State Wage Case 2024 (No 2) [2024] NSWIRComm 6

Category 1 1. Security Industry (State) 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;

Category 2 1. Local Government (Electricians) (State) Award; 2. Entertainment and Broadcasting Industry - Live Theatre and Concert (State) Award;

Category 3 1. Local Government Aged Disability and Home Care (State) Award; and 2. Nurses' (Local Government) Residential Aged Care Consolidated (State) Award 2021.

1. The Full Bench directed the parties to file written submissions addressing the quantum and timing of any increase to Category 1 awards by reason of AWR 2024 while changes in respect of Category 2 and 3 awards were the subject of further directions before the Vice President on 9 and 27 August 2024. [2]
2. On the question of the Category 1 awards, following repeated and regrettable instances of non-compliance with the Commission's procedural orders, the parties eventually committed their respective cases to writing: Unions NSW filed submissions on 7 and 26 August 2024 and 17 September 2024, and the Industrial Relations Secretary (Secretary) filed submissions on 13 August 2024 and 12 September 2024.
3. At the directions hearing before the Vice President on 27 August 2024 the parties confirmed that no evidence concerning the Category 1 awards would be called or relied on in the Stage 1 proceedings, and his Honour determined, with the consent of the parties, that the Full Bench would proceed to decide the quantum and timing of any increase to Category 1 awards after the close of written submissions and without a hearing.
4. Although the parties agree that the 3.75% increase awarded in AWR 2024 should be adopted for the Category 1 awards, they differ as to the timing of such an increase. Unions NSW contends that the increases should take effect from 1 July 2024, whereas the Secretary argues primarily for the increases to apply from the usual commencement dates of each of the Category 1 awards which are as follows: [3] 1. Security Industry (State) Award - 16 April 2025 2. Miscellaneous Workers - Kindergartens and Child Care Centres, &c. (State) Award - 16 December 2024 3. Health, Fitness and Indoor Sports Centres (State) Award - 16 December 2024 4. Transport Industry (State) Award - 1 April 2025 5. Clerical and Administrative Employees (State) Award - 16 December 2024.
5. In the alternative, the Secretary submits that the quantum of the increase should be prorated to adjust for any earlier commencement date, as follows: 1. Security Industry (State) Award - 0.77% for 1 July 2024 to 30 June 2025 (equivalent to 3.75% for 16 April 2025 to 30 June 2025); 2. Miscellaneous Workers - Kindergartens and Child Care Centres, &c. (State) Award - 2.01% for 1 July 2024 to 30 June 2025 (equivalent to 3.75% for 16 December 2024 to 30 June 2025); 3. Health, Fitness and Indoor Sports Centres (State) Award - 2.01% for 1 July 2024 to 30 June 2025 (equivalent to 3.75% for 16 December 2024 to 30 June 2024) 4. Transport Industry (State) Award - 0.92% for 1 July 2024 to 30 June 2025 (equivalent to 3.75% for 1 April 2025 to 30 June 2025); and 5. Clerical and Administrative Employees (State) Award - 2.01 % for 1 July 2024 to 30 June 2025 (equivalent to 3.75% for 16 December 2024 to 30 June 2025).
6. Unions NSW and the Local Government and Shires Association of New South Wales (LGNSW) were able to reach complete agreement on the awards in Categories 2 and 3. Unions NSW has filed proposed consent orders and award variations to increase award rates by 3.75% with increases to take effect on and from the first full pay period commencing on or after 1 September 2024 for these awards.
7. In the proceedings before the Vice President, Ms Salameh for LGNSW raised the prospect of an application to rescind the Entertainment and Broadcasting Industry - Live Theatre and Concert (State) Award on the grounds that it no longer applied to any Local Government employee and was obsolete. However, no party made any application for the rescission of this or any other award. We understand that the potential rescission of this award remains a matter of discussion between the parties which, for the time being, seek to vary the award rates by consent. We will return to the issue of the potential obsolescence of one or more of the awards in Categories 1 to 3, and to the need for a general review of their continuing application later in this decision (see [31]-[33] below).
8. The Full Bench has considered the proposed consent short minutes of order to vary the Category 2 and Category 3 awards, is satisfied that the orders sought comply with the requirements of the Act, and has determined to make those consent variations.
9. The following section of this decision addresses the remaining issue in dispute with respect to Category 1 awards.

Category 1 awards - the parties' submissions

1. Unions NSW submits that increasing rates from 1 July 2024 is the "default position" when the Commission decides to adopt the principles or provisions of a National decision such as AWR 2024 under s 50(1) of the Act. According to Unions NSW, the timing of the increase of "3.75 per cent, effective from 1 July" [4] is itself a "provision" of the National decision which must be flowed-on as required by the Wage Fixing Principles. [5] Unions NSW contends that for the Commission not to wholly adopt the provisions of AWR 2024 including the timing of the increase, the Commission must be satisfied that awarding increases from 1 July 2024 is "not consistent with the objects of this Act or there are other good reasons for not doing so". [6]
2. The following propositions are among the reasons advanced by Unions NSW for doing so: 1. Delivering the AWR 2024 increases without unnecessary delay is of primary importance due to the Commission's duty to ameliorate the decline in the real value of wages of employees covered by Category 1 awards. 2. If the current commencement dates are maintained, six classifications in the Category 1 awards will be below the National minimum wage of $915.90 per week for periods of between 5 to 10 months. 3. There is no relevant precedent that militates in favour of maintaining the commencement dates as they historically proceeded on a consent basis due to administrative constraints imposed from the now removed "wages cap". [7]
3. The Secretary submits that only the "the rates of pay" (quantum) should be regarded as a "provision" of a National decision for the purposes of s 50(1) of the Act, and that accordingly no "default position" exists for the timing of the increase. The Secretary points to the statutory limitation on the extent to which awards may apply retrospectively (s 15(3) of the Act) which the Secretary contends would prevent the Commission from adopting the timing of a wage increase in a National decision if that timing was "earlier than the date on which the Commission itself initiated proceedings for the award". The Secretary also points to the Commission's historical focus of being concerned to adopt the minimum rates, rather than on the timing of the increases to those rates.
4. The Secretary otherwise asserts that 1 July 2024 ought not to be adopted as the operative date because, it is said, there is administrative efficiency and utility in maintaining the existing award commencement dates which have been largely consistent for 15 years; and because it would result in the employer funding what the Secretary contends would be a "double payment" for the period of overlap between this increase and the increase from State Wage Case 2023, [8] which is not fair or reasonable.
5. The Secretary's alternative proposal for prorated increases (see [8] above) is said to be for the purpose of avoiding the overlap of this year's increase with the increase that has already been applied to the awards from State Wage Case 2023.

Consideration

1. There is no dispute that AWR 2024 is a National decision within the meaning of s 48 and for the purposes of s 50 of the Act. As observed in State Wage Case 2024 [2024] NSWIRComm 1 at [5], the Commission proceeds on the basis that it is required to consider adopting this decision for the purposes of awards under the Act.
2. The National decision was to increase minimum wage rates in modern awards by 3.75%, and to do so effective from 1 July 2024 in accordance with s 286 of the Fair Work Act 2009 (Cth): AWR 2024 at [8], [160]. Clearly, both the quantum and timing of the increase in wage rates are significant features of the decision that the Commission is required to consider.
3. We consider that the FWC's ruling on the timing of the wage increase awarded in a National decision is among the "provisions" of its decision within the ordinary meaning of that term and also for the purposes of s 50, either as a part of the decision "providing for a particular matter; stipulation; proviso", or as part of "something provided" by the decision. [9] In addition, this Commission has observed that s 51 of the Act is drafted in an "expansive manner" in which the term "provision" "at the very least encompasses the alteration of the terms of an award by a decision". [10] There is no reason to think that the term is used any differently in the context of National decisions (s 50). AWR 2024 alters the terms of modern awards by stipulating the operative date from which wage increases are to take effect, and we are satisfied that this stipulation is one of the "provisions" of the decision for the purposes of s 50.
4. The Secretary identifies that the statutory limitation on retrospective award variations under the Act may prevent the Commission from adopting such a provision. Whether the obligation to consider whether to adopt the provisions of a National Decision and the power to amend awards in accordance with it pursuant to s 50 provides an exception to the limitation in power contained in s 15(3) is not a matter we need to determine in this case, since the Commission initiated these proceedings before 1 July, as it usually does. However, even if s 15(3) does impose such a limitation and, for example, the Commission initiated proceedings to consider a National decision after the commencement of wage increases provided for in that decision, such a circumstance would merely constitute a "good reason" for the Commission not to adopt the FWC's commencement date for the purposes of s 50. It would not mean that the commencement date is not a "provision" of the decision.
5. Past "good reasons" for not adopting this date were the existence of a statutory regime that limited increases in employee-related costs on a "per annum" basis so as to preclude the timing of increases from being moved forward in time if doing so would exceed the annual limit, such as the so-called "wages cap" that applied under the Act from 2011 until its repeal in 2023; [11] and the Commission's former Wage Fixing Principle 8 which restricted the variation of awards to include a State Wage Case adjustment only when at least 12 months have elapsed since the rates in the award were increased in accordance with a previous State Wage Case decision. [12]
6. However, none of the circumstances referred to in the preceding two paragraphs apply in this case. The Secretary accepts that, in this case, s 15(3)(b) permits the Commission to make an award retrospective to the date of its summons issued on 7 June 2024; [13] while the "wages cap" and the "12-month rule" no longer apply.
7. Even if we are wrong about the timing of the increase constituting a "provision" of AWR 2024 which the Commission is required to adopt unless satisfied of the matters referred to in s 50, in this case we would nevertheless adopt the operative date of 1 July 2024 in the absence of any statutory presumption in favour of doing so. The following three reasons militate strongly in favour of doing so.
8. Firstly, the former wages cap resulted in a decline in the real value of wages for Category 1 awards over the last five years. Unions NSW refers to the FWC's observation that "[m]odern award minimum wage rates remain lower, in real terms, than what they were five years ago", [14] and points out that the pay rates in Category 1 awards have lagged even further behind during that period, having increased by only 15.39% (and even less for the Clerical Award (13.74%)) compared with an increase of 19.51% for modern award minimum wages since 2019. The Secretary does not address or challenge this proposition. [15] The annual consent variations of Category 1 awards over the last decade or more should be seen in the context of the operation of the former wages cap. From 2011 to 2022 the State Wage Case increases were limited by the wages cap and (with the exception of 2016) as a result were lower than the annual increases to modern award minimum wages provided by the FWC. [16] The result is that, at least over the last five years, the increases awarded to the minimum rates in the Category 1 Awards have been insufficient to keep pace with inflation, such that they have decreased in real terms, and to a degree greater than the reduction in the real value of rates under federal modern awards.
9. Noting the mandate to set "fair and reasonable conditions of employment", the Commission needs to consider carefully how to maintain the real value of minimum award wages having regard to relevant economic and fiscal considerations. This is all the more important when considering low paid workers such as those covered by the Category 1 awards. [17] Given this context, the Commission is strongly disinclined towards contributing to any further reduction in the real value of wages for Category 1 awards by delaying the implementation of the AWR 2024 increases beyond 1 July 2024.
10. Secondly, to adopt the Secretary's preferred approach of following the current commencement dates of the Category 1 awards would result in six classifications falling below the National Minimum Wage of $915.90 per week for periods of between 5 to 10 months. The Secretary accepts this is right. [18] Instead, he asks us to disregard that because, he says (without evidence), no employees are currently engaged in the relevant classifications. The Commission's Wage Fixing Principle 6 provides that a classification in an award which falls below the "Award Review Classification Rate" (which is equivalent to the National Minimum Wage) triggers a process of conciliation and arbitration directed to either updating the award to reflect the Award Review Classification Rate or rescinding the award because it is obsolete. Although we consider that the ongoing viability of the awards should be the subject of a more systematic review (see [31]-[33] below), none of the parties presently contend that any of the Category 1 awards are obsolete. Accordingly, we consider that allowing the wage rates for any classifications in the Category 1 awards to fall behind the National Minimum Wage for any period of time would be inconsistent with the Commission's existing Wage Fixing Principles, and repugnant to the Commission's obligation to set "fair and reasonable conditions of employment". Even if it is the case that there are no employees currently employed in such classifications, nothing prevents them being so employed.
11. Thirdly, no evidence has been presented to suggest that commencing the AWR 2024 increases from 1 July 2024 for Category 1 awards would have an adverse economic impact, or would be in any way problematic for the fiscal position and outlook of the Government, or, indeed, would have any impact at all. The Commission may have taken a different view if the Secretary had relied on some evidence of this kind. Bare assertions of "utility" and "administrative efficiency" in maintaining consistent operative dates for annual increases, and of unspecified "potential issues" with retrospective increases are of little assistance, and provide a meagre counterweight to the first and second considerations stated above.
12. We accept that, as a matter of long-standing industrial practice (if not principle), the Commission would not ordinarily countenance more than one increase in wage rates within a single 12-month period. However, in the special circumstances referred to above, a one-off resetting of the annual increase to wage rates in the Category 1 awards is justified.
13. For the same reasons, the Secretary's alternative pro rata proposal must also be rejected. This proposal would also have the additional adverse impact of entrenching lower base rates for subsequent increases to the wage rates in the relevant awards, further diminishing the capacity of future increases to ameliorate the extent to which the wages for Category 1 awards have fallen behind federal modern award minimum rates in real terms.
14. In light of these reasons, it seems to us that a more comprehensive review of the rates in these awards is warranted. Such a review should be directed to ensuring that these rates represent fair and reasonable wages in conformity with the Commission's statutory mandate. After their decline in real value during the last five years, due in large part to the operation of the former wages cap, the Commission can have no confidence that its statutory mandate is fulfilled simply by applying the AWR 2024 increases to the Category 1 awards from 1 July 2024.
15. In addition, we are concerned that the absence of any evidence of the impact of increasing wage rates may reflect the limited application of the Category 1 awards, or even the potential obsolescence of one or more of those awards (including potentially awards in Categories 2 and 3). This concern is reinforced by the question raised over the Entertainment and Broadcasting Industry - Live Theatre and Concert (State) Award referred to in [10] above and the absence of any employees currently engaged in the classifications referred to in [27] above. The review should also ascertain the extent to which these awards have practical application, and to deal with them appropriately, whether by rescission of one or more awards or by further adjustments to the wage rates contained in them.
16. To facilitate such a review, the Full Bench of the Commission refers the matter to Commissioner McDonald for report to the Full Bench pursuant to s 156(5)(a) of the Act.

Orders in relation to Category 1 awards

1. For the reasons above, the Commission makes the following orders: 1. The Commission adopts AWR 2024 as a National decision in relation to the Category 1 awards. 2. Pursuant to s 52 of the Act, the rates of pay and pay-related allowances prescribed in the Category 1 awards be increased by 3.75%, provided that any increases resulting from this order may be offset against any or both of: 1. any equivalent over award payments; and 2. award wage increases other than State Wage Case adjustments. 1. Order 2 takes effect on and from the first full pay period commencing on or after 1 July 2024. 2. The parties are to file with the Registry one set of award variations, in Word format, in respect of each of the Category 1 awards to give effect to Orders 2 and 3 within 7 days.

Orders in relation to Category 2 and Category 3 awards

1. The Full Bench makes the following orders in respect of the Local Government Aged Disability and Home Care (State) Award: 1. The Commission adopts AWR 2024 as a National decision in relation to the Local Government Aged Disability and Home Care (State) Award. 2. Pursuant to s 52 of the Act, the rates of pay and pay-related allowances prescribed in the Local Government Aged Disability and Home Care (State) Award be increased by 3.75%, provided that any increases resulting from this order may be offset against any or both of: 1. any equivalent over award payments; and 2. award wage increases other than State Wage Case adjustments. 1. Order 2 takes effect on and from the first full pay period commencing on or after 1 September 2024. 2. The parties are to file with the Registry the award variations, in Word format, in respect of the Local Government, Aged, Disability and Home Care (State) Award to give effect to Orders 2 and 3 within 7 days.
2. The Full Bench makes the following orders in respect of the Nurses' (Local Government) Residential Aged Care Consolidated (State) Award 2021. 1. The Commission adopts AWR 2024 as a National decision in relation to the Nurses' (Local Government) Residential Aged Care Consolidated (State) Award 2021. 2. Pursuant to s 52 of the Act, the rates of pay and pay-related allowances prescribed in the Nurses' (Local Government) Residential Aged Care Consolidated (State) Award 2021 be increased by 3.75%, provided that any increases resulting from this order may be offset against any or both of: 1. any equivalent over award payments; and 2. award wage increases other than State Wage Case adjustments. 1. Order 2 takes effect on and from the first full pay period commencing on or after 1 September 2024. 2. The parties are to file with the Registry the award variations, in Word format, in respect of the Nurses' (Local Government) Residential Aged Care Consolidated (State) Award 2021 to give effect to Orders 2 and 3 within 7 days.
3. The Full Bench makes the following orders in respect of the Local Government (Electricians) State Award: 1. The Commission adopts AWR 2024 as a National decision in relation to the Local Government (Electricians) State Award: 2. Pursuant to s 52 of the Act, the rates of pay and pay-related allowances prescribed in the Local Government (Electricians) State Award be increased by 3.75%, provided that any increases resulting from this order may be offset against any or both of: 1. any equivalent over award payments; and 2. award wage increases other than State Wage Case adjustments. 1. Order 2 takes effect on and from the first full pay period commencing on or after 1 September 2024. 2. The parties are to file with the Registry the award variations, in Word format, in respect of the Local Government (Electricians) State Award to give effect to Orders 2 and 3 within 7 days.
4. The Full Bench makes the following orders in respect of the Entertainment and Broadcasting Industry - Live Theatre and Concert (State) Award: 1. The Commission adopts AWR 2024 as a National decision in relation to the Entertainment and Broadcasting Industry - Live Theatre and Concert (State) Award: 2. Pursuant to s 52 of the Act, the rates of pay and pay-related allowances prescribed in the Entertainment and Broadcasting Industry - Live Theatre and Concert (State) Award be increased by 3.75%, provided that any increases resulting from this order may be offset against any or both of: 1. any equivalent over award payments; and 2. award wage increases other than State Wage Case adjustments. 1. Order 2 takes effect on and from the first full pay period commencing on or after 1 September 2024. 2. The parties are to file with the Registry the award variations, in Word format, in respect of the Entertainment and Broadcasting Industry - Live Theatre and Concert (State) Award to give effect to Orders 2 and 3 within 7 days.

Orders in relation to a review of awards in Categories 1, 2 and 3

1. For the purpose of progressing the review referred to in [31]-[33] the Full Bench refers the matter to Commissioner McDonald for further directions to be listed on a date to be notified.

Endnotes

1. See sub-principle 4.2 of the Wage Fixing Principles set out in Annexure A to the State Wage Case 2022 [2022] NSWIRComm 1081.
2. State Wage Case 2024 [2024] NSWIRComm 1 at [9]-[12].
3. Secretary's Outline of Submissions and Submissions in Reply filed 13 August 2024 at [17].
4. AWR 2024 at [8].
5. See State Wage Case 2022 [2022] NSWIRComm 1081, Annexure A - Wage Fixing Principles, sub-principle 4.1.
6. The Act s 50(1).
7. See the former s 146C of the Act (repealed by the Industrial Relations Amendment Act 2023 (NSW), and the former Industrial Relations (Public Sector Conditions of Employment) Regulation 2011 and Industrial Relations (Public Sector Conditions of Employment) Regulation 2014.
8. [2023] NSWIRComm 1121.
9. Macquarie Dictionary, 9th edn, 2023.
10. State Wage Case 2006 (No 6) (2006) 153 IR 268 at [39].
11. See the former s 146C of the Act (repealed by the Industrial Relations Amendment Act 2023 (NSW), and the former Industrial Relations (Public Sector Conditions of Employment) Regulation 2011 and Industrial Relations (Public Sector Conditions of Employment) Regulation 2014.
12. See Wage Fixing Principle 8 as expressed in State Wage Case 2009 (2009) 186 IR 277 at Appendix A. The 12-month rule was initially removed from this principle in State Wage Case 2010 (2010) 201 IR 155 at [65]-[66] which set out the principle 8 in Appendix A (which was superseded in State Wage Case 2010 (No 2) (2011) 206 IR 218 at [20] and Appendix A); Cf. the current equivalent principle 4 in State Wage Case 2022 [2022] NSWIRComm 1081 at Annexure A. For an example of the Commission declining to follow a federal wages decision in part because it would mean discarding "the 12-month rule" see State Wage Case 2007 (2007) 163 IR 253 at [9].
13. Secretary's Outline of Submissions and Submissions in Reply filed 13 August 2024, at [13], and Secretary's Stage 1 Further Reply Submissions filed 12 September 2024, at [5].
14. AWR 2024 at [8], [155].
15. Secretary's Stage 1 Further Reply Submissions filed 12 September 2024 at [10] in response to Unions NSW Submissions in Reply filed 26 August 2024 at [33]-[37].
16. Secretary's Stage 1 Further Reply Submissions filed 12 September 2024 at [8]-[9] in response to Unions NSW Submissions in Reply filed 26 August 2024 at [30].
17. These workers have been historically regarded as low paid in the context of State Wage Cases: See for example State Wage Case 2007 (2007) 163 IR 253 at [70]-[100].
18. Secretary's Stage 1 Further Reply Submissions filed 12 September 2024 at [12] in response to Unions NSW Submissions in Reply filed 26 August 2024 at [31]-[32]. DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 09 October 2024