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NSW Public Service Industrial Relations Guide
Chapter 3: Bargaining in the public service
3.1 Sources of Authority
- NSW Public Sector Wages Policy 2011
- IR Act s 146C – Commission to give effect to certain aspects of government policy on public sector employment
- Regulation 6 – Other policies
- Regulation 8 – Meaning of employee-related costs
- Regulation 9 – Meaning of employee-related cost savings
3.2 NSW Public Sector Wages Policy 2011
The Wages Policy describes the process that agencies are to follow when dealing with proposed changes to the wages or conditions of employment of public sector employees. Agencies should refer to the detail of the Wages Policy whenever considering such changes.
3.3 Regulation
The Wages Policy is supported by legislation.
The Regulation requires the IRC to give effect to the Wages Policy.
3.4 Application of Wages Policy
The Wages Policy applies to the NSW Public Sector, which includes:
- Public Service agencies, Departments and Executive agencies
- The Teaching Service, the NSW Police Force, the NSW Health Service and the Transport Service of NSW
- State Owned Corporations including their subsidiaries and independent statutory bodies.
- It covers:
- all matters before the IRC
- any negotiations, variations, claims or offers by agencies that impact on remuneration or other conditions of employment, whether or not they are formalised in an industrial instrument.
3.5 Wages Policy Taskforce
See clause 2 of the Wages Policy for further information.
The Wages Policy Taskforce is convened fortnightly and includes representatives from:
- NSW Treasury – People Strategy Group (Chair)
- NSW Treasury – Policy and Budget Strategic Operations
- NSW Public Service Commission.
3.6 Approval of Increases
Proposals to increase remuneration or other conditions of employment that do not increase employee related costs by more than 2.5 per cent per annum may be approved by the Wages Policy Taskforce.
Increases in remuneration or other conditions of employment that increase employee related costs by more than 2.5 per cent per annum can only be considered where sufficient employee related cost savings have been achieved to fully offset the increased employee related costs.
Proposals for increases of more than 2.5 per cent must be considered by Wages Policy Taskforce and then submitted to the Cabinet Standing Committee on Expenditure Review (ERC) for consideration.
3.7 Employee related costs and cost savings
See Regulations 8 and 9 of the Regulation and clause 5 of the Wages Policy for the definition of employee related costs and cost savings.
See clause 7 of the Wages Policy for examples of employee related cost savings.
3.8 Submission timelines
Agencies should consult with Treasury and PSIR six months prior to the expiry of instruments.
Submissions for consideration by Wages Policy Taskforce should be provided three months prior to expiry of the instrument. If a proposal requires ERC approval an agency should allow additional approval time.
Submissions should be sent to PSIR nine working days prior to the scheduled Wages Policy Taskforce meeting.
3.9 Bargaining
Following approval of bargaining parameters an agency may commence negotiations in accordance with the approved parameters.
An agency may settle an industrial instrument where it is consistent with the bargaining parameters approved by Wages Policy Taskforce or ERC, and is to consult with PSIR prior to finalising the instrument.
Any requests to amend bargaining parameters following negotiations may require a further submission to Wages Policy Taskforce (and ERC if required).
PSIR coordinates submissions and leads negotiations for instruments which apply to multiple agencies.
3.10 Decisions of courts and tribunals
3.10.1 The Public Service Association and Professional Officers' Association Amalgamated of NSW v Director of Public Employment
In this matter, the High Court dismissed an appeal by the State public sector unions and upheld the validity of s 146C(1) of the IR Act.
Section 146C(1) provides that IRC must "give effect to any policy on conditions of employment of public sector employees ... that is declared by the regulations to be an aspect of government policy that is required to be given effect to by the Commission" when making or varying any award or order.
Although s 146C(1) of the IR Act and the Regulation used the words "policy" and "government policy", the High Court clarified that the policies contemplated by s 146C(1) (and those contained in the Regulation) were no different from any other laws (including any applicable statutes and regulations) which the IRC must apply in exercising its functions. This includes the Wages Policy, as stated in the Regulation, which limits the increases in remuneration that may be awarded by the IRC.
3.10.2 Secretary of The Treasury v Public Service Association & Professional Officers' Association Amalgamated Union of NSW
In this matter, the Supreme Court held that it is necessary for the IRC to take into account increases in superannuation contributions when calculating the increases to employee expenses and subsequent wage increases to be made available in awards within the 2.5 per cent limitation provided by the Regulation.
The Chief Justice confirmed that:
“In these circumstances it seems to me that compliance with the policy contained in the Clause involves an inquiry as to whether any increase awarded by the Commission, taken together with any other increases in employee-related costs, has the effect of increasing employee-related costs by more than 2.5% per annum for the award period. In the present case, as it can be established that the superannuation payment to be made for the benefit of employees will increase compared to the period immediately prior to the award, it will be necessary for it to be taken into account in calculating the 2.5% per annum limit.”
3.10.3 Operational Ambulance Officers (State) Award (No 4)
The decision of the IRC in Operational Ambulance Officers (State) Award [2015] NSWIRComm 17 determined there should be a new employment classification of ‘Critical Care Paramedic (Aeromedical)’ (with a higher pay scale) to reflect ‘the changed work, and the skills and responsibility’ of ‘paramedics performing work in the Aeromedical Retrieval Services of the Ambulance Service of NSW’.
Through a process of conciliation and agreement, the parties identified employee related cost savings in accordance with clause 6(1)(b) of the Regulation. The value of overtime savings generated by the new rostering arrangements for training was sufficient to offset the increase above 2.5% per annum in employee related costs resulting from the new classification and rates of pay for the Critical Care Paramedics (Aeromedical). The IRC was satisfied that the requirements of the Regulation were met.
3.10.4 Crown Employees (Correctional Officers, Department of Corrective Services) Award 2007 for Kempsey, Dillwynia and Wellington Correctional Centres
In this matter, a Full Bench of the IRC addressed the question of whether savings effected at the three Correctional Centres governed by the Award in question fell outside the meaning of ‘employee-related cost savings’ in Regulation 9(1) including whether ‘whole of government savings’, that is, measures that bring a government department or agency within budget, could be relied upon as representing employee related cost savings with respect to this Award.
The IRC agreed with the respondent’s claim that allowing savings from such initiatives to be treated as employee-related savings for the purposes of the Regulation would, in case of consequential salary adjustments, render the savings nugatory and work contrary to the purpose of s. 146C to effect fiscal restraint.