ANNUAL WAGE REVIEW – 2016/17 financial year – preliminary hearing – s.284 Fair Work Act 2009 – Full Bench – in the Annual Wage Review 2015-16 decision (the 2015-16 Review decision) [[2016] FWCFB 3500], the Expert Panel (the Panel) proposed that two issues be the subject of a preliminary hearing for the 2016-17 Annual Wage Review (the 2016-17 Review) – a review of the transitional instruments relevant to annual wage reviews; and the existing arrangements for employees with disability – in their submission to the 2015-16 Review, United Voice proposed that the Panel conduct a separate process of submissions and hearings in relation to setting a medium-term target as an ‘additional tool to assist it in the performance of its annual obligations’ – the Panel agreed and indicated that the proposal for the adoption of a medium-term target would form part of the preliminary hearing for the 2016-17 Review – proposal for a medium-term target – on 19 September 2016, a background paper prepared by staff of the Commission was published to assist submissions for the hearing into the setting of a medium-term target for annual wage reviews – submissions in favour of a medium-term target were received from United Voice, the Australian Council of Trade Unions (ACTU), the Australian Council of Social Service (ACOSS) and the Australian Catholic Council for Employment Relations (ACCER) – submissions argued that a medium-term target was necessary to assist with consideration of the relative living standards and needs of the low paid by addressing inequality, particularly the minimum wage relative to median earnings – the submissions that proposed a medium-term target suggested that it be set at 60 per cent of median earnings in four years – Submissions from the Australian Government, the Australian Industry Group (Ai Group), Australian Business Industrial and New South Wales Business Chamber (ABI and NSWBC) and the Australian Federation of Employers and Industries (AFEI) did not support a medium-term target – these submissions generally contended that a medium-term target was inconsistent with or not supported by the Fair Work Act – parties also argued that such a target would reduce the Panel’s flexibility to respond to changing economic conditions – the FW Act requires the Panel to conduct and complete a review of the national minimum wage and minimum wages in modern awards – the Panel held it was clear and uncontroversial that in the context of a particular Review the Panel cannot ‘bind’ future panels in subsequent reviews – follows that any attempt to adopt a ‘hard’ or binding medium term target for the NMW would be ineffective (even if it were accepted that the Panel had power to adopt such a target) – whether any useful and appropriate purpose would be served by adopting a more ‘flexible’ medium-term target – minimum wages objective and modem awards objective considered – there is often a degree of tension between the economic, social and other considerations which the Panel must take into account – the Panel noted that given the legislative context and its approach to its statutory task a ‘flexible’ medium- term target would be of little assistance – transitional instruments – in the 2015-16 Review decision the Panel proposed that a review be conducted of transitional instruments that arose for consideration in the Annual Wage Review process in the following year’s review – on 19 September 2016 the Commission released, among other things, a background paper traversing issues and materials relevant to a review of transitional instruments – transitional instruments are those which were created by the Workplace Relations Amendment (Work Choices) Act 2005 (Cth) (Work Choices Act) and State industrial relations systems and preserved in operation, transitionally or otherwise, by the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 (Cth) (Transitional Act) – a number of interested parties lodged written submissions in relation to the issue raised – the Panel considered that it should not at this stage proceed to terminate any transitional instruments, for two reasons – first, there is a question about the power to terminate transitional instruments as part of the conduct of an annual wage review – there is no express power conferred to terminate a transitional instrument in the course of an annual wage review – second, the proceedings in the All Trades matter has left in doubt the course that should appropriately be taken to the transitional APCSs applicable to apprentices and trainees in the State of Queensland – the Panel considered that the appropriate step to take at this stage was to invite interested parties to make further submissions about whether the termination power in item 3 of Schedule 5 and/or the other powers of termination provided for in the Transitional Act are exercisable in the conduct of an Annual Wage Review – review of existing arrangements for employees with disability – in submissions to previous Annual Wage Reviews, ACOSS raised concerns about the complexity of the system of wages for employees with disability and the appropriateness of the minimum wage rate for those whose productivity is affected by a disability being set at the income test free level for the Disability Support Pension (DSP) – in addition to making a National Minimum Wage Order (NMWO) for all award/agreementfree employees and reviewing modem award minimum wages, the Panel must set special National Minimum Wages (NMWs) for employees with disability – s.12 of the FW Act defines an ’employee with a disability’ as ‘a national system employee who is qualified for a disability support pension as set out in s.94 or 95 of the Social Security Act 1991, or who would be so qualified but for paragraph 94(l)(e) or 95(1)(c) of that Act’ – in Annual Wage Reviews decisions the Panel has set two special NMWs for employees with disability – as part of the present Review, the Panel has foreshadowed a more detailed review of existing wage arrangements for employees with disability – to that end, the Panel issued a Background Paper and has received written and oral submissions from interested parties – Background Paper raised a series of questions concerning: setting and varying wage rates for employees whose disability does not impact on their productive capacity (special NMW1); setting and varying wage rates for employees whose productive capacity is affected by their disability (special NMW2); and further research – NMW1 – the Australian Government and almost all parties making submissions recognised that setting special NMW1 was required by s.294 of the FW Act – whilst recognising the statutory constraints, ACOSS and the ACTU contended that it was inappropriate to have a separate minimum wage for employees with a disability that did not affect their productive capacity – the Panel considered that as a result of the combined effect of s.294(3)(c) and the relevant definition in s.12, it is necessary for the Panel to provide a minimum wage for all employees with a disability including those whose disability does not affect their productive capacity – the Panel will continue to set special NMW 1 as part of our annual review – NMW2 – employees whose productive capacity is affected by their disability could be considered to be those who are ‘unable to perform the range of duties to the competence level required within the class of work for which they are engaged’ – the Supported Wage System (SWS) was developed in 1994 by the Commonwealth Government, working together with peak employer and union councils and bodies representing people with disability – the SWS is a wage-setting system that allows employers to pay productivity based wages for employees with disability – the SWS forms part of some modem awards and requires that formal agreements be made in relation to each employee – the Australian Government advised the Panel that there were just over 5,700 employees subject to SWS agreements in 2015-16 – in recent years, in setting special NMW2 the Panel has used the SWS as a basis for determining pro-rata wages for employees with disability whose disability affects their productivity, and determined the minimum wages for these employees should be set at the same rate as the weekly incomefree threshold for a single person receiving the DSP – the Background Paper raised a series of questions concerning the basis for, and level of, special NWM2 – the Australian Government, Ai Group, ABI and NSWBC and National Disability Services (NDS) supported maintaining the current method of setting minimum wages for SWS employees at the income-free DSP threshold amount – ACOSS restated its position from previous Reviews, that the minimum wage rate under the SWS for employees with disability was too low – the ACTU submitted that the Commission should exercise caution in dealing with special NMW2 and the SWS, since it came about from extensive research, consultation and consensus – the Panel do not consider that it is appropriate to deal with the detail of the issues concerning special NMW2 at this point – the Panel will further consider this matter, including any developments, in the subsequent consultations to be conducted in 2017 – research – the Panel invited proposals about additional research that should be conducted in relation to wage setting for employees with disability – the Panel will refer the research proposals that have been advanced to the Minimum Wages Research Group and consider any recommendations made in light of the available funding. Annual Wage Review 2016-17 – Preliminary hearing
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