REVIEW OF WAGE FIXING PRINCIPLES 1994

THE PRINCIPLES

1.    INTRODUCTION

This statement of principles to be observed in the jurisdiction of the Tasmanian Industrial Commission has been developed to encourage enterprise bargaining, and the development of equitable and workable enterprise bargaining relationships between employers, employees and their unions. The principles are also designed to ensure that the structural efficiency process continues to apply to awards of the Tasmanian industrial jurisdiction.

2.    STRUCTURAL EFFICIENCY

Consistent with the September 1988 (T.1524 and T.1525 of 1988); October 1989 (T.2146 of 1989); August 1991 (T.3069 of 1991); February 1992 (T.3584 of 1991) and December 1993 (T.4692 of 1993) State Wage Case decisions, the structural efficiency principle provides a framework through which it is intended that the parties to an award should co-operate positively in a continuing review of that award with a view to implementing measures to improve the efficiency of industry and enterprises 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 and enterprises;

• including properly fixed minimum rates for classifications in awards, consistent with the Form of Orders Principle, 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;

(ii) 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.

3.    ENTERPRISE BARGAINING

3.1. When approving enterprise bargaining agreements, the Commission will have regard for the primary consideration that such agreements should be formalised as Section 55 registered industrial agreements. Parties who wish to pursue a different approach in a particular circumstance will be required to satisfy the Commission to that effect on the basis of the circumstances of the particular enterprise or enterprises involved.

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

3.2.1 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;

3.2.2 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;

3.2.3 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: the fact that it is 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;

3.2.4 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;

3.2.5 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 agreement or new award is calculated. It should also contain a procedure for re-negotiation of the award or agreement at the expiry of its term;

3.2.6 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;

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

4.    ROLE OF THE COMMISSION IN ENTERPRISE BARGAINING

The Commission will continue to play an active role in encouraging and facilitating the parties in the pursuit of enterprise specific outcomes through enterprise bargaining.

4.1 The Commission, on application by a party which could be by way of Section 29, will undertake a conciliation and/or facilitation role to assist the parties in reaching agreement.

4.2 Section 61 of the Act (Private Arbitration) may be utilised by the parties where needed, to conclude an agreement.

4.3 Failing agreement to private arbitration in accordance with Section 61, or should a party wish to pursue an enterprise award or variation to an existing award, the relevant provisions of the Act may be pursued.

4.4 When approving an enterprise bargaining agreement which is to be reflected in a Section 55 agreement or enterprise award, the Commission will ensure that the Section 55 agreement or enterprise award, taken as a whole, will not disadvantage the employees concerned.

5.    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:

5.1 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;

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

5.3 supplementary payments may be prescribed in the wages clause of awards.

6.    THE AWARD SAFETY NET

Existing wages and conditions in the relevant award or awards of the Commission shall be the safety net underpinning enterprise bargaining.

The award safety net may, on application, be reviewed and adjusted from time to time to ensure its relevance. Generally, the detailed nature and timing of any adjustments will be determined in the context of specific applications and in the light of prevailing economic, social and industrial circumstances.

7.    ARBITRATED SAFETY NET ADJUSTMENTS

In accordance with the State Wage Case decision reviewing the Wage Fixing Principles (T5215 of 1994) dated 20 December 1994, awards of the Commission both minimum and paid rates may be varied to include three arbitrated safety net adjustments of $8.00 per week each in accordance with the following:

7.1 First arbitrated safety net adjustment

7.1.1 As from 20 December 1994 awards may, on application, be varied to provide the first $8 per week arbitrated safety net adjustment provided for in these principles.

7.1.2 Where an award has been varied to include the $8.00 per week arbitrated safety net adjustment pursuant to the State Wage Case Decision of 24 December 1993 (T.4692 of 1993), the award shall not receive the first arbitrated safety net adjustment provided for in these principles.

7.1.3 On hearing an application to incorporate the first arbitrated safety net adjustment the Commission will raise with the parties the continued implementation of the award restructuring programme and measures taken, or proposed to be taken, to facilitate and/or encourage enterprise bargaining.

7.1.4 The first arbitrated safety net adjustment may be reduced to the extent of any wage increase achieved by way of enterprise bargaining since 1 November 1991.

7.2 Second arbitrated safety net adjustment

7.2.1 Enterprise level: On application a second $8 per week arbitrated safety net adjustment will be available at enterprise level from no earlier than 20 December 1994 subject to the following tests:

7.2.1.1 that the award covering the enterprise has been varied to include the first $8 per week arbitrated safety net adjustment referred to in 7.1 above;

7.2.1.2 that the employees concerned have not received the benefit of an arbitrated safety net adjustment during the preceding 6 months;

7.2.1.3 that the union applicant has genuinely sought to reach an agreement with the employer but failed;

7.2.1.4 that there is no likelihood that, within a reasonable period, further conciliation or negotiation will result in an agreement covering the employees concerned; and

7.2.1.5 that the amount of the arbitrated safety net adjustment is to be reduced to the extent of any wage increase resulting from agreements reached at an enterprise level since 1 November 1991 insofar as that increase has not previously been used to offset an arbitrated safety net adjustment.

7.2.2 Award level: On application a second $8 per week arbitrated safety net adjustment will be available, at an award level, from no earlier than 20 June 1995, subject to the following tests:

7.2.2.1 that the award has been varied for the first $8 per week arbitrated safety net adjustment referred to in 7.1 above;

7.2.2.2 that at least six months has elapsed since the handing down of this set of principles or the granting of the first award level arbitrated safety net adjustment provided for in these principles;

7.2.2.3 that an employee who has received the second arbitrated safety net adjustment at an enterprise level will not be entitled to receive a second increase arising from the incorporation of the increase at an award level; and

7.2.2.4 that the amount of the arbitrated safety net adjustment is to be reduced to the extent of any wage increase as a result of agreements reached at an enterprise level since 1 November 1991.

7.3 Third arbitrated safety net adjustment

Providing the Commission does not decide otherwise as a consequence of the deliberations of the Australian Industrial Relations Commission in proceedings scheduled for August 1995:

7.3.1 Enterprise level: On application a third $8 per week arbitrated safety net adjustment will be available at enterprise level from no earlier than 20 December 1995. The employer must be clearly identified in the application which will be subject to the following tests:

7.3.1.1 that the award covering the enterprise has been varied to include the second $8 per week arbitrated safety net adjustment referred to in 7.2 above;

7.3.1.2 that the employees concerned have not received the benefit of an arbitrated safety net adjustment during the preceding 12 months;

7.3.1.3 that the union applicant has genuinely sought to reach an agreement with the employer but failed;

7.3.1.4 that there is no likelihood that, within a reasonable period, further conciliation or negotiation will result in an agreement covering the employees concerned; and

7.3.1.5 that the amount of the arbitrated safety net adjustment is to be reduced to the extent of any wage increase resulting from agreements reached at an enterprise level since 1 November 1991 insofar as that increase has not previously been used to offset an arbitrated safety net adjustment.

7.3.2 Award level: On application a third $8 per week arbitrated safety net adjustment will be available, at award level, from no earlier than 20 June 1996, subject to the following tests:

7.3.2.1 that the award has been varied to reflect the first and second $8 per week safety net adjustments;

7.3.2.2 that at least 12 months has elapsed between the second and third award level safety net increases; and

7.3.2.3 that the amount of the arbitrated safety net adjustment is to be reduced to the extent of any wage increase resulting from agreements reached at an enterprise level since 1 November 1991 insofar as that increase has not previously been used to offset an arbitrated safety net adjustment.

8.    FORM OF ORDERS

8.1 Arbitrated safety net adjustments at the award level shall be shown as a separate amount against each classification in the award.

8.2 Second and third arbitrated safety net adjustments at the enterprise level, other than by Section 55 Agreement, will be provided for in the relevant industry award.

8.3 Where the minimum rates adjustment process has been completed in a minimum rates award or in a paid rates award the Commission may on application determine to combine the base rate and supplementary payment into an award rate. The arbitrated safety net shall continue to be expressed as a separate amount to protect the integrity of the relativities established in the structural efficiency process.

8.4 Where the minimum rates adjustment process has not been completed, the safety net adjustment may be taken into account in determining the size and phasing in of a minimum rates adjustment.

9.    ALLOWANCES

9.1 Existing allowances

9.1.1 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.

9.1.2 Adjustment of existing allowances which relate to work or conditions which have not changed and of service increments for monetary safety net increases will be determined in each case by the Commissioner dealing with the safety net adjustment.

The issue of the adjustment of allowances, service increments and weekend penalties expressed as flat dollar amounts, for the first arbitrated safety net adjustment is reserved subject to a further hearing of the Tasmanian Industrial Commission and the pending outcome of the deliberations of the Australian Industrial Relations Commission in respect to the Retail and Wholesale Shop Employees (Australian Capital Territory) Award 1993.

However, with respect to the second $8 per week arbitrated safety net adjustment, allowances, service increments, and weekend penalties expressed as flat dollar amounts are to be adjusted for the second $8 per week arbitrated safety net adjustment.

The application of the third arbitrated safety net adjustment to allowances, service increments and weekend penalties expressed as flat dollar amounts will be determined as a consequence of the deliberations of the Australian Industrial Relations Commission in proceedings scheduled for August 1995.

9.1.3 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.

9.2 New allowances:

9.2.1 New allowances to compensate for the reimbursement of expenses incurred may be awarded where appropriate having regard to such expenses.

9.2.2 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.

9.2.3 New service increments may only be awarded to compensate for changes in the work and/or conditions and will be determined in accordance with the relevant parts of the work value changes provisions of this statement of principles.

10.  SUPERANNUATION

10.1 Agreements may be approved 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:

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

10.1.2 are consistent with the provisions of the Industrial Relations Act 1984 and the September 1994 AIRC Superannuation Test Case decision (Print L5100).

10.2 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 Industrial Relations Act 1984, arbitrate on that claim.

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

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

11.  WORK VALUE CHANGES

11.1 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.

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.

11.2 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.

11.3 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, or the date of any increase awarded in accordance with this principle since that date.

11.4 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.

11.5 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.

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

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

11.8 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.

12.  MAKING AND VARYING AN AWARD ABOVE OR BELOW THE SAFETY NET

An application to make or vary a minimum or paid rates award for wages and/or conditions above or below the award safety net shall be referred to the President for consideration as a special case. A party seeking a special case must make an application supported by material justifying the matter being dealt with as a special case. It will then be for the President to decide whether it is to be dealt with by a Full Bench. Exceptions to this process are applications which fall within the provisions in the Enterprise Bargaining and First Award and Extension to an Existing Award Principles.

In considering an application to make or vary a paid rates award for wages and/or conditions above or below the award safety net, the Commission will ensure that any such paid rates award sets fair and enforceable wages and conditions of employment that are maintained at a relevant level.

12.1 Considerations which may be relevant in determining such wages and/or conditions in a paid rates award are:

12.1.1 ensuring it is suited to the efficient performance of work according to the needs of the particular industries and enterprises, while employees' interests are also properly taken into account;

12.1.2 the market and the extent of restructuring and associated efficiency improvements;

12.1.3 that a range of rates may be introduced for classifications in the award;

12.1.4 skill and responsibility;

12.1.5 recruitment and retention;

12.1.6 the commitment of the parties at both state and corporate level;

12.1.7 that the rates fixed do not lead to wage adjustments elsewhere;

12.1.8 that in a review of a paid rates award applying to a single enterprise/employer or a number of enterprises/employers, consideration should be given to internal relativities, if necessary, by a process of collective review of all the paid rates awards applying only to the particular enterprise/employer or enterprises/employers. Relevant factors in such a review are the particular circumstances of the enterprise/employer or enterprises/employers, including the particular market; and

12.1.9 that reliance on nexus itself provides no justification for a paid rates adjustment.

12.2 Where the market is a consideration the following should apply:

12.2.1 in the first instance, before any steps are taken to obtain information about the market, appropriate classifications and internal relativities should exist or be set for the workplace or sector concerned on the basis of skill and responsibility;

12.2.2 market information should not be used to alter the internal relativities already set without good and sufficient reason and the onus must lie on any party seeking to alter those relativities to demonstrate good and sufficient grounds for alteration;

12.2.3 in some cases the relevant market will be the local geographical market, although in other cases national market considerations will be relevant and the market may include the public sector;

12.2.4 when using information about market rates of pay, care must be taken to ensure that the rates examined have been set for classifications which are comparable and that conditions of employment have been objectively taken into account; and

12.2.5 in obtaining information about market rates, the relevant consideration is the level of actual rates paid not the amounts of any increases in rates.

13.  FIRST AWARD AND EXTENSION TO AN EXISTING AWARD

The following shall apply to the making of a first award and an extension to an existing award:

13.1 In making a first award the long established principles shall apply. That is, prima facie the main consideration shall be the existing rates and conditions.

13.2 In the making of a first award, the other main consideration shall be that the award meets the needs of the particular industry or enterprise while ensuring that employees' interests are also properly taken into account. Structural efficiency considerations shall apply in the making of such an award.

13.3 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, providing structural efficiency considerations, including the minimum rates adjustment provisions where relevant, have been applied to the award.

13.4 Additional matters which are to be considered when making a first paid rates award include:

13.4.1 whether the wages and conditions of employment of the employees concerned have customarily been determined by a paid rates award;

13.4.2 whether the parties to the award are appropriate, bearing in mind that a paid rates award is most appropriately framed on the basis of limited coverage;

13.4.3 that such an award should generally cover all important aspects of the employment relationship considered appropriate for award regulation;

13.4.4 that wages and conditions of employment in a paid rates award are to be fair and enforceable and maintained at a relevant level. Considerations which may be relevant to the determination of such wages and conditions are:

13.4.4.1 ensuring it is suited to the efficient performance of work according to the needs of the particular industries and enterprises, while employees' interests are also properly taken into account;

13.4.4.2 the market and extent of restructuring and associated efficiency improvements;

13.4.4.3 that a range of rates may be introduced for classifications in the award;

13.4.4.4 skill and responsibility;

13.4.4.5 recruitment and retention;

13.4.4.6 the commitment of the parties at both state and corporate level; and

13.4.4.7 that the rates fixed do not lead to wage adjustments elsewhere;

13.4.5 that the award should specify the classification prescribed in the relevant minimum rates award on which the paid rate prescribed for the key classification in the award is calculated; and

13.4.6 the need for the parties to give a commitment that they will maintain the integrity of the paid rates award. (The Commission may convert into a minimum rates award a paid rates award which ceases to be maintained as a true paid rates award. The conversion of a lapsed paid rates award into a minimum rates award will involve the evaluation of classifications in it by comparison with similar classifications in other minimum rates awards).

13.5 Where the market is a consideration the following should apply:

13.5.1 in the first instance, before any steps are taken to obtain information about the market, appropriate classifications and internal relativities should exist or be set for the workplace or sector concerned on the basis of skill and responsibility;

13.5.2 market information should not be used to alter the internal relativities already set without good and sufficient reason and the onus must lie on any party seeking to alter those relativities to demonstrate good and sufficient grounds for alteration;

13.5.3 in some cases the relevant market will be the local geographical market, although in other cases national market considerations will be relevant and the market may include the public sector;

13.5.4 when using information about market rates of pay, care must be taken to ensure that the rates examined have been set for classifications which are comparable and that conditions of employment have been objectively taken into account; and

13.5.5 in obtaining information about market rates, the relevant consideration is the level of actual rates paid not the amounts of any increases in rates.

14.  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. A reduction in standard hours below 38, or an increase in standard hours up to 38, will be approved only in circumstances where the parties demonstrate their consent.

15.  ECONOMIC INCAPACITY

Any registered organisation subject to an award may apply on behalf of an employer or group of employers 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.