendments. Text that was inserted is bolded and text that was deleted is struck through.)

Whether the Principles should contain a Model No Extra Claims clause

1. The Secretary contended that the Principles could include a model no extra claims clause that could be inserted into an award by consent or after an arbitration, where the Commission considers that it is appropriate to do so. A draft clause was provided with the Secretary's written submissions.
2. Following the hearing, the Secretary filed a note proposing amendments to his model clause. The Secretary's clause marked up with his subsequent amendments read: Other than as provided for in the Industrial Relations Act 1996, during the nominal term of the Award, there will be no further claims/demands or proceedings instituted, or claims made in any proceedings, before the NSW Industrial Relations Commission for the making of an Award or the variation of an Award to give effect to extra or reduced wages, salaries, rates of pay, allowances or conditions of employment with respect to the Employees covered by the [Award/Enterprise Agreement] with an operative effect during the nominal term of this Award that take effect prior to the nominal expiry of the [Award/Enterprise Agreement] unilaterally made by a party to this [Award/Enterprise Agreement] unless otherwise agreed to by the parties. Provided that this clause does not prevent the Parties from continuing conducting collaborative discussions during the life nominal term of the [Award/Enterprise Agreement] involving proposals to deliver additional enhancements to remuneration and/or conditions of employment, and to achieve additional industry wide and systemic efficiencies and productivity improvements to the delivery of Government services to the public. Further, this clause does not prevent: Changes to conditions or salaries may be jointly progressed and, if agreed, an application to vary the Award/Enterprise Agreement may be made (i) Award variation applications being made by consent prior to the nominal expiry date of end of the nominal term of the Award to reflect the agreed outcome of collaborative discussions. (ii) Consent applications being made to the NSW Industrial Relations Commission during the nominal term of the Award for matters to be arbitrated, with the operative effect of any arbitrated decision and any consequential changes to the Award terms and conditions to take place on a date agreed by the parties or the date determined by the Commission in accordance with the IR Act. (Emphasis added to indicate the Secretary's amendments. Text that was inserted is bolded and text that was deleted is struck through.)

Whether to retain the Superannuation Principle

1. The existing principle 10 (Superannuation) states: 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) ("SGA Act"), 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.

Whether the Equal Remuneration Principle should be amended

1. The existing principle 11 (Equal Remuneration and Other Conditions) states: 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.

Whether to retain the Economic Incapacity Principle

1. The existing principle 12 (Economic Incapacity) states: 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.
2. Unions NSW, the APA and the FBEU all contended that the Economic Incapacity Principle should be removed. Unions NSW contended that absent an economic catastrophe of unprecedented proportions, it is difficult to anticipate a situation where the State of New South Wales or a local council would be in a position where this principle could apply, and in such situations the Special Case Principle could be applied. It agreed with the FBEU's submissions that the Principle was drafted with micro-private sector enterprises in mind and is no longer relevant.
3. The Secretary and LGNSW both contended that there remained value in retaining the Principle. LGNSW referred to the recent pandemic and like situations which, while highly uncommon, could give rise to a need to adjust award obligations, on a temporary basis, in order to avoid austere consequences for both employees and employers.
4. The LGNSW noted that the Principle had been applied to employers within the current jurisdiction of the Commission. [95]
5. The Principle has rarely been used and given the nature of the employers within the jurisdiction of the Commission, is quite unlikely to be used in the future. However, and notwithstanding the existence of the Special Case Principle, we are prepared to retain it in its current form. We accept that in the unlikely event that a relevant situation arises, it would be useful to have a principle that provides a clear identification of the matters to be considered.

Whether to amend the Transitional Provisions

1. Existing principle 13 provides: 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 the State Wage Case 2020 (No 2) [2020] NSWIRComm 1079 ("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.
2. The FBEU and Unions NSW submitted that subprinciple 13.2 could be deleted, so that the new Principles are able to operate in respect of applications to amend all awards, whether within their nominal term or otherwise. They submitted that it was preferable for the Commission to apply Principles that are reflective of the amendments made last year to the Industrial Relations Act and to avoid what would otherwise be an inconsistent application of old and new Principles across otherwise similar matters.
3. We accept the force of those submissions. We have deleted the text of the existing 13.2 from the proposed principle 17. This removal will not affect any part-heard matters, in which we will continue to apply the Principles from State Wage Case 2022, but will otherwise have the new Principles apply from the date they are made.

Next steps

1. What follows in Annexure A is our view as to the form of the Award Making Principles, reflecting our reasons for decision.
2. They contain further changes to those identified above of a less significant nature, including as to the format, headings, order and some minor additions.
3. The parties have until 13 December 2024 to file submissions that address the drafting of the attached proposed principles. This is not an invitation to rerun arguments that have been put and determined. Rather, we seek the parties further assistance to ensure that the proposed text does not give rise to any unintended consequences and to address any infelicitous language. The Commission intends to finalise the Principles before the end of the year and for that reason will be unable to grant any extension to that deadline.

DIRECTIONS 1. By 4.00pm on Friday, 13 December 2024 the parties are to file any submissions they may wish to make as to the terms of the draft Principles which are Annexure A to this decision.

Annexure A - The 2024-2025 Award Making Principles Draft provided for comment

Preamble 1.1 These Principles guide the exercise of discretion when making or varying awards under ss 10 and 17 the Industrial Relations Act 1996 (the Act).

Mandatory considerations 2.1 When determining an application to make a new award or to vary an existing award, whether by consent or otherwise, the Commission must have regard to: 1. whether the terms of the award as made or varied will set fair and reasonable conditions of employment for employees; and 2. the public interest, and in that respect must have regard to: 1. the objects of the Act, including the effect of the award as made or varied on: 1. the promotion of productivity and efficiency; 2. the promotion of participation in industrial relations by employees and employers at an enterprise or workplace level; 3. the elimination of discrimination in the workplace, in particular ensuring equal remuneration for all persons doing work of equal or comparable value; and 4. strategies to attract and retain skilled staff where there are skill shortages so as to ensure effective and efficient delivery of services; 1. the state of the economy of New South Wales and the likely effect of the decision on that economy; and 2. in respect of an award that will apply to public sector employees, the fiscal position and outlook of the Government and the likely effect of the award as made or varied on the position and outlook.

When an Award may be Varied or Another Award Made without the Claim Requiring Consideration as an Arbitrated Case 3.1 Provided it otherwise complies with the requirements of the Act, an award may be made or varied without the application needing to be considered as an Arbitrated Case under Principle 9: 1. in accordance with an express provision in an award that provides for its variation; 2. to incorporate test case standards, in accordance with Principle 5; 3. to adjust wages consistent with a State Wage Case decision, in accordance with Principle 6; 4. to adjust allowances and service increments, in accordance with Principle 7; 5. to adjust wages to ensure that they are not below the National Minimum Rates Order as made by the Fair Work Commission, in accordance with Principle 8; or 6. where the application is consented to by the parties.

No extra claims commitments 4.1 A consent application to make or vary an award may involve parties giving a no extra claims commitment in agreed terms. Such a commitment may take the form of an undertaking to the Commission not to pursue claims for different terms and conditions that would take effect during the nominal term of the award, with or without identified exceptions. 4.2 Absent extraordinary circumstances, the Commission will not entertain an application to vary or make an award that is inconsistent with a no extra claims commitment unless otherwise expressly permitted by the award. 4.3 The Commission will not include in an award a clause that prohibits a party making an application under the Act or participating in proceedings under the Act.

Test Case Standards 5.1 There is a presumption that test case standards established and/or revised by a Full Bench of the Commission will be incorporated into an award on application.

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

Adjustment of Allowances 7.1 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. 7.2 If an order is made pursuant to Principle 6 for an adjustment to be made to the applicable award, that adjustment will also apply to existing allowances which relate to work or conditions which have not changed other than in line with whole of award salary adjustments, including shift allowances expressed as monetary amounts and service increments. 7.3 New allowances may be awarded to compensate for the reimbursement of expenses incurred where appropriate. 7.4 Otherwise, applications to increase existing allowances or create new allowances in the absence of consent will be determined in accordance with the Arbitrated Case Principle.

Minimum rate of pay 8.1 The Commission will vary an award on application or on its own motion to increase a rate of pay in an award which is below the minimum rate set by the National Minimum Rates Order as made by the Fair Work Commission from time to time.

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

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

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

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

Special Case Principle 13.1 A new award or a variation to an existing award can be granted otherwise than under one or more of the preceding Arbitrated Case principles where an applicant can demonstrate that the matter has special attributes or is out of the ordinary in a manner that warrants approval by the Commission despite the restrictive considerations imposed by these principles. 13.2 Care should be taken not to rely on factors already taken into account in establishing a predecessor award.

Value of Money Principle 14.1 The Commission can make a new award or vary an award to address changes in the real value of money having regard to: 1. the mandatory considerations in Principle 2 including the need to ensure that the award rates remain fair and reasonable; 2. the status of bargaining between the parties to the Award; 3. the likelihood of that bargaining concluding in a timely fashion; and 4. the terms of any no extra claims undertaking that relevant unions provide to the Commission in order to obtain the increase; in circumstances where: 1. the award applies to public sector employees; 2. the nominal term of the existing award has expired; 3. the employees covered by that award have not had an increase in rates for at least 12 months; 4. no paid rates adjustment has been set pursuant to Principle 6; and 5. each union party to the award gives a no extra claims undertaking in the following terms, or in such other terms as the parties agree or the Commission considers appropriate in the circumstances: [Name of union] undertakes not to pursue any further claims in proceedings before the Industrial Relations Commission in respect of employees covered by the award that would take effect during its nominal term. Provided that this undertaking does not prevent: (i) participation in collaborative discussions to amend the award by means of mutual gains bargaining or otherwise; (ii) making an application to vary the award by consent; (iii) participation in a consent arbitration; (iv) participation in a s 19 review or other proceedings initiated by the Commission or another party that affects the award; or (v) pursuing and giving effect to claims under the Gender Based Undervaluation Principle during the nominal term.

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

Economic Incapacity Principle 16.1 Any employer or group of employers bound by an award may apply, temporarily or otherwise, to 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 on a case by case basis and any relevant material shall be rigorously tested. Significant unemployment or other serious consequences for the employees and employers concerned are important factors to be taken into account in assessing the merit of any application. 16.2 Such an application will be processed according to the Special Case Principle. 16.3 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.

Transitional provisions 17.1 Other than as provided at 17.2, these Principles apply to: 1. any application to make or vary an award that is made on or after the date of commencement of these Principles; and 2. 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). 17.2 Paragraphs 6.3 to 6.6 have no application prior to the 2025 State Wage Case, which will consider whether to make a paid rates adjustment and whether there should be any alteration to those paragraphs.

Duration 18.1 These Principles will operate on and from 20 December 2024 until further order of the Commission.

The Commission makes the following order pursuant to s 51:

A. Minimum Wage for Award/Agreement Free Employees A.1 [Draft provided for comment] Employees within the jurisdiction of the Act whose employment is not subject to the terms of an industrial instrument shall be paid not less than the rate prescribed by the National Minimum Wage Order as made by the Fair Work Commission from time to time.

Paper from NSW Treasury, "Productivity Considerations: For the Industrial Relations Commission of New South Wales Review of Wage Fixing Principles" (23 August 2024) Productivity and Efficiency Considerations

1. Purpose 1.1. The Industrial Relations Commission of New South Wales (IRC) is conducting a broad review of the form and content of the IRC's wage fixing principles. 1.2. The Industrial Relations Commission of New South Wales (IRC) is conducting a broad review of the form and content of the IRC's wage fixing principles. 1.3. This paper outlines matters NSW Treasury considers relevant for defining, assessing and measuring productivity enhancing reforms in the NSW Government industrial relations context, to support the IRC in its review.
2. Defining Productivity Productivity is an economic concept relating to real inputs and outputs. 2.1. According to the Reserve Bank of Australia, "productivity refers to how much output can be produced with a given set of inputs" (RBA, 2024). It reflects how well an economy, industry or organisation utilises its resources to generate goods and services. 2.2. Productivity improvements are changes that allow more output to be produced with a given set of inputs. For example, a process redesign that allows the same number of surgeons (given inputs/labour hours) to undertake more life-saving surgeries (increased output volumes), is a productivity improvement, assuming there was no offsetting decline in quality of surgery or increase in other inputs. 2.3. Closely related to productivity is efficiency. Being more efficient can be one way to improve productivity. 2.4. Higher productivity is the main source of real per capita income growth in the long term and helps to improve living standards and national wellbeing (Australian Government, 2023). There are many ways to improve productivity. 2.5. Productivity or efficiency improvements in the public sector could arise from: 2.5.1. delivering the same service (quality or quantity) with fewer inputs (i.e. efficiency). For example, processing the same number of licence applications using fewer labour hours through a change in processes (all else being equal) 2.5.2. delivering a better service (quality or quantity) with the same inputs. For example, extending operating hours of a service through changes to rostering, without changing staff hours overall (all else being equal) 2.5.3. achieving a large reduction of inputs, with a slight reduction in service quality/quantity. For example, digitising a service may slightly reduce customer experience but with a large reduction in the staffing hours required for service delivery (all else being equal) 2.5.4. achieving a large improvement in service quality/quantity, with a relatively small increase of inputs. For example, implementing telehealth consultations might require a modest upgrade to IT equipment, but greatly improve services to remote areas (all else being equal). 2.6. The following do not constitute productivity or efficiency improvements: 2.6.1. gaining a small improvement in output with a proportionate or relatively large increase in inputs 2.6.2. achieving a small reduction in inputs with a proportionate or relatively larger reduction in service quality/quantity 2.6.3. gaining a small improvement in quality, with no extra inputs, but with a relatively large reduction in output 2.6.4. slightly boosting output, with no extra inputs, but with a relatively large reduction in quality. 2.7. Common drivers of public sector productivity include: 2.7.1. improving management practices 2.7.2. more effective/efficient working practices or processes 2.7.3. creating a culture of continuous improvement and innovation 2.7.4. adopting technology and/or infrastructure that make processes more efficient overall (for example, effective use of data, technological advances, effective use of ICT, better use of data) 2.7.5. ensuring workers' skills and competencies are fit for purpose (both technical and soft skills) 2.7.6. using markets and/or competition to strengthen incentives (new entry and market creation) 2.7.7. reducing red-tape to encourage efficiency and/or innovation 2.7.8. service redesign and alternative delivery mechanisms (prevention/early intervention) 2.7.9. responding to context specific needs, especially regional or local requirements 2.7.10. establishing governance, accountability, and measuring and incentivising performance 2.7.11. improving resource allocation (reconfiguring services) and budgeting. 2.8. Every decision government makes involves a trade-off between different uses of resources. Some reforms may be productivity enhancing, but not as much as alternative reforms. Productivity is not a financial concept, but financial variables can impact it 2.9. Productivity relates to real inputs like labour hours, machinery, land, technology, and real outputs like goods and services. Factors like revenue, expenditure, wages, profit, financial costs, capital expenditure (etc.) are financial variables not real variables, and so do not factor directly into productivity. 2.10. Changes to financial variables can, however, impact productivity when they influence real inputs and/or real outputs. But these impacts are often indirect and have to be established in the circumstances. For example, all other things being equal, increasing wage rates does not directly change productivity, whereas increasing labour hours does. A higher wage rate may, however, in practice divert funding from other uses and in doing so indirectly impact real inputs and outputs and hence productivity. 2.11. Productivity reforms may or may not result in fiscal savings, and fiscal savings may or may not improve productivity. The Government takes the fiscal impacts of proposed productivity reforms into account when considering them, as well as its broader fiscal position and objectives. 2.12. The IRC has specifically invited submissions to address the relationship between an improvement in the quality of public sector services and employee-related costs. Some points are relevant in relation to this: 2.12.1. changes in employee-related costs may or may not improve public services 2.12.2. improvements in public services may or may not result in or be caused by changes in employee-related costs 2.12.3. establishing the relationship requires an analysis of the circumstances as the relationship will differ from setting to setting 2.12.4. an improvement in the quality of public sector services does not necessarily indicate that productivity has improved, as this would also require an analysis of whether and how inputs have changed too 2.12.5. employee-related costs is a financial variable and does not directly factor into productivity (whereas real inputs like labour hours do).

Endnotes

1. Fair Work Act 2009 (Cth).
2. Industrial Relations Act 1996 (NSW), s 21(2)(b).
3. (1983) 5 IR 1.
4. Crown Employees (School Administrative and Support Staff) Award [2019] NSWIRComm 1082 at [15].
5. Industrial Relations Amendment Act 2023 (NSW), Sch 1.2, Sch 1.3 item 4.
6. Industrial Relations Act (NSW), ss 3(i), 146(2)(c).
7. (2024) 331 IR 248; [2024] FWCFB 3500.
8. [2024] NSWIRComm 1.
9. State Wage Case 2024 (No 2) [2024] NSWIRComm 6.
10. [2022] NSWIRComm 1081.
11. [2024] NSWIRComm 1.
12. New South Wales, Industrial Relations, Premier's Department, NSW Government Fair Pay and Bargaining Policy 2023, (November 2023).
13. (1983) 5 IR 1.
14. (1983) 4 IR 429.
15. (1983) 4 IR 429 at 432.
16. (1983) 4 IR 429 at 472.
17. (1983) 4 IR 429 at 451.
18. (1983) 4 IR 429 at 472.
19. We express the latter exception in the draft subprinciple 4.2.
20. See State Wage Case August 1997 (1997) 73 IR 200 at 219.
21. National Wage Case August 1988 (1988) 25 IR 170; State Wage Case August 1988 (1988) 26 IR 24.
22. National Wage Case August 1989 (1989) 30 IR 81; Re State Wage Case August 1989; Re Minimum Rates Adjustment (1990) 35 IR 183.
23. National Wage Case October 1991 (1991) 39 IR 127; State Wage Case March 1992 (1992) 41 IR 239.
24. National Wage Case April 1991 (1991) 36 IR 120; State Wage Case May 1991 (1991) 36 IR 362.
25. (1993) 52 IR 157.
26. (1990) 35 IR 183 at 195.
27. (1994) 57 IR 1.
28. (1997) 73 IR 200.
29. (1998) 79 IR 37.
30. State Wage Case June 1998 (1998) 79 IR 416 at 439.
31. (1998) 79 IR 416.
32. State Wage Case 2010 (2010) 201 IR 155; [2010] NSWIRComm 183 at [74].
33. State Wage Case 2010 (2010) 201 IR 155; [2010] NSWIRComm 183.
34. [2021] NSWIRComm 1079.
35. Workplace Relations Amendment (Work Choices) Act 2005 (Cth).
36. State Wage Case 2006 (No 6) (2006) 153 IR 268; [2006] NSWIRComm 204 at [10]; State Wage Case 2010 (2010) 201 IR 155; [2010] NSWIRComm 183 at [71].