Industrial Relations Commission New South Wales Medium Neutral Citation: State Wage Case 2014 (No 2) [2015] NSWIRComm 5 Hearing dates: 20 and 29 January 2015 Date of orders: 29 January 2015 Decision date: 06 March 2015 Jurisdiction: Industrial Relations Commission Before: Kite AJ on Full Bench Delegation Decision: Principle 6 of the Commission's Wage Fixing Principles is varied by deleting the figure of $592.30 and substituting $640.90. Noted that the parties had reached agreement in relation to the minutes of the variations flowing from the Full Bench's orders in State Wage Case 2014 [2015] NSWIRComm 4. Catchwords: STATE WAGE CASE – summons to show cause – orders made varying a number of State Awards – settlement of minutes – review and adjustment of the Award Review Classification Rate specified in Principle 6 of the current Wage Fixing Principles – Award Review Classification Rate varied – Principle 6 of the Commission's Wage Fixing Principles varied. Cases Cited: State Wage Case 2010 [2010] NSWIRComm 183; (2010) 201 IR 155 State Wage Case 2010 (No 2) [2011] NSWIRComm 29; (2010) 206 IR 218 State Wage Case 2014 [2015] NSWIRComm 4 Category: Principal judgment Parties: Unions NSW Local Government and Shires Association Secretary for Industrial Relations Representation: Counsel: A Perigo of counsel, then J V Murphy of counsel (Secretary for Industrial Relations) Solicitors: Unions NSW Local Government and Shires Association Secretary for Industrial Relations File Number(s): IRC 798 of 2014 DECISION 1. On 16 December 2014, a Full Bench of the Commission made orders varying a number of State awards (see State Wage Case 2014 [2015] NSWIRComm 4). In the course of those proceedings, the Full Bench delegated to me its powers in order to deal with: 1. the settlement of minutes of the ordered award variations; and 2. the review and adjustment of the Award Classification Review Rate ("the ARCR") specified in Principle 6 of the current Wage Fixing Principles (State Wage Case 2010 (No 2) [2011] NSWIRComm 29; (2011) 206 IR 218). 1. The hearing in relation to these two issues took place over two days. Submissions of the Parties 1. Unions NSW traced the history of the ARCR noting that it had last been reviewed in State Wage Case 2010 [2010] NSWIRComm 183; (2010) 201 IR 155 when it was set at $592.30 by reference to the C14 minimum rate of pay under the Metal, Engineering and Associated Industries (State) Award. Unions NSW supported the maintenance of that approach. 2. As to costs impact, Unions NSW submitted that it would be negligible for the New South Wales Government and Local Government employment. 3. As to quantum, Unions NSW submitted: 4. (i) the ARCR and the State Minimum Wage should be increased in line with State Wage Case increases awarded by the Commission in 2011, 2012, 2013 and 2014 as outlined in Appendix 1: ARCR Increases; and 5. (ii) any increase should be a percentage increase rather than a flat dollar increase primarily due to the effect of flat dollar increases on relativities and the importance of maintaining the relevance of State awards which is enhanced by percentage increases. 6. The Appendix referred to provided as follows: 7. The Secretary for Industrial Relations also traced the history of the ARCR and submitted: The ARCR since 1997 has been a part of the Wage Fixing Principles. Changes to the ARCR have been considered in tandem with the increases to be awarded generally. Similarly, the Wage Fixing Principles have been reviewed in each State Wage Case and given due attention by the relevant Full Bench following the submissions of all relevant parties. It is submitted that the matter of the ARCR and the Wage Fixing Principles generally are entwined. Accordingly, it is submitted that the appropriate time to review the ARCR is when the Wage Fixing Principles as a whole are reviewed. Any increase to the ARCR may trigger the mechanism set out in Principle 6.2. At this time, no consideration has been given by any party as to whether that mechanism is still appropriate or whether changes would be required. The foreshadowed review of the Wage Fixing Principles would examine the whole of Principle 6, not simply the ARCR. Should the Commission, contrary to these submissions, consider an increase in the ARCR to be appropriate, it is submitted that the ARCR remain pegged to the equivalent private sector rate. The ARCR has historically been referenced to the classification C14 minimum rate of pay under the now rescinded Metal, Engineering and Associated Industries (State) Award. The federal minimum wage was historically referenced to the classification C14 in the now rescinded Metal Industry Award. The Metal, Engineering and Associated Industries (State) Award was one of a number of awards that, through the award modernisation process conducted by the Australia Industrial Relations Commission, was replaced by the Manufacturing and Associated Industries and Occupations Award 2010 (the Modern Award). The national minimum wage as determined by the relevant Annual Wage Review is the same rate as the lowest classification in the Modern Award, classification level C14. The rate for C14 currently is $640.90. Adjusting the ARCR to reflect the C14 rate in the Modern Award, it is submitted, is consistent with the longstanding position that the lowest classification rate in the relevant metal industry award was the appropriate rate for the minimum wage that has existed in the New South Wales system. 1. In relation to the primary submission of the Secretary, set out in the first four paragraphs quoted above, the parties were unable to identify any New South Wales Award which may require adjustment as a result of accepting the Secretary's alternative submission. 2. The Local Government and Shires Association drew a distinction between the concept of a State Minimum Wage and the ARCR. Mr Dansie submitted that: … there seems to be a stronger justification for retaining an award review classification rate and not introducing a minimum wage which doesn't really sit well under the State legislation. Consideration 1. While all parties had a preference for undertaking the review of the Wage Fixing Principles and the ARCR "as a package" (to quote Unions NSW), none were actually opposed to adjusting the ARCR before the review of the Wage Fixing Principles which is contemplated to take place in the latter part of the year (see State Wage Case 2014). 2. Ultimately Unions NSW, in contemplation of the anticipated review of the Principles, indicated its agreement to the amount for the ARCR being $640.90. It did not press for the setting of a state minimum wage. 3. In my view, having regard to the history of fixation of the ARCR, as affected by the matters summarised in the last four paragraphs of the Secretary's submission quoted above, $640.90 is the appropriate rate, at least pending a full review of the Principles. 4. Principle 6 of the Commission's Wage Fixing Principles is varied by deleting the figure of $592.30 and substituting $640.90. Settlement of Minutes 1. Unions NSW advised (and the other parties confirmed) that the parties had reached agreement in relation to the minutes of the variations flowing from the Full Bench's orders. Those minutes had been filed in the Registry and could be dealt with by the Commission in chambers. ********** 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: 06 March 2015