REVIEW OF WAGE FIXING PRINCIPLES 1993

THE PRINCIPLES

STRUCTURAL EFFICIENCY

Consistent with the September 1988 (T.1524 and T.1525) and October 1989 (T.2146) and August 1991 (T.3069) and February 1992 (T.3584 of 1991) State Wage Case decisions, the structural efficiency principle provides a framework through which it is intended that the parties to an award co-operate positively in a fundamental review of that award with a view to implementing measures to improve the efficiency of industry and provide employees with access to more varied, fulfilling and better paid jobs. The measures should include but not be limited to:

• establishing skill-related career paths which provide an incentive for workers to continue to participate in skill formation;

• eliminating impediments to multi-skilling and broadening the range of tasks which a worker may be required to perform;

• creating appropriate relativities between different categories of workers within the award and at enterprise level;

• ensuring that working patterns and arrangements enhance flexibility and the efficiency of industry;

• including properly fixed minimum rates for classifications in awards, related appropriately to one another, with any amounts in excess of these properly fixed minimum rates being expressed as supplementary payments;

• updating and/or rationalising the list of parties to awards;

• addressing any cases where award provisions discriminate against sections of the workforce;

• examining both award and non-award matters to test whether work classifications and basic work patterns and arrangements are appropriate - the examination to include specific consideration of:

  i) the contract of employment including the employment of casual, part-time, temporary, fixed term and seasonal employees,

  ii) the arrangement of working hours,

  iii) the scope and incidence of the award;

• inserting facilitative provisions in relevant clauses of the award;

• establishing a consultative mechanism and procedures appropriate to their size, structure and needs for consultation and negotiation on matters affecting their efficiency and productivity;

• providing in awards, in order to ensure increased efficiency and productivity at the enterprise level, while not limiting the rights of either an employer or union to arbitration, a process whereby consideration can be given to changes in award provisions; any agreement reached under this process would have to be formally ratified by the Commission and any disputed areas should be subject to conciliation and/or arbitration; and

• providing in an award a provision to the effect that an employer may direct an employee to carry out such duties as are within the limits of the employee's skill, competence and training.

Structural efficiency exercises should incorporate all past work value considerations.

ENTERPRISE AWARDS OR SECTION 55 AGREEMENTS

A. An enterprise award or section 55 agreement may be made or adjusted to reflect an enterprise bargaining agreement between parties, subject to the following:

a) the proposed enterprise bargaining agreement is consistent with the continuing implementation at enterprise level of the structural efficiency principle (i.e. ensuring existing structures are relevant to modern competitive requirements of industry and are in the best interests of both employers and employees), including the consideration of a broad agenda;

b) any wage rates contained in the proposed enterprise bargaining agreement (apart from rates that may be approved on the basis of other principles) which exceed the appropriate rates set in accordance with the minimum rates adjustment principle, or prescribed in an existing paid rates award, must be based on the actual implementation of efficiency measures designed to effect real gains in productivity;

c) the enterprise bargaining agreement has been negotiated through a single bargaining unit in an enterprise or section of an enterprise. In the case of a single bargaining unit in a section of an enterprise, the parties must demonstrate that the section is discrete: its being treated separately from other sections of the enterprise must not restrict the implementation of the structural efficiency principle and enterprise bargaining in that establishment, or other sections of the enterprise;

d) where the proposed award or agreement will operate in conjunction with another award or agreement, or other awards or agreements, it details the wage increases involved for each classification;

e) where the proposed award or agreement is not to operate in conjunction with another award or agreement, then the award or agreement should specify the classification in the relevant minimum rates award on which the actual rate prescribed for the key classification in the new award or agreement is calculated. It should also contain a procedure for renegotiation of the award or agreement at the expiry of its term;

f) the proposed award or agreement does not result in a reduction in ordinary time earnings, or departure from parental leave standards determined in test case proceedings and Commission standards of hours of work and annual leave with pay. A proposed award or agreement shall not in any way limit or forego the rights of employers and employees to make application and have determined by the Commission any matter in respect to termination, change and redundancy.

g) where parties to an enterprise bargaining agreement reached through negotiations with a single bargaining unit include employees w ihin the jurisdiction of the Australian Industrial Relations Commission, an agreement covering those employees is submitted for approval through the processes provided under that jurisdiction.

B. Consistent with the provisions of the Industrial Relations Act 1984, the Commission will in relation to enterprise bargaining assist the parties to an industrial dispute in relation to any part of that dispute arising at an enterprise level. The Commission will initially do so by conciliation and, as a final resort, shall do so by arbitration.

In any arbitration, the Commission will have particular regard to the need for continued implementation at enterprise level of the structural efficiency principle and any wage increases awarded through arbitration (apart from increases that may be approved on the basis of other principles) must be based on the actual implementation of efficiency measures designed to effect real gains in productivity.

Any arbitrated award or award variation is to be consistent with the application of paragraphs (d), (e) and (f) of Part A of this principle.

MINIMUM RATES ADJUSTMENT

Minimum rates adjustment for minimum rates awards in accordance with the October 1989 and August 1991 State Wage Case decisions shall continue to be allowable and shall be in accordance with the following:

a) the appropriate adjustments in any award will be applied in no less than four instalments which will become payable at six monthly intervals provided in appropriate cases longer or shorter phasing-in arrangements may be approved or awarded and/or parties may agree that part of a supplementary payment should be based on service;

b) the second and subsequent instalments of these adjustments will not be automatic and an application to vary the relevant award will be necessary;

c) supplementary payments may be prescribed in the wages clauses of awards;

d) the award must contain a definition making it clear that a supplementary payment represents, in effect, a payment in lieu of equivalent overaward payments;

e) where the existing minimum classification rate in an award exceeds the minimum rate for that classification assessed in accordance with this decision, the excess amount is to be prescribed in a separate clause: that amount will not be subject to adjustment;

f) acceptance of absorption of these adjustments to the extent of equivalent overaward payments is a prerequisite to their being applied in any award.

ARBITRATED SAFETY NET ADJUSTMENT

In accordance with the December 1993 Review of Wage Fixing Principles Case decision (T.4692 of 1993), an increase in the minimum award rates safety net (minimum classification rate and supplementary rate) established as a consequence of the implementation of the October 1989 State Wage Case decision, may be made. That adjustment shall be applied to the supplementary payment element of that safety net. Consistent with the basis of the safety net rates of pay and the minimum rates adjustment process acceptance of absorption of that adjustment to the extent of any equivalent amount in rates of pay - whether overaward, award or registered agreement - in excess of the minimum rates (classification rate and supplementary payment) prescribed in accordance with the October 1989 State Wage Case decision, is a prerequisite to it being applied in any award.

Provided that any excess amount prescribed in an award as the result of the implementation of the minimum rates adjustment determined in accordance with the October 1989 State Wage Case decision will not be taken into account in the absorption of the adjustment available under this principle.

SPECIAL CASES

Except for the flow-on of test case provisions, any claim for increases in wages and salaries or changes in conditions in awards, other than those allowed elsewhere in the principles, will be processed as a special case.

It will be a matter for the President to decide whether any such case should be dealt with by a Full Bench.

ALLOWANCES

1.     Existing allowances

a) Existing allowances which constitute a reimbursement of expenses incurred may be adjusted from time to time where appropriate to reflect the relevant changes in the level of such expenses;

b) Existing allowances which relate to work or conditions which have not changed may be adjusted from time to time to reflect state wage increases, except where a flat money amount has been awarded, provided that shift allowances expressed in awards as money amounts may be adjusted for flat money amount state wage increases;

c) Existing allowances for which an increase is claimed because of changes in the work or conditions will be determined in accordance with the relevant provisions of the work value changes principle.

2.     New allowances

a) New allowances to compensate for the reimbursement of expenses incurred may be awarded where appropriate having regard to such expenses;

b) No other new allowances shall be created unless changes in work have occurred or new work or conditions have arisen: where changes have occurred or new work or conditions have arisen, the question of a new allowance, if any, shall be determined in accordance with the relevant principle.

The relevant principle in this context may be work value changes or first awards and extensions to existing awards principle.

3.     Service increments

a) Existing service increments may be adjusted to reflect a percentage State Wage Case increase;

b) New service increments may only be allowed to compensate for changes in the work and/or conditions and will be determined in accordance with the relevant provisions of the work value changes principle.

SUPERANNUATION

a) Agreements may be certified or consent awards made providing for employer contributions to approved superannuation schemes for employees covered by such agreements or consent awards provided those agreements or consent awards:

i) operate from a date determined or approved by the Commission; and

ii) do not involve the equivalent of a wage increase in excess of 3% of ordinary time earnings of employees.

b) Where, following a claim for employer contributions to approved superannuation schemes for employees, the parties are unable to negotiate an agreement consistent with this principle, and conciliation proceedings before the Commission have also failed to achieve such an agreement, the Commission shall, subject to the provisions of the Act, arbitrate on that claim.

c) The Commission will not grant retrospective operation for any matters determined in accordance with this principle.

d) For the purpose of this principle, approved superannuation scheme means a scheme approved in accordance with the Commonwealth Operational Standards for Occupational Superannuation Funds.

WORK VALUE CHANGES

a) Changes in work value may arise from changes in the nature of the work, skill and responsibility required or the conditions under which work is performed. Changes in work by themselves may not lead to a change in wage rates. The strict test for an alteration in wage rates is that the change in the nature of the work should constitute such a significant net addition to work requirements as to warrant the creation of a new classification or upgrading to a higher classification.

These are the only circumstances in which rates may be altered on the ground of work value and the altered rates may be applied only to employees whose work has changed in accordance with this principle.

b) 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.

c) The time from which work value changes in an award should be measured is, unless extraordinary circumstances can be demonstrated in special case proceedings, the date of operation of the second structural efficiency adjustment allowable under the 30 October 1989 State Wage Case decision.

d) Care should be exercised to ensure that changes which were or should have been 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.

e) Where a significant net alteration to work value has been established in accordance with the principle, an assessment will have to be made as to how that alteration should be measured in money terms. Such assessment should 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. However, the Commission will also take account of the relativities and the integrity of the internal award classification structures and the external classifications to which that structure is related.

f) The expression "the conditions under which the work is performed" relates to the environment in which the work is done.

g) The Commission should guard against contrived classifications and overclassification of jobs.

h) Any changes in the nature of the work, skill and responsibility required or the conditions under which the work is performed, taken into account in assessing an increase under any other principle, shall not be taken into account in any claim under this principle.

PAID RATES AWARDS

a) Subject to special cases, the Commission will not make a new paid rates award.

b) Where a new paid rates award is made, that award shall specify the classification prescribed in the relevant minimum rates award on which the actual rate prescribed for the key classification in the paid rates award is calculated.

c) Commitments will be required from all parties to paid rates awards to the effect that the integrity of those awards will be preserved.

d) The Commission on each occasion an application is before it for the variation of a paid rates award, will inquire whether the integrity of the award has been preserved.

e) The Commission may convert into a minimum rates award a paid rates award which fails to maintain itself as a true paid rates award. The conversion of such a lapsed paid rates award into a minimum rates award will involve the valuation of the classifications in it by comparison with similar classifications in other minimum rates awards.

NOTE: The integrity of a paid rates award is not affected by the outcome of enterprise bargaining exercises approved in accordance with the provisions of the enterprise awards or section 55 agreements principle.

FIRST AWARDS AND EXTENSIONS TO EXISTING AWARDS

a) In the making of a first award, the long established principles shall apply, i.e. prima facie the main consideration is the existing rates and conditions.

b) In the extension of an existing award to new work or to award-free work the rates applicable to such work will be assessed by reference to the value of work already covered by the award.

c) In awards regulating the employment of workers previously covered by a Federal award or determination, existing Federal award rates and conditions prima facie will be the proper award rates and conditions.

d) Where a first award which is a minimum rates award is made it shall contain a minimum rate for each classification of employee covered by it. The total minimum rate determined for each classification will be expressed as a minimum classification rate and a supplementary payment which bear a proper relationship to the rates for relevant classifications in other minimum rates awards. Where an existing Federal award rate exceeds the amount appropriate to a proper relationship, the excess is to be prescribed in a separate clause. That excess amount will not be subject to adjustment.

e) Where a new paid rates award is made, that award shall specify the classification prescribed in the relevant minimum rates award on which the actual rate prescribed for the key classification in the paid rates award is calculated.

NOTE: This principle should be read in conjunction with pages 45-47 of the June 1986 National Wage Case decision.

STANDARD HOURS

In approving any application to reduce standard hours to 38 per week, the Commission should satisfy itself that the cost impact is minimised. Claims for reduction in standard weekly hours below 38 will not be allowed.

ECONOMIC INCAPACITY

Any respondent or group of respondents to an award may apply to reduce and/or postpone the application of any increase in labour costs determined under the principles on the grounds of very serious or extreme economic adversity. The merit of such application shall be determined in the light of the particular circumstances of each case and any material relating thereto shall be rigorously tested.

It will be a matter for the President to decide whether any such application should be dealt with by a Full Bench.