South Australian Employment Tribunal awards 1.75% increase to work-related allowances in South Australian awards

The third decision in the 2020 State Wage Case has recently been delivered by the South Australian Employment Tribunal (the Tribunal). As discussed in our earlier article regarding the second decision in the 2020 State Wage Case, the outstanding issue to be determined by the Tribunal was whether “work related allowances” should be increased by 1.75% in State awards. This increase would be commensurate with the 1.75% increase to both the Minimum Standard for Remuneration in South Australia and the minimum award wage ordered by the Tribunal in the second decision.

The United Trades and Labour Council of South Australia (SA Unions) argued that the 1.75% increase should also flow onto “work related allowances” while the Chief Executive of the Department of Treasury and Finance (Chief Executive) argued that these allowances should not be increased and made two lines of submissions to this effect. The Chief Executive’s submissions focused on the factors that, in exercising its discretion to increase work related allowances pursuant to section 90 of the Fair Work Act 1994 (SA) (FW Act), the Tribunal should have regard to.

The first of these submissions was that the Tribunal should consider the primacy of enterprise bargaining in the FW Act and the South Australian industrial relations system before varying an award. In particular, the Chief Executive submitted that the Tribunal should refrain from varying an award if it considers that the parties should try to negotiate an enterprise agreement to deal with the subject matter of the proposed variation.

In response to this submission, SA Unions submitted that the scheme of the FW Act envisages an industrial relations system that has the twin goals of encouraging enterprise bargaining whilst simultaneously providing a safety net of fair and relevant wages and conditions prescribed by awards.

The Tribunal preferred SA Unions’ submissions on this point and found no reason in principle as to why the primacy of enterprise bargaining would prohibit or adversely affect the increase of work related allowances in State awards. In reaching this conclusion, the Tribunal was particularly influenced by the objects of the Part of the FW Act that regulate enterprise agreements and its direct reference to the maintenance of award remuneration and conditions of employment as a safety net underpinning negotiated enterprise agreements.

The Chief Executive also submitted that the Tribunal should have regard to the fact that he had already made requests to the Chief Executives of administrative units of the Public Service and other South Australian public sector agencies to increase work related allowances by 1.75% from the first pay period on or after 1 July 2020. The Chief Executive therefore submitted it was unnecessary to vary these allowances in State awards, as the relevant increases had been, or were in the process of being, paid. The Tribunal maintained that the opposite was in fact true and that, by making such requests, the new rate has in fact become the new safety net and should be reflected in State awards.

Accordingly, the Tribunal made the variations to work related allowances in State awards sought by SA Unions – an increase of 1.75%.

Impact for employers

South Australian public sector and local government employers should review the industrial agreements (i.e. enterprise agreements, awards and employment contracts) that regulate their Award-covered employees to ensure that employees are being paid their correct rates, in consideration of the increase to work related allowances that apply from the first full pay period on or after 1 July 2020.

Please note that in the Local Government sector most, if not all, Councils have used their Enterprise Bargaining Agreements to absorb most allowances into their wage schedules. It is important that Councils continue to have these ‘absorption’ clauses within their agreements and do not allow these clauses to be inadvertently dropped from their present agreements.

For more specific information on any of the material contained in this article please contact Sathish Dasan on +61 8 8217 1253 or sdasan@normans.com.au, Ganesh Krishnan on +61 8 8217 1395 or gkrishnan@normans.com.au or Anastasia Gravas on +61 8 8217 1331 or agravas@normans.com.au.