[2007] AIRCFB 684 |
AUSTRALIAN INDUSTRIAL RELATIONS COMMISSION
Workplace Relations Act 1996
Clause 29 of Schedule 6 and s.553(1) applications to vary awards
Clause 42 of Schedule 6 and s.113 references to Full Bench
Wages and Allowances Review 2007
Various Industries | |
JUSTICE GIUDICE, PRESIDENT
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DECISION
Introduction
[1] There are 26 applications before the Commission to flow-on major elements of the wage-setting decision published by the Australian Fair Pay Commission (AFPC) on 5 July 2007 (the July 2007 decision). The applications seek to vary wage rates and wage-related allowances in 13 transitional awards and to vary wage-related allowances in 13 pre-reform awards. A list of the applications is attached to this decision (Appendix A). The case for the union applicants was put in the main by the Australian Council of Trade Unions (ACTU). A number of employer bodies appeared or intervened including the Australian Chamber of Commerce and Industry (ACCI) and the National Farmers’ Federation (NFF). The Minister for Employment and Workplace Relations intervened and made submissions on behalf of the Commonwealth.
[2] The July 2007 decision is the AFPC’s second wage-setting decision. The AFPC’s first wage-setting decision was made on 26 October 2006. Applications for the flow-on of that decision to federal awards were determined principally in the Wages and Allowances Review 2006 decision. 1 In that decision the Commission dealt with the relevant legislative provisions and some of the fundamental changes to the award system arising from the Workplace Relations Amendment (Work Choices) Act 2005. This decision, to be known as the Wages and Allowances Review 2007 decision, is based on the same statutory provisions. It follows that a number of issues decided in the Wages and Allowances Review 2006 decision are also relevant to this decision. Although it is not necessary to set them out, we note that the main statutory provisions governing the exercise of the Commission’s powers to vary transitional awards and pre-reform awards are cl.8 of Schedule 6 to the Workplace Relations Act 1996 (the Act) and ss.510 and 511 of the Act.
AFPC Decision
[3] In the Executive Summary of its July 2007 decision the AFPC said:
“The Commission grants a general pay increase that will adjust the standard FMW and Pay Scales as follows:
All parts of this decision that adjust or establish a rate of pay, however defined in this decision, will have effect from the first full pay period on or after 1 October 2007.” 2
[Footnotes omitted]
[4] For the present purposes the July 2007 decision increased the standard federal minimum wage by $10.26 per week to $522.12 per week. It also increased all adult pay scales that currently provide for a basic periodic rate of pay up to the level of $700 per week by $10.25 per week and increased adult pay scales above $700 per week by $5.30 per week. The increases in the federal minimum wage and the pay scales will take effect from the first full pay period on or after 1 October 2007. The AFPC also decided, however, that rural employers receiving a specific type of Government financial assistance should be relieved of the obligation to pay the increases for a maximum of 12 months. 3
[5] The parties and interveners agree generally that this Commission should vary rates of pay in transitional awards to reflect the AFPC’s July 2007 decision. They also agree generally that we should adjust wage-related allowances in transitional awards and pre-reform awards in accordance with this Commission’s usual principles for the adjustment of allowances. There are two exceptions to this general position. The first is a submission advanced by the Australian Catholic Council for Employment Relations (ACCER) concerning the amount of the increase or increases we should award. The second is a submission advanced by the ACTU in opposition to any special treatment for rural employers. Since the ACCER submission is capable of affecting our decision overall we shall deal with it first.
The Amount to be Awarded
[6] ACCER submitted that the AFPC decision is wrong, that we should not follow it and that we should instead award an increase in minimum award rates of $27 per week. The nub of the submission is that calculations appearing in the AFPC decision which compare the disposable income of employees on the minimum wage and the Henderson Poverty Line involve impermissible discrimination. The discrimination is said to arise in the following way. The calculations in question assume that where one of two adult members of a family does not work that person is actively seeking work and qualified for a Government payment referred to as Newstart Allowance. 4 ACCER points out, correctly, that where such a person elects not to actively seek employment the Newstart Allowance will not be paid and the disposable income of the family will be correspondingly lower and closer to the Henderson Poverty Line.5 Thus ACCER contends that the calculations involve discrimination against families in which one of the two adult members of the family elects not to join the workforce but to carry out family responsibilities.
[7] ACCER further contends that for these reasons the AFPC decision is inconsistent with the duty upon the AFPC and upon this Commission to have regard to the principles embodied in the Family Responsibilities Convention, discriminates against workers with family responsibilities and impedes the access that a person with family responsibilities has to employment. We note that a similar submission was also put to the AFPC.
[8] In our view it would not be appropriate to accept ACCER’s submission and to substitute the amount of $27 per week for the wage increases set by the AFPC. There are a number of reasons. The first is that in discussing the calculations concerned the AFPC itself noted that where individuals are ineligible for or choose not to take up particular benefits their disposable incomes will be lower. 6 It must be assumed, therefore, that this issue was taken into account by the AFPC in some way in weighing the significance of the material concerning the Henderson Poverty Line and its relationship to family incomes at the minimum wage level. Secondly, the calculations in question were not the only material relied upon by the AFPC in reaching its decision – obviously a range of matters were taken into account. Finally, there is no direct relationship between the calculations and the increases set by the AFPC in any event. In summary, and conscious of the guidance in cl.8(4)(a) of Schedule 6 to the Act, we have not been persuaded to depart from the AFPC decision.
[9] We have decided to flow on the increases set by the AFPC with only one minor modification – the amount of the variation to weekly award rates up to and including $700 per week should be rounded to $10.30 per week. The effect of our decision is that the minimum wage should be increased by $10.30 per week resulting in a new minimum wage in transitional awards of $522.20 per week. Transitional award rates up to and including $700 per week should be increased by $10.30 per week. Transitional awards rates over $700 per week should be increased by $5.30 per week. Wage-related allowances in transitional awards and pre-reform awards should be increased commensurately in accordance with the Commission’s normal principles.
Rural Employers
[10] As we have indicated above, in its July 2007 decision the AFPC decided that rural employers receiving a specific type of government financial assistance should be relieved of the obligation to pay the increases in the pay scales for a maximum of 12 months. The assistance is known as an Exceptional Circumstances Interest Rate Subsidy (ECIRS). So far as relevant to this Commission, the AFPC decision is limited to the Australian Pay and Classification scales derived from the following federal Awards:
[11] Rural employers in receipt of an ECIRS are exempt from the requirement to afford the increases otherwise applying to pay scales as a result of the July 2007 decision until the interest rate subsidy ceases or until 1 October 2008, whichever is the earlier. NFF submitted that we should adopt similar provisions in the three transitional federal awards concerned, one of which is currently before us. The ACTU opposed that course, submitting that the AFPC decision was unjustified and motivated by factors other than those stated by the AFPC.
[12] In announcing its decision to defer increases for rural employers in receipt of an interest rate subsidy pursuant to the ECIRS scheme, the AFPC set out official estimates of farm income in 2006/7 and then said:
“In the Commission’s consideration, the financial viability of farm enterprises is critical to sustaining jobs in the rural sector into the future. While there is considerable variability in agricultural employment from state to state (for example, estimated changes in employment over 2006-2007 range from a 12 per cent increase in Queensland to a 10 per cent decrease in Western Australia), combined with projections of minimal growth over the next five years, the Commission believes there is scope to provide further assistance to maintain jobs during this difficult period.
The Commission recognises that even minor cost increases for farm business in Exceptional Circumstances areas currently in receipt of drought assistance may increase financial strain on these businesses resulting in job losses.” 8
[13] We have considered the submissions of the parties, the relevant reasons given by the AFPC and had regard to the matters in cl.8 of Schedule 6. There is no sound basis to depart from the AFPC’s decision. We shall adopt the same approach in the transitional awards concerned.
[14] There was some debate concerning the method by which our decision could or should be implemented. The ACTU asked us, in the event we rejected its primary submission, to prevail upon the Commonwealth to provide a list of employers receiving an ECIRS to ensure that no employer could seek to defer the increases unless entitled to do so. It appears, however, that any such list might alter from time to time as the circumstances of the particular farm business altered and uncertainty might still arise as to the legal position in some cases. Other measures to render the operation of the transitional award rates more certain were canvassed, but none was entirely satisfactory.
[15] If an employer intends to defer an increase it is desirable that, subject to practical limitations, employees should be aware of that fact and should also be aware of how the employer’s entitlement to defer the increase arises. We shall require that any employer intending to defer an increase notify each of its employees in writing and at the same time provide to each employee a copy of the relevant Government document indicating the period for which the interest rate subsidy is to apply. In the award before us, the Horticultural Industry (AWU) Award 2000 [Transitional], 9 the variation necessary to give effect to this decision might conveniently retain the current award rates but also include a second column containing the rates provided for in this decision. We have included a draft provision in Appendix B to this decision.
[16] There is an outstanding issue concerning the adjustment of wage-related allowances in the awards applying to rural employers. It was submitted by the NFF and ACCI that an employer in receipt of an ECIRS and entitled to defer payment of an increase otherwise provided for should also be entitled to defer payment of any increases in wage-related allowances in a relevant transitional or pre-reform award.
[17] In light of our decision to adopt the AFPC’s approach of permitting employers in receipt of an ECIRS to defer increases in transitional award wage rates, we have decided to extend the same principle to wage-related allowances. While the AFPC did not deal with any question of deferral of allowances, this was no doubt because the adjustment of allowances is not within the AFPC’s statutory responsibilities. Given the importance which the legislature has attached to consistency between our decisions and AFPC decisions, it is appropriate that rural employers in receipt of an ECIRS be permitted to defer payment of any increase in wage-related allowances flowing from this decision until the subsidy ends or the first pay period on or after 1 October 2008, whichever is the earlier. The form of the variation in relation to wage rates should be applied with appropriate modifications to wage-related allowances.
Operative Date
[18] The AFPC’s July 2007 decision takes effect from the first full pay period on or after 1 October 2007. There is broad acceptance that for reasons of administrative convenience and cost any increases flowing from our decision should operate from the first pay period on or after 1 October 2007 also. Under no circumstances should an increase operate from earlier than 1 October 2007. The ACTU submitted, however, that we should make a general ruling that any award variation application filed in proper form prior to 1 October 2007 should operate from the first pay period on or after that date, regardless of the date the variation is made. Employers and the Commonwealth opposed this course.
[19] It is common ground that variations to pre-reform awards and transitional awards cannot be given retrospective operation unless the Commission is satisfied there are exceptional circumstances. 10 While considerations of equity, as between employees subject to the AFPC decision directly and employees covered by transitional awards, might favour a universal operative date, there are other factors which might weigh against retrospectivity. Because of the publicity surrounding the AFPC’s July 2007 decision and these proceedings, it is unlikely that exceptional circumstances would arise in any but a small number of applications. Nevertheless it is undesirable that we speculate on the circumstances which might arise in a particular application. Where a party seeks an operative date earlier than the date of the award or order the onus will be on that party to satisfy the Commission that there are exceptional circumstances.
[20] The operative date for any award variations flowing from this decision should be no earlier than the first pay period on or after 1 October 2007. Whether any retrospective operation is awarded after that time will be a matter for the Commission to decide pursuant to the statutory provisions governing retrospectivity.
Supported Wage System
[21] In its July 2007 decision the AFPC increased to $66 per week the minimum weekly amount payable under instruments which give effect to the Supported Wage System with effect from 1 October 2007. The ACTU requested us to consider increasing the minimum amount payable under the Supported Wage System model clause in transitional awards to $66 per week. No party or intervener opposed that suggestion and we adopt it. The variation to the Supported Wage System model clause should be made at the time the relevant transitional award is varied to implement the increases provided for elsewhere in this decision.
Statement of Principles
[22] In the Wages and Allowances Review 2006 decision the Commission indicated that the Statement of Principles would require review in light of the changes in the Commission’s powers and functions. 11 So far no party has initiated such a review. While some parties addressed the Statement, no party or intervener made comprehensive submissions about it. In the circumstances we repeat what the Commission said in its earlier decision:
“[64] A number of issues about the Statement of Principles arise for decision in these proceedings. The first of these is the operation of the so-called 12 month rule in Principle 8(b). In our view it would be inconsistent with the approach adopted by the AFPC in its October 2006 decision if we were to apply the 12 month rule to minimum rates in transitional awards and furthermore it would clearly be inequitable to do so. ACCI proposed that we should require a commitment to absorption from unions of the kind contained in Principle 8(d). We think such a provision is unnecessary, although the matter can be further considered in the context of the foreshadowed conference. Similarly, there is no need for an award clause of the kind in Principle 8(c). It is clear the variations will only have effect in relation to minimum award rates.
[65] To the extent that the Commission’s Statement of Principles is inconsistent with this decision this decision will prevail. To avoid doubt, the so-called 12 month rule in Principle 8(b) shall have no application, we shall not require unions to give a commitment to absorption of the kind referred to in Principle 8(d) and there will be no requirement for awards to include a clause in the form provided for in Principle 8(e). It is clear that the variations will only have effect in relation to minimum award rates. Principle 12 Economic Incapacity will continue to be available.” 12
[23] We adhere to those views.
Other Matters
[24] In the Wages and Allowances Review 2006 decision the Commission expressed the view that as a general rule the model clause relating to school-based apprentices should be included in any transitional award where an apprenticeship can potentially be undertaken. 13 In relation to school-based traineeships the Commission said:
“The Commonwealth proposed that the NTW award be incorporated by reference into all transitional awards where a traineeship can potentially be undertaken. It also acknowledged that there may be transitional awards in which it would be inappropriate to incorporate the whole of the NTW award. In such cases the award might simply adopt the school-based trainee provisions of the NTW award. We agree with that approach.” 14
[25] ACCI submitted that we should maintain the same approach. We endorse the comments in the earlier decision to which we have referred.
[26] The orders necessary to give effect to this decision will be settled by Commissioner Smith with recourse to this Bench. On a more general note, where applications are made to implement this decision there is scope for the Commission to make orders in the absence of the parties where the order proposed by the applicant is not opposed by the other parties. It is not appropriate that this Full Bench mandate a particular method of dealing with applications in those circumstances. Where the parties agree, however, the Commission will attempt to facilitate settlement of orders without the need for parties to attend a hearing.
BY THE COMMISSION:
PRESIDENT
Appearances:
R Watts with M Gaynor for the Australian Council of Trade Unions on behalf of applicant unions and with N Swancott for the Liquor, Hospitality and Miscellaneous Union and J Nucifora for the Australian Municipal, Administrative, Clerical and Services Union.
A Leszczynski for the Finance Sector Union of Australia.
B Johnson for the Transport Workers Union of Australia.
M Felle for Jobs Australia Limited.
P O’Grady of counsel for the Australian Catholic Council for Employment Relations.
M Mead and S Smith for the Australian Industry Group and Engineering Traders Association of South Australia.
D Mammone for the Australian Chamber of Commerce and Industry on behalf of the Australian Business Industrial, Australian Retailers’ Association, Chamber of Commerce and Industry of Western Australia, Confederation of ACT Industry, Master Builders Australia Inc, the South Australian Chamber of Commerce and Industry (trading as Business SA), the Queensland Chamber of Commerce and Industry, the Pharmacy Guild of Australia, with P Eberhard for the Victorian Employers’ Chamber of Commerce and Industry and with C Harnath for the Master Plumbers and Mechanical Services Association of Australia.
D Wawn with C Hennings for the National Farmers Federation, the Victorian Farmers Federation Industrial Association and the Tasmanian Farmers and Graziers Association.
L Yilmaz and WJ Chesterman for the Victorian Automotive Chamber of Commerce and Industry.
J Hargrave for the Printing Industries Association of Australia.
A Klemis for the Bread Manufacturers’ Industrial Association of Australia, and the Australian Meat Industry Council.
E R Cole with M Roddam and W La for the Minister for Employment and Workplace Relations on behalf of the Commonwealth.
Hearing Details:
2007.
Melbourne.
July 27, Directions before Giudice J.
August 13.
APPENDIX A – LIST OF APPLICATIONS
C2007/458 |
Dry Cleaning Industry Award 2000 [Transitional] |
AT779906CAV |
C2007/469 |
Dry Cleaning Industry Award 2000 |
AP779906CAV |
C2007/459 |
Motels, Accommodation and Resorts Award 1998 |
AP787952CRV |
C2007/467 |
Motels, Accommodation and Resorts Award 1998 [Transitional] |
AT787952CRV |
C2007/466 |
The Hospitality Industry - Accommodation, Hotels, Resorts and Gaming Award 1998 [Transitional] |
AT783479CRV |
C2007/460 |
The Hospitality Industry - Accommodation, Hotels, Resorts and Gaming Award 1998 |
AP783479CRV |
C2007/462 |
Liquor Industries - Racecourses Showgrounds etc. - Casuals Award 1998 [Transitional] |
AT787006 |
C2007/468 |
Liquor Industries - Racecourses Showgrounds etc. - Casuals Award 1998 |
AP787006 |
C2007/463 |
Saddlery, Leather, Canvas and Plastic Material Workers’ Award 1999 [Transitional] |
AT795956CNV |
C2007/461 |
Saddlery, Leather, Canvas and Plastic Material Workers’ Award 1999 |
AP795956CNV |
C2007/495 |
Horticultural Industry (AWU) Award 2000 |
AP784867CRV |
C2007/496 |
Horticultural Industry (AWU) Award 2000 [Transitional] |
AT784867CRV |
C2007/2906 |
Clerical and Administrative Employees (Victoria) Award 1999 [Transitional] |
AT773032CRV |
C2007/2902 |
Clerical and Administrative Employees (Victoria) Award 1999 |
AP773032CRV |
C2007/2907 |
Victorian Local Authorities Award 2001 [Transitional] |
AT811556 |
C2007/2903 |
Victorian Local Authorities Award 2001 |
AP811556 |
C2007/2905 |
Crisis Assistance, Supported Housing Award 2002 [Transitional] |
AT813963 |
C2007/2904 |
Crisis Assistance, Supported Housing Award 2002 |
AP813963 |
C2007/2915 |
Information Technology Industry (Professional Employees) Award 2001 |
AT812692CAV |
C2007/2917 |
Timber and Allied Industries Award 1999 [Transitional] |
AT800937CRV |
C2007/2918 |
Timber and Allied Industries Award 1999 |
AP800937CRV |
C2007/2919 |
Insurance Industry Award 1998 |
AP784988CRV |
C2007/2921 |
Graphic Arts - General - Award 2000 [Transitional] |
AT782505CR |
C2007/2924 |
Graphic Arts - General - Award 2000 |
AP782505CR |
C2007/2923 |
Metal, Engineering and Associated Industries Award 1998 [Transitional] |
AT789529CRV |
C2007/2922 |
Metal, Engineering and Associated Industries Award 1998 |
AP789529CRV |
Appendix B
HORTICULTURAL INDUSTRY (AWU) AWARD 2000 [TRANSITIONAL]
DRAFT PROVISION CONCERNING RURAL EMPLOYERS
The rates in Column B include the increases provided for in the Wages and Allowances Review 2007. Employers in receipt of an Exceptional Circumstances Interest Rate Subsidy on 1 October 2007 may defer payment of the rates in Column B and continue to pay the rates in Column A until the interest rate subsidy ceases or until the first pay period on or after 1 October 2008, whichever occurs earlier. Provided, however, that an employer intending to defer payment of the rates in Column B must notify each of its employees affected in writing that it intends to defer the increases and at the same time provide to the employee a copy of the Government documentation showing, at least, the period for which the interest rate subsidy is to apply.
Printed by authority of the Commonwealth Government Printer
<Print code C >
2 AFPC July 2007 decision, p.9.
3 ibid, pp 14-15.
4 ibid, Table 1.10.
5 Exhibit ACCER 1 at paras 22 and 23.
6 AFPC July 2007 decision, p.70.
7 ibid at p. 121.
8 AFPC July 2007 decision, p. 14.
9 AT784867CRV.
10 Workplace Relations Act 1996, s.572 and Schedule 6, cl.66.
11 8 December 2006, PR002006, at para [62].
12 ibid at para [65].
13 ibid at para [54].
14 ibid at para [57].