Annual Wage Review 2021–22 - [2022] FWCFB 3500

[2022] FWCFB 3500

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009

s.285—Annual wage review

Annual Wage Review 2021–22

(C2022/1)

JUSTICE ROSS, PRESIDENT
VICE PRESIDENT CATANZARITI
DEPUTY PRESIDENT ASBURY COMMISSIONER HAMPTON
MR FERGUSON
PROFESSOR WOODEN
MS LABINE-ROMAIN

MELBOURNE, 15 JUNE 2022

Contents

Paragraph
1.	The Statutory Framework	[1]
2.	Considerations	[23]
2.1 Economic considerations	[24]
2.2 Social and other considerations	[66]
3.	The Decision – NMW and Modern Award Minimum Wages	[88]
4.	Timing	[198]
5.	Transitional instruments	[263]
6.	Copied State awards	[278]
7.	Conclusion	[448]
Appendix 1 – Index of material	Page 102
Appendix 2 – Proposed Minimum Wages Adjustments	Page 105
Appendix 3 – Poverty lines	Page 111
Appendix 4 – Research for Annual Wage Reviews	Page 112
Appendix 5 – Copied State awards	Page 115

Abbreviations

2009–10 Review	Annual Wage Review 2009–10
2012–13 Review	Annual Wage Review 2012–13
2016–17 Review	Annual Wage Review 2016–17
2017–18 Review	Annual Wage Review 2017–18
2018–19 Review	Annual Wage Review 2018–19
2018 Bus Engineering and Maintenance Award	State Transit Authority Bus Engineering and Maintenance Enterprise (State) Award 2018
2018 Bus Operations Award	State Transit Authority Bus Operations Enterprise (State) Award 2018
2018 Senior and Salaried Officers Award	State Transit Authority Senior and Salaried Officers’ Enterprise (State) Award 2018
2019–20 Review	Annual Wage Review 2019–20
2020–21 Review	Annual Wage Review 2020–21
2021–22 Review	Annual Wage Review 2021–22
AAWI	average annualised wage increase
ABI	Australian Business Industrial and Business NSW
ABS	Australian Bureau of Statistics
ACCER	Australian Catholic Council for Employment Relations
ACCI	Australian Chamber of Commerce and Industry
ACOSS	Australian Council of Social Service
Act	Fair Work Act 2009 (Cth)
ACTU	Australian Council of Trade Unions
Ai Group	Australian Industry Group
AMWU	Australian Manufacturing Workers’ Union
ARTBIU	Australian Rail Tram and Bus Industry Union
ARA	Australian Retailers Association
ASU	Australian Services Union
AWOTE	average weekly ordinary time earnings
C4	Engineering Associate/Laboratory Technical Officer Level 1
C10	Engineering/Manufacturing Tradesperson Level 1
C14	Engineering/Manufacturing Employee Level 1
Commission	Fair Work Commission
CPI	Consumer Price Index
GDP	gross domestic product
GST	Goods and Services Tax
GVA	gross value added
LCI	Living Cost Index
LITO	low income tax offset
LMITO	low and middle income tax offset
LPC	Low Pay Commission
Manufacturing Award 2020	Manufacturing and Associated Industries and Occupations Award 2020
Miscellaneous Award	Miscellaneous Award 2020
MGA	Master Grocers Australia Limited
NLW	National Living Wage
NMW	national minimum wage
NRA	National Retail Association
Panel	Expert Panel for annual wage reviews
RBA	Reserve Bank of Australia
R&CA	Restaurant and Catering Industry Association
Review	Annual Wage Review
SAWIA	South Australian Wine Industry Association
SDA	Shop Distributive and Allied Employees’ Association
SG	Superannuation Guarantee
Statistical report	Statistical Report—Annual Wage Review 2021–22
SWS	Supported Wage System
WAD	Workplace Agreements Database
WPI	Wage Price Index

The Annual Wage Review Decision

The Statutory Framework

The Fair Work Act 2009 (Cth) (Act) requires that each financial year the Commission, constituted by an Expert Panel for annual wage reviews (Panel), conduct and complete a review of the national minimum wage (NMW), modern award minimum wages and make a NMW order (the Review).[1]

The NMW order applies to award/agreement free employees[2] and is dealt with in Division 4 of Part 2-6 of the Act.[3] The NMW order sets both the NMW[4] and special NMWs which apply to employees who are juniors; to whom training arrangements apply; or who have a disability and must set the casual loading for award/agreement free employees.[5] An award/agreement free employee cannot be paid less than the rate of pay specified in the NMW order.

The making of a NMW order and the review and variation of modern award minimum wages are separate, but related, functions. They are related because they both form part of the ‘safety net’ (see s.3(b)) and s.285(3) of the Act) provide that in exercising its powers to set, vary or revoke modern award minimum wages, the Panel ‘must take into account the rate of the national minimum wage that it proposes to set in the [R]eview’. It follows from s.285(3) that as part of the decision-making process in a Review the Panel must first form a view about the rate of the NMW it proposes to set (taking into account the statutory considerations relevant to that discrete task) and then take that proposed NMW rate into account (along with the other relevant statutory considerations) in exercising its powers to set, vary or revoke modern award minimum wage rates.

The Panel must conduct the Review within the legislative framework of the Act, particularly the object of the Act in s.3, the modern awards objective in s.134(1) and the minimum wages objective in s.284(1). The Panel’s task is to consider the relevant statutory considerations in the context of the prevailing economic and social circumstances in arriving at its decision in a Review.

In considering the modern awards objective, the Commission must ensure that modern awards, together with the National Employment Standards, provide a ‘fair and relevant minimum safety net of terms and conditions’, taking into account the particular considerations identified in s.134(1)(a)–(h). The minimum wages objective provides that the Commission ‘must establish and maintain a safety net of fair minimum wages’ taking into account the considerations identified in s.284(1)(a)–(e). These statutory objectives are very broadly expressed and do not necessarily exhaust the matters which the Panel might properly consider to be relevant. The range of such matters ‘must be determined by implication from the subject-matter, scope and purpose’ of the Act.[6]

The minimum wages objective and the object of the Act apply to the review and making of a NMW order.[7] But the modern awards objective is not relevant to the review and making of a NMW order,[8] as the making of such an order does not involve the performance or exercise of modern award powers.

The statutory tasks in ss 134 and 284 involve an ‘evaluative exercise’ which is informed by the considerations in s.134(1)(a)–(h) and s.284(1)(a)–(e).

As the Panel has observed in previous Review decisions, there is a degree of overlap between the various considerations which the Panel must take into account[9] and a degree of tension is evident between some of these considerations. No particular primacy is attached to any of these considerations.[10] Further, the weight to be attributed to a particular statutory consideration may vary from year to year depending on the social and economic context in a particular Review. It is this complexity that has led the Panel to reject a mechanistic or decision-rule approach to wage fixation.[11]

The general matters the Panel must take into account in performing its functions contain some common elements. In past Review decisions, the Panel has grouped the matters of direct relevance to the Review into three broad categories:

· economic;[12]
· social;[13] and
· collective bargaining.[14]

In the current Review the Australian Catholic Council for Employment Relations (ACCER) submitted that if the NMW order ‘is set at such a level where persons fall into disadvantage or poverty, then it does not answer the statutory description contained in s 284 of the FW Act’,[15] that is, ‘a safety net of fair minimum wages’.

ACCER contends that the NMW and the C13 to C10 wage rates do not presently constitute ‘a safety net of fair minimum wages’. The short point advanced by ACCER is that ‘to answer that statutory command in s 284, the NMW must be increased sufficiently to lift working people out of poverty’[16] and that the failure to make such an order arising for this Review would amount to a jurisdictional error.[17]

During the course of the public consultations, ACCER’s counsel clarified the proposition advanced by ACCER, as being that to comply with the statutory discretion in s 284 that the NMW order should be set at the level at which full-time employees with one or 2 children are above the 60 per cent of median income poverty line. And, any order arising from the Review which did not achieve that result would be affected by jurisdictional error.[18]

It was put to counsel that this would require an increase of over 40 per cent to the NMW, which is significantly above ACCER’s proposal.[19] In fact, for a single-earner couple with 2 children, an increase of more than 50 per cent is needed in the NMW for disposable income for this household type to reach the 60 per cent median income poverty line.

ACCER’s counsel accepted that ACCER’s proposal for a 6.5 per cent increase in the NMW would not lift these employees out of poverty and hence, were we to accept ACCER’s construction argument, we would fall into jurisdictional error even if we were to grant an increase of the magnitude sought by ACCER.

ACCER has advanced similar propositions in previous Reviews. In the Annual Wage Review 2017–18 (2017–18 Review) proceedings ACCER contended that the Panel’s ‘primary obligation’ is to set a safety net wage that will provide a decent standard of living[20] and, further, that the ‘operational objective’ of minimum wage setting under the Act is that:

‘Full time workers have a reasonable expectation of a standard of living that will be in excess of poverty and one which will enable them to purchase the essentials for a “decent standard of living” and engage in community life, assessed in the context of community norms.’[21]

In the 2017–18 Review decision, the Panel rejected ACCER’s submission as to the ‘operational objective’ of minimum wage setting under the Act and said:

‘The proposition advanced finds no support in the words of the statute and seeks to elevate one consideration (“relative living standards and the needs of the low paid”) above all others.’[22]

For the same reasons we reject the construction of s.284 advanced by ACCER in these proceedings. Further, it seems to us that the proposition put is contrary to the following observations by the Full Federal Court in the Penalty Rates Review decision:

‘It is not legitimate to take one element in the overall suite of potentially relevant considerations to the discharge of the FWC’s functions … and discern from that one matter a Parliamentary intention that the scheme as a whole is to be construed with that end alone in mind.’[23]

As the Panel has stated in numerous previous Review decisions, fairness in this context includes the perspective of employees and employers,^{^[24]} and the Act requires the Panel to take into account all of the relevant statutory considerations.[25]

In the Annual Wage Review 2019–20 (2019–20 Review) decision the Full Bench considered the legislative framework in detail, including a consideration of what the Panel can and can’t do in a Review.[26] The Panel adopted those observations in the Annual Wage Review 2020–21 (2020–21 Review).[27] We also adopt those observations.

The Act also sets out some important procedural fairness requirements for the Review. The Panel must ensure that all persons and bodies (referred to collectively as parties) are given a reasonable opportunity to make and reply to written submissions (s.289(1)). The timetable for the Review and all of the submissions and research reports were published on the Commission’s website to ensure that all parties had a reasonable opportunity to participate. The Panel has considered all the material received from parties, the information in the Statistical Report—Annual Wage Review 2021–22 (Statistical report) and the research referred to in the Research reference list in making its decision.

As was the case last year, the Review timetable was extended to allow parties to provide comment on the most recent available data. The Australian Bureau of Statistics (ABS) March Quarter 2022 National Accounts were released on 1 June 2022 and interested parties filed submissions in respect of these data on 3 June and 8 June 2022. In a Statement published on 30 May 2022, the Australian Government was granted leave to lodge a new submission to the Review, by 4pm on Friday 3 June 2022.[28]

As a practical matter the Review decision had to be published sometime before 30 June 2022 to allow sufficient time for draft variation determinations to be published and for interested parties to submit corrections or other amendments to the draft determinations. Given these constraints, our decision has not sought to canvass all of the issues raised in the submissions. We have focussed on the issues which the Act requires that we take into account.

2. Considerations

The economic and social considerations required to be taken into account in relation to the minimum wages objective in s.284(1)(a)–(e) and in relation to the modern awards objective in s.134(1)(a), (b), (c), (d), (e), (f) and (h) are dealt with in this section. A discussion of the key economic and social indicators follows.

2.1 Economic Considerations

The latest National Accounts for the March quarter 2022 show that gross domestic product (GDP) grew by 0.8 per cent in the quarter and by 3.3 per cent over the year (Chart 1). Throughout the year, growth was particularly strong in the December quarter 2021 (3.6 per cent) following a decline in the September quarter (–1.8 per cent) that was affected by the Delta outbreak.[29] Annual GDP growth was higher than over the previous year to the March quarter 2021 (1.4 per cent), while there was also an improvement in GDP per capita (2.5 per cent compared with 1.3 per cent) and gross value added (GVA) (4.2 per cent compared with 0.6 per cent).[30]

Chart 1: Economic growth, annual and quarterly growth rates

Source: Statistical report (version 9), 8 June 2022, Chart 1.1; ABS, Australian National Accounts: National Income, Expenditure and Product, March 2022.

Household consumption increased by 1.5 per cent in the March quarter 2022 and by 4.0 per cent over the year. This led to a decline in the Household saving ratio to 11.4 per cent, the lowest since the start of the pandemic, although still above pre-pandemic levels. The increase in household consumption in the March quarter was driven by a rise in Transport services (60.0 per cent); Recreation and culture (4.8 per cent) and Hotels, cafes and restaurants (5.3 per cent).[31]

Reflecting the pattern in household consumption, growth in GVA was highest in the March quarter 2022 in Arts and recreation services (4.4 per cent); Transport, postal and warehousing (4.3 per cent); and Accommodation and food services (3.7 per cent). These industries benefited from easing COVID-19 restrictions and domestic and international border restrictions.

Over the year, GVA growth was highest in Administrative and support services (11.1 per cent); Agriculture, forestry and fishing and Information media and telecommunications (both 10.2 per cent). GVA fell in Mining (–2.0 per cent) and Accommodation and food services (–0.5 per cent).

Severe flooding in parts of Queensland and New South Wales led to lower output in Mining and Construction.[32] According to the Budget, the direct economic cost of the floods was expected to reduce real GDP growth by around half a percentage point in the March quarter 2022, largely due to reduced activity in the Mining, Agriculture, Accommodation and food services, Retail trade and Construction industries.[33]

The Labour Market

The labour market has rebounded strongly from the impacts of the pandemic. The unemployment and underemployment rates are at their lowest for some time, and the participation rate at its highest, in more than 10 years (Chart 2). In fact, the unemployment rate has not been this low since 1974.[34]

Chart 2: Unemployment, underemployment and participation rates

Source: Statistical report (version 9), 8 June 2022, Chart 6.1; ABS, Labour Force, Australia, April 2022.

The strong labour market and demand for labour is also evident in the increase in job vacancies. The Budget noted that the number of unemployed people per vacancy fell to its lowest value on record in November 2021 at 1.6.[35] Chart 3 shows that growth in job vacancies has been relatively high over the last year and as a proportion of the labour force (job vacancy rate) is twice as high as it was 5 years ago.

Chart 3: Job vacancies, annual growth and job vacancy rate

Source: Statistical report (version 9), 8 June 2022, Chart 6.11; ABS, Job Vacancies, Australia, February 2022; ABS, Labour Force, Australia, April 2022.

Note: The ABS define the job vacancy rate as job vacancies as a proportion of the labour force.

A number of the submissions drew attention to the labour shortages faced by businesses, noting that there has been a slow return of skilled migrants and other visa holders following the opening of Australian borders.[36]

Productivity

Movements in labour productivity growth over the last couple of years have been impacted by the pandemic, with peaks recorded during lockdown periods as the number of hours worked has been limited. Chart 4 shows that all measures of labour productivity have grown since the beginning of the pandemic. GDP per hour worked increased by 1.7 per cent in the March quarter 2022 to be 2.8 per cent higher over the year. This follows declines in the June and December quarters of 2021 and an increase of 3.1 per cent in the September quarter 2021.

Chart 4: Measures of productivity, indexes—Dec-11=100

Source: Statistical report (version 9), 8 June 2022, Chart 2.1; ABS, Australian National Accounts: National Income, Expenditure and Product, March 2022.

Note: Labour productivity is measured as real GDP per hour worked. Gross value added measures the value of output at basic prices minus the value of intermediate consumption at purchasers’ prices. The market sector includes all industries except for Public administration and safety, Education and training and Health care and social assistance.

Profits

Total company gross operating profits increased by 25.3 per cent over the year to the March quarter 2022, which is above the 5-year and 10-year averages (Table 1). The profits share was 31.1 per cent in the March quarter 2022, reaching a new peak.[37] This indicates that, despite some declines, business profits have been able to recover. The wages share fell to 49.8 per cent.[38]

Table 1: Company gross operating profits, mining and non-mining industries, growth rates

Mining	Non-mining	Total
(%)	(%)	(%)
Dec-11	4.4	1.2	2.3
Dec-12	–27.1	3.5	–7.4
Dec-13	37.0	1.3	11.2
Dec-14	–20.5	1.3	–6.2
Dec-15	–16.1	2.4	–3.0
Dec-16	78.1	10.7	27.7
Dec-17	2.4	6.3	4.9
Dec-18	28.1	3.0	11.6
Dec-19	8.0	0.9	3.7
Dec-20	3.5	23.6	15.3
Dec-21	37.3	0.7	14.2
Mar-22	48.0	8.5	25.3
5 years to Mar-22*	19.3	5.6	11.3
10 years to Mar-22*	13.6	4.9	8.3

Source: Statistical report (version 9), 8 June 2022, Table 3.3; ABS, Business Indicators, Australia, March 2022.

Note: *Average annual growth rates.

As the Reserve Bank of Australia (RBA) observed in its May 2022 Statement on Monetary Policy, in respect of the underlying profits of ASX 200 companies:

‘The high level of profits continues to reflect elevated earnings for energy and materials companies, driven by high commodity prices. Even so, the increase in profits was broadly based. Over 70 per cent of all ASX 200 companies reported increased earnings relative to the second half of 2020 (during the earlier phase of the pandemic) with over 50 per cent of these companies exceeding analysts’ expectations.’[39]

Wages

Wages growth, as measured by the Wage Price Index (WPI), reached 2.4 per cent over the year to the March quarter 2022, the highest since the December quarter 2018. Annual WPI growth has been below 3 per cent since the March quarter 2013. The WPI grew by 0.7 per cent in the quarter, the second in a row, which is the highest quarterly growth since the March quarter 2014.[40]

The highest increases over the year to the March quarter 2022 were in Rental, hiring and real estate services (3.1 per cent), Manufacturing, Professional, scientific and technical services and Information media and telecommunications (all 2.7 per cent) and lowest in Electricity, gas, water and waste services (1.5 per cent) and Mining (1.8 per cent) (Chart 5). Annual growth was above average in Accommodation and food services (2.6 per cent) and below average in Retail trade (2.3 per cent).

Chart 5: Wage Price Index by industry, average annual growth over decade and growth over year to March quarter 2022

Source: Statistical report (version 9), 8 June 2022, Chart 5.2; ABS, Wage Price Index, Australia, March 2022.

Note: Data are expressed in original terms.

Over the 10 years to the December quarter 2021, the NMW and modern award minimum wages have increased by more than the WPI and have closely matched growth in average weekly ordinary time earnings (AWOTE) (Chart 6).

Growth in AWOTE has been larger than the WPI, for a range of reasons including compositional changes. Cumulative growth in the average annualised wage increase (AAWI) in federal enterprise agreements has been higher than both average measures of wages growth, the NMW and modern award minimum wages.

Chart 6: Measures of nominal wages growth, quarterly and cumulative growth rates, index

Source: Statistical report (version 9), 8 June 2022, Chart 5.1: ABS, Average Weekly Earnings, Australia, November 2021; ABS, Wage Price Index, Australia, March 2022; Manufacturing and Associated Industries and Occupations Award 2010; Manufacturing and Associated Industries and Occupations Award 2020.

Some employer groups submitted that we should take a cautious approach because of the relationship between wage increases and inflation. For example, the Australian Industry Group (Ai Group) submitted that ‘[a]n excessive minimum wage increase would fuel inflation’,[41] while the Australian Chamber of Commerce and Industry (ACCI) submitted that ‘any excessive increase in wages has the potential to trigger further inflation, which only adds to the already increasing costs to consumers and businesses’.[42]

Ai Group also submitted that the recent increase to the cash rate by the RBA ‘implies an increased sensitivity to wage pressures and heightens the likelihood of interest-rate driven disemployment effects flowing from wages pressures’ and that ‘a further period of wage moderation would help contain inflationary pressures and extend the run of job creation and the inroads that have been made into underemployment… [and] also help address the clear risk that a temporary rise in inflation could become a self-reinforcing cycle of rises in nominal wages and price.’[43]

Increases awarded in previous Reviews have been above the aggregate WPI growth for much of the last decade and have not resulted in a breakout of wages growth across the broader economy. As for the relationship between aggregate wages growth and inflation, the RBA stated the following in its Statement on Monetary Policy for May 2022 as a key domestic uncertainty:

‘Inflation in Australia and internationally is now forecast to be elevated for much of the forecast period. As well as dampening real incomes, a period of higher inflation could change how governments, businesses and households respond to actual and expected movements in prices. Given the labour market is already quite tight, workers might be more able to demand and achieve higher wages to compensate for the increased cost of living even in the absence of a lift in productivity; if employers pass these increased wage costs on to consumers, this could result in inflation being sustained at a higher rate than currently anticipated.’[44]

Inflation

The most significant difference since the time of the last Review has been the increase in the Consumer Price Index (CPI). The CPI increased by 2.1 per cent in the March quarter 2022 to be 5.1 per cent higher over the year, the highest annual increase since the introduction of the Goods and Services Tax (GST). Underlying inflation as measured by the trimmed mean increased by 1.4 per cent in the quarter and 3.7 per cent over the year, the highest since 2009.[45] Inflation is significantly higher than at the time of the last Review, where annual growth in the CPI and the trimmed mean were both 1.1 per cent (Chart 7).[46]

The main contributions to the sharp increase in inflation in the quarter were increases in new dwelling purchases by owner occupiers (5.7 per cent), due to rising construction costs and fewer grant payments, and Automotive fuel (11.0 per cent), driven by the Russian invasion of Ukraine. Over the year, new dwelling purchases by owner occupiers increased by 5.7 per cent and Automotive fuel increased by 35.1 per cent. Together, these items accounted for around one-third of the quarterly CPI increase and over one-quarter of the annual CPI increase.[47]

These increases in Automotive fuel are captured in the CPI in the March quarter 2022. The ABS shows that the average price of unleaded petrol was $1.83 per litre in the quarter, up from $1.64 per litre in the December quarter 2021.[48] The Budget announced that the fuel excise and excise-equivalent customs duty rate that applies to petrol and diesel will be halved for 6 months.[49] This commenced from 30 March 2022 and therefore any effect on the CPI would be after the March quarter 2022.

The RBA commented that the sources of inflation broadened in the March quarter 2022 from durable goods and new dwellings to also include groceries. Strong demand is also enabling firms to pass on increases in input costs,[50] and retailers in the RBA’s liaison program have been more willing to accept price increases from their suppliers due to the broad-based cost increases they have faced.[51]

Another measure that the ABS produces that is relevant to this Review is the living cost index (LCI) for employee households. This index increased by 1.7 per cent in the March quarter to be 3.8 per cent higher over the year. This was the highest annual increase since the September quarter 2011. An information note published by Commission staff for last year’s Review explained that a significant driver of changes in the LCI since the pandemic has been a fall in mortgage interest as a result of the RBA lowering the cash rate during the period. Mortgage interest is not considered in the calculation of the CPI, while it is included as part of the LCI. The information note also showed that low-paid employees are less likely to own a home or currently be paying off a mortgage.[52] It would then be expected that any increases to mortgage interest, as forecast by the RBA,[53] will lead to higher increases in the LCI for employee households than the CPI.

Chart 7: Measures of inflation—CPI, underlying inflation and LCI for employee households

Source: Statistical report (version 9), 8 June 2022, Chart 4.1; ABS, Consumer Price Index, Australia, March 2022; ABS, Selected Living Cost Indexes, Australia, March 2022.

Underlying inflation, calculated as the average of the trimmed mean and weighted median, does not necessarily measure the impact of changes in the cost of living faced by award-reliant workers, as it is calculated by reducing the impact of irregular or temporary price changes in the CPI.[54] This includes economic shocks that have a significant and temporary impact on the CPI, such as changes in world oil prices which affects the price of automotive fuel[55], a non-discretionary item.[56]

The Australian Council of Trade Unions (ACTU) submitted that:

‘… headline inflation is the better measure than the trimmed mean because a fair minimum safety net involves considering the costs workers are actually facing… Workers are presently facing significant cost-of-living pressures, including for essential goods and services included in headline inflation, such as petrol and key items of food and groceries but currently excluded from underlying or trimmed mean inflation. In reality workers are paying for costs associated with headline inflation (such as higher petrol prices), because firms are passing on headline inflation to consumers to protect their profit margins…’[57]

Inflation in non-discretionary items increased by 6.6 per cent over the year to the March quarter 2022, much higher than for discretionary items (2.7 per cent) (Chart 8). Non-discretionary items are goods or services purchased because they meet a basic need, are required to maintain current living arrangements or are a legal obligation. As submitted by the ACTU, these include key items such as food and groceries, automotive fuel, electricity, gas and other household fuels.[58]

Chart 8: Non-discretionary and discretionary inflation, cumulative growth rates

Source: Statistical report (version 9), 8 June 2022, Chart 4.4; ABS, Consumer Price Index, Australia, March 2022.

Note: The ABS define non-discretionary expenditure as goods or services that are purchased because they meet a basic need (food, shelter, healthcare), are required to maintain current living standards, or are a legal obligation. Discretionary expenditure includes goods or services that could be considered as ‘optional’ purchases.

Households are likely to face increases in their power bills as electricity and gas prices increase. The Australian Energy Regulator reported that volume weighted average prices for electricity increased across all regions in the first quarter of 2022 compared with the same quarter last year and at least doubled in most regions and quadrupled in Queensland.[59] Domestic gas prices were elevated in the first quarter of 2022, setting a new first quarter record, with increases already in the second quarter of the year.[60] Further, oil prices have surged following the European Leaders agreement to ban 90 per cent of Russian oil imports by the end of the year.[61]

The Australian’s Global Food Forum discussed impacts on the grocery bill of Australians including labour shortages, the cost of raw materials and rising cost of fuel and utilities. Woolworths reported an overall average price inflation of 2.7 per cent and Coles of 3.3 per cent.[62] These factors combined suggest that households, particularly those that are low paid, will face further cost of living pressures.

The ACTU submitted that ‘there are various choices for measuring living cost inflation, with varying degrees of sensitivity to particular household circumstances’.[63] It was further submitted that:

‘… it would be hard to quantify a single optimal inflation rate that could be adopted to fully and fairly insulate the differing cost of living baskets from rising inflation. In our view, a broad range of indicators should be considered by the Panel given that it is entrusted to maintain a safety net for all award and minimum wage reliant workers including those who are least able to mitigate the inflation risks most relevant to their particular circumstances.’[64]

We have taken into account each measure of inflation and the cost of living as presented in the Statistical report and in submissions. Further, as noted in last year’s Review decision,[65] we accept that price increases and the cost of living at the aggregate level can mask the lived experience of low-paid workers. Price increases in non-discretionary purchases, such as rent and basic food staples, are more likely to affect the household budgets of the low paid.[66]

Employment effects of minimum wage increases

Since the research by Bishop (2018) was undertaken and discussed in the 2017–18 Review,[67] there has been no new Australian research on the employment effects of minimum wages. Parties therefore continue to rely on international research to discuss these effects.

The ACTU provided commentary on international literature published since the last Review and concluded that:

‘… the impacts of minimum wages suggests that the Panel cannot be satisfied that a minimum wage increase of the order sought in this review will have any measurable disemployment effect. The Panel can however be satisfied that lifting minimum wages may encourage adaptive strategies at the firm or industry level that increase productivity and efficiency (such as may be achieved through bargaining), may remove distortions in labour demand attributable to monopsony power and will reduce the gender pay gap and contribute to aggregate demand.’[68]

The studies included in the review discussed the work of Georgiadis and Franco Gavonel (2021), Campos-Vazquez and Esquivel (2021) and Clemens and Strain (2021). These were also considered by Ai Group.

The first study referred to was prepared for the Low Pay Commission (LPC) and considers the effects of the National Living Wage (NLW), COVID-19 and Brexit on care homes in England. Georgiadis and Franco Gavonel (2021) found that on average, NLW increases in April 2020 and April 2021 had a positive and significant effect on wages growth in care homes, but no significant effect on employment and hours.[69] The authors argue that these effects could be explained by other offsets to the NLW, such as a reduction in employees’ absenteeism and training, and the deterioration of quality of care.[70]

Campos-Vazquez and Esquivel (2021) consider the effect of minimum wage increases in Mexico following a program introduced in 2019 that doubled the minimum wage in municipalities that shared a border with the United States. By 2021, the minimum wage was 51 per cent higher on the northern border than in the rest of the country.[71] The authors did not find any significant effect on employment following the doubling of the minimum wage but found that the increase raised workers earnings, especially at the bottom of the wage distribution.[72]

The Clemens and Strain (2021) study differentiated between the effects of large and small wage increases and between short and medium run effects based on US state and federal minimum wage policy over the past decade. The authors argued that the time period used provides a suitable opportunity to study the medium-run effects of both moderate and historically large minimum wage changes.[73] Their results found that relatively large minimum wage increases had substantial, negative effects on employment among individuals with low levels of experience and education, while small minimum wage increases had only modest effects.[74] Their results also suggest that the medium-run effects of large minimum wage increases are larger and more negative than their short-run effects.[75]

In its reply submission Ai Group argued that most of the material relied upon by the ACTU was ‘irrelevant to the Australian economy’[76] and that the results from Georgiadis and Franco Gavonel (2021) is unlikely to have ‘relevance or implications for the entire Australian economy’, noting that the health care sector in Australia has seen a higher increase in the WPI compared with other industries.[77] In reference to the conclusion made by Clemens and Strain (2021) that large minimum wage increases have negative effects on employment among individuals with low levels of experience and education, Ai Group argued that ‘[g]iven that most of the occupations reliant on minimum wage increases in Australia are also classified as ‘less qualified occupations’, a 5.5% increase in minimum wages would have a significant negative impact on employment levels in these occupations.’[78]

The Australian Government’s submission of 1 April 2022 also provided a summary of Australian and international studies on the employment effects of minimum wages. Although much of the literature was dated and had been addressed in previous Reviews,[79] reference was made to recent work published by Cribb et al. (2021) commissioned by the LPC.

Cribb et al. (2021) estimate the effect of the introduction of the NLW in the UK in 2016 and subsequent increases up to 2019.[80] The Australian Government submitted that the study found that workers had experienced ‘positive wage effects’ from the increases in the NLW and commented that ‘[r]ecent LPC commissioned studies have found no statistically significant employment effects for workers in areas with higher exposure to the minimum wage following the NLW increases between 2016 and 2019.’[81]

The RBA noted that ‘[e]mployment is forecast to grow strongly during 2022, consistent with the ongoing strength in leading indicators of labour demand, before moderating thereafter in line with activity.’[82] Labour force participation is ‘expected to be sustained at historically high levels over the forecast period, supported by the cyclical strength in labour market conditions and the longer-term trend toward increased participation among females and older Australians’ and ‘the unemployment rate is forecast to decline to around 3½ per cent in early 2023 – the lowest level since 1974 – and remain around this level thereafter.’[83]

The RBA added that measures of labour underutilisation ‘are also forecast to decline to their lowest level in many years as firms increase staff hours to meet demand’, while ‘the reopening of the border could, over time, help to alleviate labour shortages in some industries, while also adding to demand in the economy’.[84]

We agree with the RBA’s assessment and remain of the view that moderate and regular increases in minimum wages do not result in significant disemployment effects. The growth in job advertisements has largely been among the low skilled who will benefit the most from an increase in the NMW and modern award minimum wages.[85]

2.2 Social and Other Considerations

The minimum wages objective and the modern awards objective require the Panel to take into account:

· relative living standards and the needs of the low paid;[86] and

· the principle of equal remuneration for work of equal or comparable value.[87]

In giving effect to the modern awards objective, we must also take into account ‘the need to encourage collective bargaining’.[88]

These statutory considerations inform the evaluation of what constitutes ‘a fair and relevant minimum safety net of terms and conditions’[89] and ‘a safety net of fair minimum wages’.[90]

Relative living standards and the needs of the low paid

Growth in real wages (measured using the WPI) has shown greater variation during the pandemic, mainly due to changes in the CPI. Annual growth increased over the year to the June quarter 2020 (2.2 per cent) as inflation declined (–0.3 per cent). However, real wages fell over the following year to the June quarter 2021 (–2.1 per cent) as inflation picked up. While real wages have declined in short periods during the last 10 years, this was a much deeper and more sustained fall (Chart 9).

Chart 9: Real WPI growth

Source: Statistical report (version 9), 8 June 2022, Chart 9.2; ABS, Wage Price Index, March 2022; ABS, Consumer Price Index, March 2022.

The Panel has consistently adopted a threshold of two-thirds of median adult full-time ordinary earnings as the benchmark we use to identify who is ‘low paid’.[91]

Consistent with previous Review decisions, we accept that if the low paid live in poverty then their needs are not being met. In measuring poverty, we continue to rely on poverty lines based on a threshold of 60 per cent of median equivalised household disposable income and that those in full-time employment can reasonably expect to earn wages above a harsher measure of poverty.

We also acknowledge that there are limitations with measures of equivalised household disposable income when assessing poverty, as they are used to assess the circumstances of a selected household type, rather than individual circumstances. The poverty line essentially measures inequality at the lower end of the income distribution and does not measure observed needs or capacity to meet these needs, which is better indicated by measures of deprivation and financial stress.

The Australian Government’s submission of 1 April 2022 stated that the NMW rose by more than the CPI (and the WPI) between 2010 and 2021.[92] This aligns with data in the Statistical report, showing that the real NMW increased by 7.9 per cent between the December quarter 2011 and the December quarter 2021.[93] As there have been percentage increases in modern award minimum wages awarded in Review decisions during this time, both NMW and award-reliant workers have benefited from real wage increases. This is also demonstrated in the chart below, reproduced from the Statistical report, which shows the increase in the real value of the NMW over the last decade. The recent rise in inflation has resulted in the real value declining substantially since the last Review (Chart 10).

Chart 10: Real value of the NMW, index

Source: Statistical report (version 9), 8 June 2022, Chart 9.1; ABS, Consumer Price Index, Australia, March 2022; Fair Work Australia/FWC decisions.

Note: Only percentage increases have been awarded since the Annual Wage Review 2010–11, hence, the real increase across all modern award minimum wage rates has been the same across the period. For the purpose of analysis, only the NMW is presented.

The Statistical report again contains estimates of disposable incomes for selected household types earning various wage rates in comparison to a 60 per cent median income poverty line. This is shown at Appendix 3. While over the last year there was a relatively large fall in the ratio for households that were receiving the JobSeeker payment, there was also a decline across all household types at all wage rates.

As the Panel has previously observed, these differences mean that it is not feasible for minimum wages alone to ensure that all of the family types with a minimum wage employee working full time have incomes that exceed relative poverty levels.[94] Differences arise due to some families receiving support from the welfare system. Further, the margin between the 60 per cent median income relative poverty line and the equivalised household disposable income represents, at best, a broad indicator of the extent to which the needs of the low paid are met.

Eight of the 14 household types had disposable incomes below the poverty line when earning the NMW. These included all single-earner households, except for single adult and single parent working full-time (with 1 or 2 children). This is 3 more household types than in the last Review following the removal of the additional JobSeeker payment. This was also the case for household types earning the C10 rate, however, single-earner couples receiving JobSeeker payment with 1 or no children had disposable incomes equivalent to the poverty line.

The ABS has again reported on indicators of financial stress in its Household Impacts of COVID-19 Survey. The latest survey, undertaken in April 2022, shows improvement across the proportion of households that were able to raise $2000, pay bills on time and expect to be able to pay bills in the next three months since May 2021 (Table 2).

Table 2: Change in household financial stress

May 2021	April 2022	May 2021 to April 2022
(%)	(%)	(ppt change)
Whether household could raise money for something important within a week*
Able to raise $2000	76.2	86.7	10.5
Able to raise $500 but not $2000	12.1	10.2	–1.9
Unable to raise $500	5.4	2.2	–3.2
Don’t know	6.1	0.9^	–5.2^
Whether household was unable to pay bills on time in the last three months due to a shortage of money**
Was unable to pay bills on time	8.4	6.0	–2.4
Was able to pay bills on time	90.4	93.9^	3.5^
Whether household expects to be able pay bills received in the next three months
Yes	90.9	96.6	5.7
No	2.2	0.5	–1.7
Don’t know	6.9	2.9	–4.0

Source: Statistical report (version 9), 8 June 2022, Table 12.3; ABS, Household Impacts of COVID-19 Survey, May 2021; ABS, Household Impacts of COVID-19 Survey, April 2022.

Note: * The definition of ‘something important’ was deliberately left up to the respondent to define. Examples given included paying unexpected bills and covering the cost of emergencies. ** Only includes households that received a selected bill in the last three months. Selected bills include electricity, gas or telephone bills, mortgage or rent payments, car registration or insurance, and home and/or contents insurance. ^ Proportion has a margin of error greater than 10 percentage points or proportion ± margin of error is less than 0 per cent or greater than 100 per cent, which should be considered when using this information.

We also assess these measures using data from the HILDA survey, which are provided annually and presented in the Statistical report for employee households and low-paid employee households. The proportion of households that reported any financial stress actually declined in 2020, and there was a significant decline among low-paid employee households. However, comparing the 2 tables shows that low-paid employee households were twice as likely to experience any financial stress as all employee households (24.0 per cent compared with 12.1 per cent) in 2020.[95]

Low-paid employee households were more than twice as likely to report the following financial stress indicators (Table 3).

Table 3: Financial stress experienced by households

Low-paid employee households	All employee households
(%)	(%)
Unable to raise $4000 in a week for something important	9.6	4.6
Could not pay electricity, gas or telephone bills on time	10.0	4.9
Went without meals	3.1	1.4
Could not afford to heat home	2.2	1.0
Sought assistance from welfare/community organisation	3.8	1.3
Sought financial help from friends or family	9.0	3.9

Source: Statistical report (version 9), 8 June 2020, Tables 12.1 and 12.2; Household, Income and Labour Dynamics in Australia Survey, Wave 20.

Collective Bargaining

In making the NMW order, the Panel must give effect to the minimum wages objective. While the minimum wages objective does not refer to ‘the need to encourage collective bargaining’, one of the objects of the Act is to encourage collective bargaining and, on that basis, it is appropriate to consider that legislative purpose in making the NMW order.[96]

The Attorney-General’s Department report Trends in Federal Enterprise Bargaining presents data on federal enterprise agreements that have not passed their nominal expiry date captured in the Workplace Agreements Database (WAD).

The report includes a measure of wages growth calculated from these agreements. Chart 11 shows that AAWIs for agreements in the private sector was 2.7 per cent in the December quarter 2021 and has been around 2.6 to 2.7 per cent since the September quarter 2020. AAWIs for public sector agreements have been lower than in the private sector since the December quarter 2018, and was 2.3 per cent in the December quarter 2021.

Chart 11: AAWI for agreements approved in the quarter by sector

Source: Statistical report (version 9) 8 June 2022, Chart 10.2; Attorney-General’s Department, Trends in Federal Enterprise Bargaining, December quarter 2021.

The number of federal enterprise agreements approved in both the private and public sector has increased following the lows experienced in 2020 and early 2021 (Chart 12).

Chart 12: Number of agreements approved in the quarter by sector, index

Source: Statistical report (version 9) 8 June 2022, Chart 10.1; Attorney-General’s Department, Trends in Federal Enterprise Bargaining, December quarter 2021.

We accept that there has been a decline in current enterprise agreements, but a range of factors impact on the propensity to engage in collective bargaining, many of which are unrelated to increases in the NMW and modern award minimum wages.[97] Given the complexity of these factors we are unable to predict the precise impact of our decision on bargaining.

The increases we have determined in this Review may impact on bargaining in different sectors in different ways. We cannot be satisfied that the increase we have determined will encourage collective bargaining. We have taken this into account along with the other statutory considerations in determining the outcome in this Review.

Equal remuneration

The gender pay gap refers to the difference between average wages earned by men and women. It may be expressed as a ratio which converts average female earnings into a proportion of average male earnings on either a weekly or an hourly basis. The Statistical Report sets out 3 measures of the gender pay gap, ranging from 8.8 per cent to 15.2 per cent.[98]

The consideration of the ‘principle of equal remuneration for work of equal or comparable value’ was comprehensively addressed in the 2017–18 Review decision and that discussion was adopted in the 2018–19 and 2019–20 Review decisions.[99] We also adopt those observations. In particular, we accept that moderate increases in the NMW and modern award minimum wages would be likely to have a relatively small, but nonetheless beneficial, effect on the gender pay gap.

The Decision: NMW and Modern Award Minimum Wages

3.1 The parties’ proposals

The Panel received submissions from bodies representing the interests of employees, employers and other groups, the Australian Government and various state governments. The quantum and form of the proposed increase to the NMW and to modern award minimum wages varied significantly among the submissions. The timing of any increase was also the subject of a range of views. We deal with the timing issues in Chapter 4.

The ACTU, supported by a number of individual union submissions, sought a 5.5 per cent increase to the NMW and modern award minimum wages.[100] ACCER sought an increase of 6.5 per cent to the NMW and ‘at a minimum to the C13 to C10 rates…in modern awards’.[101]

There was a diversity of views among various employer interests. ACCI supported an increase of ‘up to 3 per cent’.[102] Ai Group proposed ‘a modest wage increase of 2.5 per cent’.[103] Australian Business Industrial and Business NSW (ABI) recommended that the Panel determine an increase of between 2.5 and 3 per cent, and submitted that:

‘an increase in wages significantly above underlying inflation, would compound the effects of increasing non-labour costs and undermine fragile business confidence. An increase broadly in line with inflation would help maintain relative living standards for workers and it is our view most businesses would have the capacity to accommodate these cost increases.’[104]

We return shortly to ABI’s observation about an increase ‘broadly in line with inflation’.

The Australian Retailers Association (ARA) supported an increase in minimum wages to ‘keep pace with the rising cost of living’ using the trimmed mean inflation rate as a measure of underlying inflation.[105] We note that the most recent data show that the trimmed mean inflation rate was 3.7 per cent over the year to the March quarter 2022 and the latest RBA forecast expects the trimmed mean to increase by 4.5 per cent over the year to the June quarter 2022.

Master Grocers Australia Limited (MGA) sought ‘further restraint in respect of any wage increases in the coming year’ and submitted that:

‘Any increase in minimum award wage in 2022 would severely damage the continuing viability of many small businesses as they grapple with the ongoing threat of COVID‑19 and the recovery process.’[106]

Restaurant and Catering Industry Association (R&CA) submitted that there ‘be no change to the minimum wage’.[107]

The Australian Government’s submission of 3 June 2022 recommends that the Panel:

‘ensures that the real wages of Australia’s low-paid workers do not go backwards… It is critical to ensure that these workers do not bear a disproportionate impact of these challenging conditions.’[108]

Various state governments also made submissions to the Review.

The Victorian Government supported an increase of ‘at least’ 3.5 per cent to the NMW and award minimum wages and submitted:

‘an increase in the NMW and award wages of less than 3.5 per cent would effectively be seen as a cut to relative living standards and the needs of the low paid.’[109]

The New South Wales Government submitted that we should adopt a ‘cautious approach’ to the Review.[110]

The Government of South Australia recommended that the Panel adopt a ‘fair and balanced approach, which allows real wage growth to reflect a fair share of labour productivity growth, while mindful of ongoing uncertainty and challenging trading conditions faced by many businesses.’[111]

The Queensland Government supported an increase in minimum wages that is ‘fair and reasonable’.[112]

The Government of Western Australia recommended that the Panel award a ‘meaningful pay increase’ to minimum and award wage earners and should adopt a ‘balanced approach’ in determining the quantum of such an increase.[113]

A list of the material filed is set out at Appendix 1. A summary of the positions advanced by the various parties is set out in Appendix 2.

3.2 The low paid and award reliant

As mentioned in Chapter 1, the Panel’s task in a Review is to review the NMW, modern award minimum wages and to make a NMW order.

Both the minimum wages objective and the modern awards objective require that we take into account, among other considerations, ‘relative living standards and the needs of the low paid’.[114]

As mentioned in Chapter 2.2, the Panel has consistently adopted a threshold of two-thirds of median adult full-time ordinary earnings as the benchmark used to identify the ‘low paid’.

Using ABS data for May 2021, earnings below $22.20 per hour are considered to be ‘low paid’; if using HILDA survey data the threshold is $22.56 per hour.[115] The Australian Government’s submission of April 1 2022 provided an estimate of the number of low-paid award-reliant employees as at May 2021 using a pay threshold of below $22.20 per hour, which was between the C11 modern minimum award rate ($21.92) and the C10 rate ($23.09) as at May 2021.[116]

Workers paid at the current NMW rate ($20.33 per hour) and at award classification levels below the C10 rate ($23.67 per hour) are ‘low paid’ within the meaning of s.134(1)(a) and s.284(1)(c) of the Act.

The C10 classification is the minimum award rate set under the Manufacturing and Associated Industries and Occupations Award 2020 (the Manufacturing Award 2020) (and predecessor awards) that has traditionally been used as a benchmark for setting minimum wages across awards. Under the Manufacturing Award 2020, workers at the C10 classification are those with recognised trade certificate, Certificate III in Engineering—Mechanical Trade, or Certificate III in Engineering—Fabrication Trade, or Certificate III in Engineering—Electrical/Electronic Trade, or equivalent.[117]

The current NMW rate of $20.33 per hour is equivalent to the base rates (or lowest pay points) in 43 of the 121 modern awards. For convenience these modern award base rates are referred to as the C14 rate. The wage rates of workers in the other pay point classifications in these 43 awards, as well as the base wage rates in the remaining 78 modern awards, are all above the NMW rate.[118]

Analysis by the Australian Government in its 1 April 2022 submission using the HILDA survey data shows that in 2020 just over half (55.2 per cent) of low-paid workers were female and that low-paid work tends to be concentrated among younger workers.[119] Over half (52.4 per cent) of low-paid workers were aged under 30, with 13.4 per cent aged between 15 and 19 years, and around a quarter (24.2 per cent) in the 20-to-24-year-old age cohort.[120] Some 53.9 per cent of low-paid workers worked part-time hours and 56.9 per cent were on casual contracts.[121]

The vast majority of Australian workers have their pay set by one of three different methods: awards, enterprise agreements and individual arrangements.

Chart 2.1 in the Australian Government’s submission of 1 April 2022 shows that:

· 2,659,400 (23 per cent) of employees had their pay set by awards;

· 805,200 award reliant employees were ‘low paid’, including 88,900 award reliant employees paid the NMW rate; and

· Up to 184,000 employees in total (1.6 per cent of employees) are paid the NMW rate[122] comprising: 88,900 award-reliant employees; 79,200 employees on individual agreements; and 15,900 employees covered by enterprise agreements.[123]

The Panel’s decision also affects some employees covered by enterprise agreements or individual pay-setting arrangements.

Using data from the WAD, the Australian Government’s submission of 1 April 2022 submitted that 94,354 employees on federal enterprise agreements have wages directly linked to Review decisions.[124] This estimate includes the number of employees covered by agreements current as at 31 December 2021 with a clause which states that the entirety of the Review decision will be applied in full and automatically to wages.

Some employees on individual arrangements have their wages set above the relevant award but are influenced by Review decisions, though there is some uncertainty about the nature and extent of the impact of Review increases.[125]

A 2013 survey of non-public sector award-reliant organisations asked whether they passed on the Annual Wage Review 2011–12 decision of a 2.9 per cent increase to minimum wages to any of their employees on over-award arrangements. Some 24 per cent of respondents passed on the increase to more than half of their employees on over-award arrangements, 6 per cent passed on the increase to half of these employees and 70 per cent did not pass on the adjustment.[126]

A more recent paper by Bishop and Cassidy (2019) suggests that ‘around 12 per cent of all wage changes in [enterprise agreements] and 8 per cent of all wage changes in individual arrangements … are influenced by award decisions.’[127]

3.3 The Panel’s approach

The Panel’s approach to its statutory function is broadly reflected in the following extract from the Annual Wage Review 2014–15 decision:

‘In taking into account available economic and social data, the Panel’s approach is broadly to assess the changes in these data from year to year and determine how they inform the statutory criteria. Put another way … if there were no change in the relevant considerations from one year to the next then, all other things being equal, a similar outcome would result.’[128]

Generally speaking, differently constituted Panels should evaluate the evidence and submissions before them in accordance with a consistent and stable interpretation of the legislative framework. Justice requires consistent decision making unless a difference can be articulated and applied.[129] While we seek to explain our view of the circumstances (including forecasts or projections) prevailing in each Review in comparison with previous years, it is not feasible to quantify the weight given to particular factors in balancing the various considerations prescribed by the Act. Rather, we consider all information about the economic and social environment that is available to inform our decision.

We accept that the decision-making process in a Review should be as transparent as possible and accordingly we disclose the factors which are most relevant in a particular year, and we have done so in this decision.
We turn first to the changes in the economic circumstances since last year’s decision. The key differences in economic indicators between last year and this year are set out in Table 4 below.

Table 4: Key differences in economic indicators between 2020–21 Review and 2021–22 Review

Indicator	2020–21 Review	2021–22 Review
CPI growth	1.1 per cent over year to March quarter 2021	5.1 per cent over year to March quarter 2022
Trimmed mean inflation	1.1 per cent over year to March quarter 2021	3.7 per cent over year to March quarter 2022
Unemployment rate	5.5 per cent in April 2021	3.9 per cent in April 2022
Persons employed	13 040 400 in April 2021	13 401 700 in April 2022
Non-mining business investment growth	–3.0 per cent over year to March quarter 2021	5.3 per cent over year to March quarter 2022
WPI growth	1.5 per cent over year to March quarter 2021	2.4 per cent over year to March quarter 2022

Source: Statistical report (version 9), 8 June 2022; Statistical report—Annual Wage Review 2020–21 (version 12), 15 June 2021; ABS, Australian National Accounts: National Income, Expenditure and Product, March 2022.

The most significant changes since the time of the 2020–21 Review decision have been the sharp rise in the cost of living, as evidenced by the various measures of inflation, and the strengthening of the labour market. We turn first to the labour market.

At the aggregate level, labour market performance has been particularly strong. The unemployment rate has fallen to 3.9 per cent, compared to 5.5 per cent in April 2021.[130] Measures of underemployment have also fallen. The improvement in the labour market is forecast to continue in the period ahead. As the RBA states in its May 2022 Statement on Monetary Policy:

‘The labour market has improved further and demand for labour is strong. The unemployment rate reached 4 per cent in recent months and measures of underemployment have also declined. The level of job vacancies is very high, at a time when the participation rate and the ratio of employment to working-age population are already at historical highs. The unemployment rate is therefore forecast to decline further, to around 3½ per cent in early 2023. This would be its lowest level in almost 50 years.’[131]

As mentioned, there has been a sharp rise in the cost of living since last year’s Review.

The main measures of inflation that we consider are the CPI and underlying inflation. There are two measures of underlying inflation—the trimmed mean and weighted median.[132] As discussed in the 2019–20 Review decision, underlying inflation is calculated to remove volatility in the quarterly price changes in the CPI due to large, irregular price movements to determine the underlying trend.[133]

At the time of last year’s Review decision, the CPI and the trimmed mean measure of inflation both stood at 1.1 per cent over the year to the March quarter 2021. The comparable figures now stand at 5.1 per cent (for the CPI) and 3.7 per cent (for the trimmed mean).

There is also a marked difference in the inflation forecasts. Table 5 highlights the different inflation forecasts now compared with last year.

Table 5: RBA forecasts of inflation, 2020–21 Review and 2021–22 Review

As at 2020–21 Review	Jun-21	Dec-21	Jun-22	Dec-22
CPI	3¼	1¾	1¼	1½
Trimmed mean	1½	1½	1½	1¾
As at 2021–22 Review	Jun-22	Dec-22	Jun-23	Dec-23
CPI	5.5	5.9	4.3	3.1
Trimmed mean	4.5	4.6	3.6	3.1

Source: [2021] FWCFB 3500 at [37]; RBA (2022), Statement on Monetary Policy, May, Appendix: Forecasts.

As the RBA noted in its May 2022 Statement on Monetary Policy:

‘The outlook for inflation is also materially higher than envisaged three months ago. Headline inflation is now expected to peak at around 6 per cent in the second half of this year, partly driven by higher petrol prices and sharp increases in the cost of new dwellings. Trimmed mean inflation is expected to peak at around 4¾ per cent.’[134]

The sharp rise in inflation impacts business and workers. The cost of business inputs increases which, depending on the capacity to pass on those costs, adversely impacts profitability. Absent a wage increase, inflation erodes the real value of workers’ wages, reduces their living standards and the capacity of the low paid to meet their needs.

The low paid are particularly vulnerable in the context of rising inflation.

In its May 2022 Statement on Monetary Policy, the RBA noted that the sources of inflation are broadening, beyond petrol prices and other global factors with price increases picking up for many grocery items:

‘Grocery prices have also picked up strongly over recent months as supermarkets passed through supplier cost increases and reduced discounting activity in response to supply disruptions ... Grocery prices (excluding fruit & vegetables) increased by 2.8 per cent in the quarter—the strongest quarterly outcome since 1983—with prices 4.9 per cent higher than a year ago… Price increases for most fresh food categories were strong in the quarter, including for meat, which continued to be affected by limited supply as farmers restock herds… Prices of fruit & vegetables increased by 2.3 per cent in the quarter to be 6¾ per cent higher over the year.’[135]

As the Panel also noted in last year’s decision, price increases and the cost of living at the aggregate level can mask the lived experience of low-paid workers.[136] Research from the RBA has shown that, compared with low-income households, high-income households tend to allocate a larger share of their spending to discretionary services such as travel and recreation, as well as to durable goods. In contrast, low-income households tend to allocate a larger share of spending to non-durable goods and rent.[137] Price increases in non-discretionary purchases, such as rent and basic food staples are more likely to adversely affect the household budgets of the low paid.[138]

It is notable that the non-discretionary components of the CPI increased by 6.6 per cent over the year to the March quarter 2022.[139] The increased cost of non-discretionary items will particularly impact low-income households and many low-paid workers.

As the RBA observed in its May 2022 Statement on Monetary Policy:

‘Cost-of living pressures from rising food and fuel costs are likely to fall unevenly across households, as lower-income households spend a greater proportion of their income on food and fuel and have relatively limited buffers of savings to draw upon.’[140]

The 2.5 per cent increase awarded in last year’s Review decision exceeded the RBA’s forecasts at that time for CPI growth and trimmed mean inflation, which were forecast to increase by 1.25 per cent and 1.5 per cent respectively, over the year to the June quarter 2022.[141] Had these forecasts been realised the 2.5 per cent increase would have resulted in a real wage increase for employees affected by the Review decision. As noted above, the position has changed markedly. As at the March quarter 2022 the headline CPI rate is 5.1 per cent and trimmed mean inflation is at 3.7 per cent. Consequently, award-reliant employees and low-paid employees have seen a fall in their real wages.

The changes in the economic context weigh in favour of an increase in the NMW and modern award minimum wages.

The approach taken by the Panel to forecasts and actual data outcomes is encapsulated in the following observation in the Annual Wage Review 2012–13 (2012–13 Review) decision:

‘To the extent that the forecast economic indicators do not ultimately reflect the actual performance of the economy, this forms part of our broad assessment and our consideration of the actual indicators in subsequent reviews.’[142]

Applying this approach in the present context also weighs in favour of an increase in the NMW and modern award minimum wages.

Social and other considerations

As mentioned in Chapter 1, in addition to various economic considerations we are required to have regard to various social considerations and to ‘the need to encourage collective bargaining’. The minimum wages objective and the modern awards objective require us to take into account ‘relative living standards and the needs of the low paid’.

As mentioned in Chapter 2.2, the Statistical Report contains estimates of disposable incomes for selected household types earning various wage rates in comparison to a 60 per cent median income poverty line. As shown in Appendix 3, as at December 2021 the position of all household types, across all wage rates, had declined compared to their position in December 2020. Eight of the household types had disposable incomes below the poverty line, 3 more than at the time of last years’ Review.

Data from the HILDA survey shows that low-paid employee households were twice as likely to experience financial stress when compared to all employee households.

The requirement to take into account relative living standards and the needs of the low paid supports an increase in the NMW and modern award minimum wages.

As we cannot be satisfied that an increase in minimum wages will encourage collective bargaining this fact weights against an increase in minimum wages.

Superannuation and Budget Measures

The Superannuation Guarantee Rate Increase

The Superannuation Guarantee (Administration) Amendment Act 2012 (Cth) amended the Superannuation Guarantee (Administration) Act 1992 to increase the Superannuation Guarantee (SG) rate from 9 per cent to 12 per cent. The increase was to be phased in and increased by 0.25 percentage points on 1 July 2013 to be 9.25 per cent and on 1 July 2014 to be 9.5 per cent.[143] The planned increases were postponed following amendments provided in the Minerals Resource Rent Tax Repeal and Other Measures Bill 2014 (Cth). The next increase is planned for 1 July 2022, where it will increase by 0.5 percentage points to 10.5 per cent, and eventually reach 12 per cent by 1 July 2025.

In last year’s Review, we noted that the 2021–22 Commonwealth Budget proposed to remove the threshold of $450 per month (before tax) under which employees do not need to be paid the SG by their employer.[144] The removal of the threshold will apply from 1 July 2022 and the Australian Government estimates it will affect around 300,000 individuals, 63 per cent of whom are women.[145]

The increase in the SG rate and the removal of the threshold will increase employment costs and for that reason they are moderating factors in our consideration of the adjustment to minimum wages.

2022–23 Budget measures to support households

The 2022–23 Budget made several other announcements regarding changes to support businesses and to households. As the Panel has previously stated, it does not take into account proposed changes that have yet to be legislated. Two proposals that have been legislated and received Royal Assent are the increase to the low and middle income tax offset (LMITO) and the cost of living payment.[146]

We have previously discussed and considered the LMITO.[147] The LMITO was introduced for the 2018–19 financial year and is paid as a lump sum after the lodging of income tax returns. The 2019–20 Budget announced that the LMITO would be extended for the 2019–20, 2020–21 and 2021–22 financial years. The Budget also announced an increase to the LMITO: the minimum offset amount would increase to $255 (up from $200), with the rate increasing by 7.5 cents per dollar (up from 3 cents) to the new maximum level of $1080 (up from $530), before phasing out at 3 cents per dollar (up from 1.5 cents). This higher LMITO replaced the initial offset amounts for the 2018–19 financial year and thereafter.

In the 2020–21 Review decision, the Panel accepted the submission of the ACTU that the retention of the LMITO for the next financial year means no change in the net position for impacted workers relative to the current state.[148]

In the 2022–23 Budget, the Australian Government announced an increase of $420 to the LMITO for the 2021–22 financial year, paid from 1 July 2022, thereby increasing the maximum payment from $1080 to $1500.[149]

For the 2022–23 year, the LMITO provided an offset of $675 for those whose personal income is less than $37 000, increasing to $1500 for incomes from $37 000 to less than $48 000 at a rate of 7.5 cents per dollar. This includes the $420 Cost of living tax offset. The maximum LMITO of $1500 applied to incomes between $48 000 and $90 000. For incomes above $90 000, the LMITO phased out at a rate of 3 cents per dollar. The LMITO worked in conjunction with the low income tax offset (LITO), which applied to incomes of $37 000 or less. The maximum LITO is $700.

All LMITO recipients will benefit from the $420 increase except those who do not require the full offset to reduce their tax liability to zero. All other features of the current LMITO remain unchanged. The fact that the maximum LMITO applies to those earning between $48 001 and $90 000 means that this additional offset is likely to benefit middle-income earners more than the low paid.

Also announced in the Budget and since legislated is a one-off cost of living payment of $250 made in April 2022 to eligible recipients to assist with higher cost of living pressures.[150] Those receiving the one-off payment are those receiving payments such as the age pension, disability support pension, parenting payment, carer payment, JobSeeker payment and youth allowance. These recipients are less likely to be working and therefore the benefit to low-paid workers of these payments is likely to be small.

Consistent with the position taken in past Review decisions we have taken into account the 0.5 percentage point increase in the SG rate, the removal of the $450 SG threshold and the 2022–23 Budget measures mentioned above in determining the level of increases in minimum wages in this Review, but we have not applied a direct, quantifiable discount to the minimum wage increases. These SG changes and Budget measures are moderating factors in our consideration of the adjustment to minimum wages and consequently the increase in the NMW and modern award minimum wages we have determined in this Review are lower than they would have been absent these factors.

It is convenient to deal here with a submission advanced by Ai Group in support of its proposed ‘modest wage increase of 2.5 per cent’:

‘When the proposed 2.5% wage increase is considered alongside the 0.5% Superannuation Guarantee increase that is operative from 1 July 2022 and the equivalent of a 1.3% increase in pre-tax income that an employee on the NMW will receive in the coming months as a result of the announced increase in the Lower and Middle Income Tax Offset, our proposal would result in the equivalent of a 4.3% increase in pre-tax remuneration for low paid employees.’[151]

Ai Group’s analysis is flawed in three respects. First, as mentioned above, the Panel has consistently eschewed the application of a direct, quantifiable discount for SG increases and Budget measures. Ai Group’s attempt to quantify the value of particular measures as a means of justifying a lower increase in minimum wages is inconsistent with the Panel’s approach. Second, quantifying the benefit of the LMITO as the equivalent of a 1.3 per cent increase in pre-tax income for an employee on the NMW is apt to mislead as there are comparatively few full-time employees paid at the NMW level. The benefit provided by the increase in the LMITO varies significantly depending on income and may provide little or no benefit to many low-paid part-time employees who are not employed on a full-time basis.

And, finally, Ai Group’s reliance on the 0.5 percentage point increase in the SG rate to arrive at ‘the equivalent of a 4.3% increase in pre-tax remuneration for low paid employees’ ignores the fact the SG rate increase is a deferred benefit; it does not assist low-paid employees to meet their current needs and cost of living pressures.

Consideration

As mentioned in Chapter 1, the Panel’s task is to consider the relevant statutory considerations in the context of the prevailing economic and social circumstances in arriving at its decision.

A number of the submissions drew attention to the complexity of the Panel’s task in the prevailing circumstances. As ABI put it:

‘this year may be one of the most difficult years for the Panel’s decision due to the evidence indicating the continuation of a two-speed economy, significantly increasing costs to business, lingering uncertainty due to the ongoing pandemic and low business confidence, against a backdrop of rising inflation and consumer costs.’[152]

The statutory tasks in ss 134 and 284 involve an ‘evaluative exercise’ in which the considerations in s.134(1)(a)–(h) and s.284(1)(a)–(e) inform the evaluation of what might constitute ‘a fair and relevant minimum safety net of terms and conditions’ and ‘a safety net of fair minimum wages’.

As the Panel has observed in numerous past Review decisions there is often a degree of tension between the economic and social considerations which we must take into account. A substantial wage increase may better address the needs of the low paid and improve the living standards of award-reliant employees relative to those employees who are not award reliant; but it may, depending upon the prevailing economic circumstances, adversely affect the performance and competitiveness of the national economy. A substantial wage increase may reduce the capacity to employ the marginalised and hence impact on employment growth or add to inflationary pressures. The range of considerations we are required to take into account calls for the exercise of broad judgment, rather than a mechanistic approach to minimum wage fixation.

The submissions on behalf of the various employer interests tended to highlight the downside risks to the economy. ACCI submitted that the ‘fragility of the recovery remains problematic’ and that ‘[t]here is an overwhelming impression of risks and the unknown’.[153] Similarly, Ai Group urged the Panel to adopt ‘a cautious approach’ and submitted:

‘While the Australian economy has bounced back at a faster and stronger pace than had been anticipated, there are many hurdles to a complete recovery.’[154]

While it may be accepted, as a general proposition, that we live in uncertain times and there are significant downside risks to the economic outlook, the employer submissions present a stark contrast with the generally optimistic assessment in the 2022–23 Budget and by the RBA.

The 2022–23 Budget noted that the ‘Australian economy has proved remarkably resilient to the ongoing impacts of the pandemic, consistently outperforming expectations and all major advanced economies’.[155] Economic growth as measured by GDP was 3.4 per cent in the December quarter 2021, the equal highest quarterly increase in 46 years, and this strong outcome does not appear to have been derailed by the Omicron outbreak in early 2022.[156]

Household consumption exceeded pre-pandemic levels for the first time in the December quarter 2021.[157] As noted in the 2022–23 Budget, a record proportion of Australians are in work[158] and this strong demand for labour is expected to continue.[159] Higher consumer spending and employment than previously expected has led to improved growth forecasts.[160] Business confidence returned quickly after the Omicron wave and business investment is expected to be strong, driven by non-mining business investment.[161] The economic and fiscal outlook is positive as noted in the Budget Overview section of Budget Statement No. 1:

‘The Australian economy has proved remarkably resilient to the ongoing impacts of the pandemic, consistently outperforming expectations and exceeding pre-pandemic levels of activity by more than the major advanced economies.

A strong economic recovery is well underway, notwithstanding the pandemic and new shocks, such as the recent floods in Queensland and New South Wales and the Russian invasion of Ukraine. Economic growth forecasts have been revised upwards, driven by stronger-than-expected momentum in the labour market and consumer spending. Real GDP is expected to grow by 4¼ per cent in 2021-22, 3½ per cent in 2022-23 and 2½ per cent in 2023-24 … The strength of the economy, and in particular the labour market, combined with higher near-term commodity prices, has driven large upward revisions to tax receipts and reductions in unemployment benefit payments … Net and gross debt as a share of GDP are both expected to be lower than at MYEFO and decline over time.’[162]

[82] RBA (2022), Statement on Monetary Policy, May, p. 61.

[83] Ibid.

[84] Ibid.

[85] Australian Government submission, 1 April 2022, at para. 107.

[86] Ibid s.284(1)(c) and s.134(1)(a).

[87] Ibid s.284(1)(d) and s.134(1)(e).

[88] Ibid s.134(1)(b).

[89] Ibid s.134(1).

[90] Ibid s.284(1).

[91] [2020] FWCFB 3500 at [359]

[92] Australian Government submission, 1 April 2022, at paras 298–300, Chart 8.3.

[93] Statistical report (version 9), 8 June 2022, Table 9.1.

[94] [2021] FWCFB 3500 at [142]

[95] Statistical report (version 9), 8 June 2022, Tables 12.1 and 12.2.

[96] Fair Work Act, s.3(f).

[97] [2020] FWCFB 3500 at [116]

[98] Statistical report (version 9), 8 June 2022, Table 11.1.

[99] Ibid at [403]; [2019] FWCFB 3500 at [388]; [2018] FWCFB 3500 at [35]–[38]

[100] ACTU submission in reply, 8 May 2022 at para. 2.

[101] ACCER submission, 1 April 2022, at para. 9.

[102] ACCI submission in reply, 10 May 2022 at para. 11.

[103] Ai Group submission in reply, 10 May 2022 at p. 2.

[104] ABI submission, 1 April 2022, at p. 3.

[105] ARA submission, 1 April 2022 at p. 2.

[106] MGA submission, 29 March 2022, at para. 4.

[107] R&CA submission, 28 March 2022, at para. 22.

[108] Australian Government submission, 3 June 2022, at paras 5, 7.

[109] Victorian Government submission, 31 March 2022, at para. 4.

[110] New South Wales Government submission, 1 April 2022, at para. 57.

[111] Government of South Australia submission, 6 May 2022, at para. 18.

[112] Queensland Government submission, 5 May 2022, at p. 2.

[113] Government of Western Australia submission, 1 April 2022, at paras 6–7.

[114] Fair Work Act ss.284(1)(e) and 134(1)(a).

[115] Australian Government submission, 1 April 2022, at paras 336, 338.

[116] Ibid at Chart 2.1.

[117] MA000010

[118] Australian Government submission, 1 April 2022, at para. 23.

[119] Ibid at para. 32.

[120] Ibid.

[121] Ibid, Appendix A, Table A.2.

[122] This excludes workers paid junior, apprentice and disability rates of pay.

[123] Australian Government submission, 1 April 2022 at Chart 2.1.

[124] Ibid.

[125] [2014] FWCFB 3500 at [47].

[126] Wright S and Buchanan J (2013), Award reliance, Research Report 6/2013, Fair Work Commission, December, p. 37.

[127] Bishop J & Cassidy N (2019), Wages Growth by Pay-setting Method, RBA Bulletin, June, p. 81.

[128] [2015] FWCFB 3500 at [7]

[129] Gala v Preston (1991) 172 CLR 243 [12]

[130] Since revised to 5.4 per cent.

[131] RBA (2022), Statement on Monetary Policy, May, p. 1.

[132] The RBA uses the trimmed mean for forecasting because it strips out extremes on both the high and low sides, and does not presume where the noise comes from.

[133] [2020] FWCFB 3500 at [132]

[134] RBA (2022), Statement on Monetary Policy, May, p. 1.

[135] RBA (2022), Statement on Monetary Policy, May p. 53.

[136] [2021] FWCFB 3500 at [113]

[137] Beech A, Dollman R, Finlay R & La Cava G (2014), The Distribution of Household Spending in Australia, RBA Bulletin, March, p. 15.

[138] ACTU submission, 1 April 2022 at para. 206; van Kints M & Bruenig R (2021), ‘Inflation variability across Australian households: implications for inequality and indexation policy’, Economic Record, Vol. 97, Issue 316, pp 1–23.

[139] ABS, Consumer Price Index, Australia, March 2022.

[140] RBA (2022), Statement on Monetary Policy, May, p. 56.

[141] [2021] FWCFB 3500 at [37]

[142] [2013] FWCFB 4000 [8]

[143] Ibid at [334]

[144] [2021] FWCFB 3500 at [60]

[145] Ibid; Treasury Laws Amendment (Enhancing Superannuation Outcomes For Australians and Helping Australian Businesses Invest) Act 2022; 2021–22 Budget Measures, Budget Paper No.2, 1 March 2021 p. 26.

[146] See Fair Work Commission (2022), Information note—Summary of measures from the 2022–23 Budget, 14 April.

[147] [2021] FWCFB 3500 at [64]–[65]; [2020] FWCFB 3500 [357]; [2019] FWCFB 3500 at [50]–[51]; Fair Work Commission (2019), Information note—Changes to the tax-transfer system, additional material for the 2018–19 Review, 3 April.

[148] [2021] FWCFB 3500 at [69]

[149] Australian Government (2022), Budget 2022–23, Budget Paper No. 1, 29 March, p. 15.

[150] Ibid, p. 167; Treasury Laws Amendment (Cost of Living Support and Other Measures) Act 2022

[151] Ai Group reply submission, 10 May 2022, p. 2.

[152] ABI submission, 1 April 2022, p. 3.

[153] ACCI submission in reply, 10 May 2022, at paras 3, 6.

[154] Ai Group submission, 1 April 2022, p. 4.

[155] Australian Government (2022), Budget 2022–23, Budget Paper No. 1, 29 March, p. 31.

[156] Ibid pp. 31, 45. Since revised to 3.6 per cent.

[157] Ibid p. 49.

[158] Ibid p. 39.

[159] Ibid p. 45.

[160] Ibid p. 31.

[161] Ibid pp. 51–52.

[162] Ibid pp. 5–6.

[163] Australian Government submissions, 3 June 2022, para. 4.

[164] RBA (2022), Statement on Monetary Policy, May, pp. 2, 23.

[165] Ibid, p. 63.

[166] Australian Government submission, 1 April 2022, at paras 43–44.

[167] ACCI submission in reply, 10 May 2022, at para. 3.

[168] ARA submission, 1 April 2022 at p. 2.

[169] ABI submission, 1 April 2022 at p. 3.

[170] RBA (2022), Statement by Philip Lowe, Governor: Monetary Policy Decision, 7 June.

[171] Australian Government submission, 1 April 2022 at para. 23.

[172] Transcript of proceedings, 18 May 2022, PN179.

[173] Ibid, PN200.

[174] Ai Group submission in reply regarding the National Accounts March quarter 2022, 8 June 2022, at p. 3.

[175] ACTU submission in reply regarding the National Accounts March quarter 2022, 8 June 2022, para. 29.

[176] ABS, Labour Force, Australia, April 2022.

[177] This applies on the basis of a 38-hour week for a full-time employee.

[178] Fair Work Act, s. 287(4).

[179] [2021] FWCFB 3500 at [219].

[180] [2020] FWCFB 3500 at [45]–[46].

[181] Ibid at [55].

[182] Ibid at [309].

[183] Ibid [162].

[184] Ibid [163]–[164].

[185] Australian Government (2022), Budget 2022–23, Budget Paper No. 1, 29 March, p. 47, Box 2.3.

[186] Ibid, p. 16.

[187] Fair Work Commission (2022), Information note – Industry analysis, 26 May.

[188] Ai Group submission, 1 April 2022, pp. 56–58.

[189] Ai Group submission regarding the National Accounts March quarter 2022, 3 June 2022, pp. 6–7.

[190] Ai Group submission, 1 April 2022, pp. 58–59.

[191] Ai Group submission regarding National Accounts March quarter 2022, 3 June 2022, at p. 7.

[192] Ibid.

[193] Ibid.

[194] ACCI submission, 1 April 2022, at para. 39.

[195] Ibid, at para. 41.

[196] Ibid, at para. 47; ACCI submission in reply, 10 May 2022, at para. 35.

[197] Ibid, at para. 38.

[198] ACCI submission, 1 April 2022, at para. 48.

[199] ACCI submission in reply, 10 May 2022, at para. 48.

[200] ACCI submission regarding the National Accounts March quarter 2022, 3 June 2022, at para. 15.

[201] Ibid, at para. 42.

[202] Ibid, at para. 46.

[203] Ibid, at para. 48.

[204] Ibid, at para. 53.

[205] ABI submission regarding the National Accounts March quarter 2022, 3 June 2022, pp. 12–16.

[206] NRA submission regarding the National Accounts March quarter 2022, 3 June 2022, at para. 2.6.

[207] Ibid, at paras 3.1–3.8.

[208] Australian Chamber–Tourism submission regarding the National Accounts March quarter 2022, 3 June 2022, at p. 1.

[209] Ibid, at p. 3.

[210] Ibid.

[211] ABI submission regarding the National Accounts March quarter 2022, 3 June 2022, at p. 12.

[212] ABI submission, 1 April 2022 at p. 25.

[213] R&CA submission, 28 March 2022, at para. 24.

[214] ACTU submission regarding the National Accounts March quarter 2022, 3 June 2022, at paras 111, 111(a).

[215] Ibid, at para. 111(b).

[216] SDA submission regarding the National Accounts March quarter 2022, 3 June 2022, at para. 5.

[217] The change in job vacancy rate also takes into account that the job vacancy rate is often higher in some industries than others.

[218] ABS (2022), Payroll jobs growth continues to be slower in 2022, media release, 12 May.

[219] In 2016, there were around 430 000 people working in Australia on temporary visas. These workers accounted for around 18 per cent of all jobs in food trades and 13 per cent in the hospitality sector. Most of these workers were on either temporary visas for skilled workers or student visas. See Lowe P (2021), The Labour Market and Monetary Policy, Speech to the Economic Society of Australia, 8 July.

[220] [2020] FWCFB 3500 at [147]

[221] [2021] FWCFB 3500 at [245]

[222] ACTU submission in reply, 23 April 2021, at para. 74.

[223] Ibid [65].

[224] Ibid [74].

[225] [2021] FWCFB 3500 at [225]–[227].

[226] Fair Work Commission (2020), Information note—Modern awards and industries, 30 March.

[227] [2020] FWCFB 3500 [66]

[228] See Schedules 6 (at Item 17) and 6A (at Item 20) of the Fair Work (Transitional Provisions and Consequential Amendments Act) 2009.

[229] [2020] FWCFB 3500 at [165].

[230] A more detailed outline of these instruments can be found at [2013] FWCFB 4000 [553]–[559]; and [2017] FWCFB 1931 [81].

[231] Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 (Cth), items 10 and 20 of Sch. 9, items 7 and 12A(5) of Sch. 3.

[232] Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 (Cth), items 7–8 of Sch. 9, and item 3(2) of Sch. 5.

[233] For example, Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 (Cth), item 20(1) of Sch. 3.

[234] [2010] FWAFB 4000 [370]–[396].

[235] Dunn A & Bray G (2010), Minimum wage transitional instruments under the Fair Work Act 2009 and the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009, Research Report 06/2010, Fair Work Australia, June 2010.

[236] [2017] FWCFB 1931 [81].

[237] Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 (Cth), items 5(1)–(5) and 9(4) of Sch. 6.

[238] Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 (Cth), at items 5(3), 6 and 10(1) of Sch. 6A.

[239] For example, certain instruments that covered employees who were also covered by the Social, Community, Home Care and Disability Industry Award 2010 were preserved by the Award Modernisation – Termination of Modernisable Instruments decision [2010] FWAFB 9916 at [44]. As at the date of this decision, they have not been terminated.

[240] [2017] FWCFB 3500 [697].

[241] [2020] FWCFB 3500 [409].

[242] ACTU submission, 1 April 2022, at para. 308; ACCI submission, 1 April 2022, at para. 287; Ai Group submission, 1 April 2022, at p. 62.

[243] Keolis Downer submissions, 1 April 2022 and 1 June 2022; Busways submissions, 1 April 2022 and 1 June 2022; Transdev submissions, 1 April 2022 and 1 June 2022; and Transit Systems submissions, 1 April 2022 and 1 June 2022.

[244] ARTBIU, AMWU and ASU submissions in reply, 6 May 2022; ARTBIU, AMWU and ASU submission in response to the Background Paper, 1 June 2022.

[245] [2022] FWCFB 78.

[246] Explanatory Memorandum for the Fair Work Amendment (Transfer of Business) Bill 2012 (Cth) p. 4.

[247] Fair Work Act s.768AW(c).

[248] See Fair Work Act s.768BY, including item 2 of the table in s.768Y(1) and column 3 of item 14 of the table in s.768BY(2).

[249] Transit Systems submission, 1 April 2022, at paras 23–24. The Transit Systems West Services Engineering and Maintenance Enterprise Agreement 2021 commenced operation on 27 May 2021. From that date, copied State awards derived from the 2018 Bus Engineering and Maintenance Award ceased to apply to transferring employees of Transit Systems covered by this agreement.

[250] ARTBIU, AMWU and ASU submission re retrospective variations, 6 May 2022, at para. 21.

[251] Ibid at para. 22.

[252] [2021] FCA 1436.

[253] Ibid at [6].

[254] Ibid.

[255] 2018 Bus Operations Award, Clause 15.2.

[256] See [2021] FCA 1436 at [51]–[52].

[257] Ibid at [53].

[258] Ibid at [54]–[56].

[259] Ibid at [54].

[260] [2022] FCA 389.

[261] Ibid at [56].

[262] Ibid at [61].

[263] Transit Systems submission in response to background paper, 1 June 2022, at para. 9.

[264] Transit Systems submission, 1 April 2022, at para. 42.

[265] Transit Systems submission in response to background paper, 1 June 2022, at para. 2.

[266] Ibid at paras 3–4.

[267] Ibid at para. 7.

[268] Transit Systems submission, 1 April 2022, at paras 48–49, citing Re Mitsubishi Motors Australia Ltd Award 1998 (the Vehicle Industry Public Holidays case) 3 October 2001, Print T1300.

[269] Ibid at para. 55.

[270] Ibid.

[271] Transit Systems submission in response to background paper, 1 June 2022, at para. 14.

[272] See ARTBIU, AMWU and ASU submission re retrospective variations, 6 May 2022, at paras 24–36.

[273] Transcript, 3 June 2022, PN176.

[274] ARTBIU, AMWU and ASU submission re retrospective variations, 6 May 2022, at para. 26.

[275] Ibid at para. 27.

[276] Ibid at para. 29.

[277] Ibid at para. 30.

[278] Ibid at paras 31, 33.

[279] Ibid at para. 34.

[280] Ibid at para. 35.

[281] Ibid at para. 37 and see paras 38–51, citing Hartley Poynton Ltd v Ali (2005) 11 VR 568, RTBU v Metro Trains [2020] FCAFC 81, Mealing v P Chand t/as Fastfix (2003) 57 NSWLR 305, Castle Construction Pty Ltd v North Sydney Council [2007] NSWCA 164 at [97], Esso Australia v AWU (2017) 263 CLR 551 and distinguishing the Vehicle Industry Public Holidays Case 3 October 2001, Print T1300.

[282] Ibid at para. 19. See also Transit Systems submissions re undertakings, 3 June 2022; and ARTBIU, AMWU and ASU submissions in response to undertakings, 5 June 2022.

[283] Ibid at para. 46, citing [2018] FWCFB 2 at [43].

[284] Ibid at paras 47–48.

[285] Ibid at para. 51.

[286] Ibid.

[287] ACTU submission in reply, 8 May 2022, at paras 159–160.

[288] See also [2020] FWCFB 3500 at [220]. Variation under s.603 is to be distinguished from the Commission’s power to correct an obvious error in a decision under s.602 of the Fair Work Act (see [2018] FWCFB 2 at [37]). The Commission may correct errors in modern awards and national minimum wage orders under ss.160 and 296 of the Fair Work Act.

[289] Transit Systems submission in response to background paper, 1 June 2022, at para. 9.

[290] Ibid at paras 3–4, 7.

[291] Ibid at paras 5–6. We note that Transit Systems refers to the 2018–19 and 2019–20 Review decisions but cites the 2017–18 and 2018–19 Review decisions

[292] Transit Systems submission in response to background paper, 1 June 2022, at para. 7.

[293] See also the Transit Systems submissions re undertakings, 3 June 2022; and the ARTBIU, AMWU and ASU submissions in response to undertakings, 5 June 2022.

[294] [2021] FCA 1436 at [57].

[295] See attachment to ARTBIU, AMWU and ASU submissions in response to undertakings, 5 June 2022.

[296] ARTBIU, AMWU and ASU submissions in response to undertakings, 5 June 2022, at para. 5, where the Unions state that Transit Systems accepts this proposition.

[297] ARTBIU, AMWU and ASU submission re retrospective variations, 6 May 2022, at para. 53.

[298] Affidavit of Jamie Sinclair, 1 June 2022 [15]; see also Transit Systems submission in response to background paper, 1 June 2022, at para. 14.

[299] Transit Systems submission, 1 April 2022, at para. 53.

[300] Esso Australia v AWU 263 CLR 551 at [49].

[301] FW Act ss.577(a) and (d), and 578(b).

[302] See Transit Systems response to question at hearing, 3 June 2022.

[303] See, for example, Keolis Downer submission, 1 April 2022, at paras 9 –10; Busways submission, 1 April 2022, at paras 72 and 89; Transdev submission, 1 April 2022, at para. 17, and submission in response to background paper, 1 June 2022, at para. 9; and Transit Systems submission, 1 April 2022, at paras 53–57.

[304] Item 20(2) of Schedule 9 to the Transitional Act.

[305] See FW Act s.285(3).

[306] FW ACT ss.578 (a) and (b).

[307] See Transdev submission, 1 April 2022, at para. 19; Keolis Downer submission, 1 April 2022, at paras 7–9; Busways North West Pty Ltd submission, 1 April 2022, at paras 4–5; ABI submission in reply, 6 May 2022, at paras 15, 19(c).

[308] See 4 Yearly Review of Modern Awards: Preliminary Jurisdictional Issues [2014] FWCFB 1788 at [32]

[309] Transcript, 3 June 2022, PN153–PN154.

[310] [2013] FWCFB 4000 at [359].

[311] Keolis Downer submission, 1 April 2022, at para. 5. It is understood that copied State awards derived from the State Transit Authority Bus Operations Enterprise (State) Award 2021 ceased to cover Keolis Downer’s transferring employees following commencement of the KDNB Bus Operations Enterprise Agreement 2021. Transdev submission, 1 April 2022, at para. 5; Busways submission, 1 April 2022, at para. 2. The copied State awards apply to Transdev transferring employees from 4 April 2022 and to Busways’ transferring employees from January 2022.

[312] Assuming a 0.5 per cent increase to the Superannuation Guarantee Charge (SGC) from 1 July 2022.

[313] Given the 0.5 per cent increase to the SGC from 1 July 2022.

[314] Assuming a 0.5 per cent increase to the SGC from 1 July 2022.

[315] See Transdev submission, 1 April 2022, at paras 16–17; and Busways submission, 1 April 2022, at para. 59.

[316] Keolis Downer submission, 1 April 2022, at para. 9. Keolis Downer withdrew its initial alternative submission that any wage increase in the 2021–22 Review should be reduced by wage increases contained in copied State awards: see Keolis Downer submission in response to background paper, 1 June 2022, at para. 22.

[317] Keolis Downer submission in response to background paper, 1 June 2022, at para. 6.

[318] Ibid at para. 10. In support of this argument, Keolis Downer reference Busways submission, 1 April 2022, at paras 71–72; and ACCI submission in reply, 10 May 2022, at paras 176–203: Ibid at para. 10.

[319] Industrial Relations Act 1996 (NSW) s.10.

[320] Keolis Downer submission in response to background paper, 1 June 2022, at para. 10.

[321] Ibid at para. 11.

[322] Ibid at paras 7, 12.

[323] Ibid at para. 13 and table at Attachment 1.

[324] Ibid at para. 19.

[325] Ibid at para. 8.

[326] Ibid at para. 14.

[327] Ibid at paras 16–18. Employees covered by copied State awards derived from the 2021 Senior and Salaried Officers Award voted to approve an enterprise agreement on 30 May 2022, and ‘negotiations with bargaining representatives for employees covered by … [copied State awards derived from the 2020 Bus Engineering and Maintenance Award] are almost complete ...’

[328] Busways submission, 1 April 2022, at paras 5 and 62.

[329] Busways submission in response to background paper, 1 June 2022, at paras 4.2–4.3, citing [2019] FWCFB 3500 at [10].

[330] Ibid at paras 3.2 and 3.5.

[331] Ibid at paras 3.3–3.4.

[332] Ibid at paras 3.6–3.7.

[333] Ibid at paras 3.8–3.10 and Tables at para. 3.9.

[334] Ibid at para. 3.11.

[335] Ibid at para. 4.4.

[336] Ibid at paras 4.4–4.5, citing Busways submission, 1 April 2022, paras 73–80.

[337] Ibid at paras 8.6–8.7.

[338] Ibid at para. 8.9.

[339] Ibid at para. 8.10.

[340] Ibid at para. 8.11.

[341] Busways submission, 1 April 2022, at para. 4(j)(ii). See also paras 66–70.

[342] Ibid at para. 68.

[343] Ibid at paras 69–70.

[344] Busways submission in response to background paper, 1 June 2022, at para. 7.10, citing Busways submission, 1 April 2022, at paras 81–83.

[345] Ibid at para. 7.1.

[346] Ibid at para. 7.12.

[347] Ibid at para. 7.7, citing Transit Systems submission, 1 April 2022, at para. 4.

[348] Ibid at para. 7.15.

[349] Ibid at para. 4.8.

[350] Ibid at para. 4.11.

[351] Ibid at para. 4.11, citing Busways submission, 1 April 2022, at para. 87. See also ACCI submission in reply, 10 May 2022, at para. 192.

[352] Ibid para. 8.18, citing Witness Statement of Will O’Neill, 30 March 2022 at para. 32.

[353] Ibid at para. 8.18.

[354] Ibid at para. 8.5.

[355] Ibid at para. 8.19.

[356] Transdev submission, 1 April 2022, at paras 16–17, 19–20; and Transdev submission in response to background paper, 1 June 2022, at para. 9.

[357] Transdev submission in response to background paper, 1 June 2022, at paras 10–11.

[358] Ibid at para. 6(a)(i).

[359] Ibid at para. 6(a)(ii), citing ABI submission, 6 May 2022, at para. 15.

[360] Ibid at para. 6(a)(iii).

[361] Ibid at para. 6(b).

[362] Ibid at para. 6(b)(ii)

[363] Ibid at para. 6(c).

[364] Ibid at para. 7.

[365] Ibid at para. 8. Transdev does not anticipate any such enterprise agreements being made any earlier than 3 months from 1 June 2022.

[366] ARTBIU, AMWU and ASU submission in response to background paper, 1 June 2022, at para. 15.

[367] ARTBIU, AMWU and ASU submission in reply, 6 May 2022 at para. 5.

[368] Ibid at para. 23 and ARTBIU, AMWU and ASU submissions in response to Background Paper, 1 June 2022, at paras 5, 17 and 31.

[369] ARTBIU, AMWU and ASU submission in response to background paper, 1 June 2022, at para. 17.

[370] Ibid.

[371] Ibid at paras 3 and 8.

[372] Ibid at para. 4.

[373] Ibid at para. 5.

[374] Ibid at paras 6–7.

[375] Ibid at paras 9–11.

[376] ARTBIU, AMWU and ASU submission in reply, 6 May 2022, at para. 24.

[377] Ibid at para. 22.

[378] Ibid at para. 17.

[379] Ibid at para. 23.

[380] Ibid at paras 23, 25.

[381] Ibid at para. 23.

[382] Ibid at para. 18.

[383] Busways submission, 1 April 2022, at paras 56, 75.

[384] ARTBIU, AMWU and ASU submission in reply, 6 May 2022, at para. 26.

[385] See for example ibid at para. 27 (in response to Busways submission, 1 April 2022).

[386] Ibid at paras 17, 30–31; and ARTBIU, AMWU and ASU submission in response to background paper, 1 June 2022, at para. 15.

[387] ACTU submission in reply, 8 May 2022, at paras 159–160.

[388] Explanatory Memorandum to the Fair Work Amendment (Transfer of Business) Bill 2012 at p. 4.

[389] Fair Work Act s.768BU. The note under this section observes that the take-home pay order will continue to apply even if an enterprise agreement starts to apply to the employee.

[390] Industrial Relations Act 1996 (NSW) s.10.

[391] Fair Work Act s.768BY (including items 2, 11 and 12 of the table in s.768Y(1) and item 14 ‘Part 5 of Schedule 9’ of the table in s.768BY(2)) and Transitional Act item 16 of Part 5 of Schedule 9.

[392] [2021] FCA 1436 at [50].

[393] Fair Work Act ss.12 and 302(2).

[394] [2015] FWCFB 3500 at [88]–[89].

[395] That is, a threshold of two-thirds of weekly median adult full-time ordinary earnings: see [2021] FWCFB 3500 at [137].

[396] See, for example, [2016] FWCFB 3500 at [540]. Further, various annual wage review research reports have examined factors that may have influenced changes in the collective agreement coverage of employees.

[397] See, for example, Busways submission in response to background paper, 1 June 2022, at para. 4.11, citing Busways submission, 1 April 2022, at para. 87. See also ACCI submission in reply, 10 May 2022, at para. 192.

[398] Transit Systems submission, 1 April 2022, at paras 23–24.

[399] Ibid at para. 4.

[400] Ibid at paras 46–47, 54, 63–64.

[401] Ibid at para. 19–21. As a result of the Court decision in ARTBIU v Transit Systems, Transit Systems has facilitated an independent audit to determine the quantum of wages arising from the Court’s decision, including the compounding effect of earlier decisions. The McCormick Report identifies the total liability as $3,475,696.72, made up of $3,273,597.72 in wages and $202,099.00 in superannuation (but excluding any order for interest): Ibid at paras 19–21.

[402] Ibid at para. 55.

[403] Ibid at paras 56–59 and Transcript, 3 June 2022, PN65–PN67.

[404] Transit Systems submission in response to background paper, 1 June 2022, at para. 13.

[405] Ibid at para. 11; Transit Systems submission, 1 April 2022, at para. 60.

[406] Transit Systems submission, 1 April 2022, at paras 61–62; and Transcript, 3 June 2022, PN93–PN94.

[407] Transit Systems submission, 1 April 2022, at para. 63.

[408] Transit Systems submission in response to background paper, 1 June 2022, at para. 10, and affidavit of Mr Jamie Sinclair, 1 June 2022, [12]-[15].

[409] Transit Systems submission in response to background paper, 1 June 2022, attaching affidavit of Jamie Sinclair, 1 June 2022, at [15].

[410] Ibid at [16].

[411] ARTBIU, AMWU and ASU submission in reply, 6 May 2022, at para. 31a.

[412] Ibid at paras 9–11.

[413] ARTBIU, AMWU and ASU submission in response to background paper, 1 June 2022, at para. 13.

[414] See also discussion of relevant considerations at ibid at paras 3–11.

[415] Ibid at para. 18.

[416] ARTBIU, AMWU and ASU submission in reply, 6 May 2022, at para. 10.

[417] Ibid at para. 11.

[418] Ibid.

[419] ACTU submission in reply, 8 May 2022, at paras 159−160.

[420] See ARTBIU v Transit Systems [2021] FCA 1436 [43] and [48]–[52] (per Rares J).

[421] See attachment to ARTBIU, AMWU and ASU submissions in response to undertakings, 5 June 2022.

[422] Transit Systems submissions in response to background paper, 1 June 2022, attaching affidavit of Jamie Sinclair, 1 June 2022 at [9].

[423] It appears this rate was increased to $1,140.40 from the first pay period commencing on or after 1 January 2022 - see However, this figure is still below that being paid by Transit Systems.

[424] Transit Systems submissions in response to background paper, 1 June 2022 attaching affidavit of Jamie Sinclair, 1 June 2022 [14].

[425] Ibid.

[426] See [2018] FWCFB 2 at [43], [452] and [495] and [2018] FWCFB 3500 at [446]–[451]

[427] ACCI submission in reply, 10 May 2022, at paras 188, 203; and ABI submission in reply, 6 May 2022, at paras 4, 5 and 19.

[428] ABI submission in reply, 6 May 2022, at para. 19.

[429] Ibid at paras 7−13.

[430] Ibid at para. 9.

[431] Ibid.

[432] Ibid at para. 14.

[433] Ibid at para. 15.

[434] Ibid at para. 16, citing Busways submission, 1 April 2022, at para. 75.

[435] ABI submission in reply, 6 May 2022, at para. 12.

[436] Ibid at paras 7, 11.

[437] Ibid at para. 18.

[438] ACCI submission in reply, 10 May 2022, at para. 189.

[439] Ibid at para. 190.

[440] Ibid at para. 200, citing [2018] FWCFB 2 at [10].

[441] Ibid at para. 201.

[442] Ibid at para. 202.

[443] ACCI submission, 1 April 2022, at para. 287.

[444] ACCI submission in reply, 10 May 2022, from para. 178; and ABI submission in reply, 6 May 2022, from para. 4.

[445] Including the National Training Wage. See [2010] FWAFB 4000

[446] Modern awards where the application of a flat dollar amount for certain rates and allowances is unclear include: the Mannequins and Models Award 2020 [MA000117], Marine Towage Award 2020 [MA000050], Market and Social Research Award 2010 [MA000030] and 8 enterprise and State Reference Public Sector awards.

[447] See Australian Government submission, 1 April 2022; New South Wales Government submission, 1 April 2022; Queensland Government submission, 6 May 2022; Government of South Australia submission, 6 May 2022; Government of Western Australia submission, 1 April 2022.

[448] Printed by authority of the Commonwealth Government Printer

Australian Government submission, 1 April 2022 at para. 2.

[449] Australian Government submission, 3 June 2022, at para. 5.

[450] NSW Government submission, 1 April 2022 at para. 5.

[451] Queensland Government submission, 6 May 2022, at p. 2.

[452] Government of South Australia submission, 6 May 2022, at para. 3.

[453] Government of Western Australia submission, 1 April 2022 at paras 6–7.

[454] Victorian Government submission, 1 April 2022, at paras 4; 111.

[455] ACCER submission, 1 April 2022, at para. 9.

[456] ACTU submission, 1 April 2022, at para. 4.

[457] ASU submission, 1 April 2022, at p. 3; SDA submission, 1 April 2022, at p. 1.

[458] ACTU submission in reply, 8 May 2022, at para. 2.

[459] ACCI submission in reply, 10 May 2022, at para. 11; NRA submission, 1 April 2022, at para. 1.1.

[460] ACCI submission in reply, 10 May 2022, at para. 21.

[461] NRA submission regarding the National Accounts March quarter 2022, 3 June 2022, at para. 4.2.

[462] ABI initial submission, 1 April 2022, at p. 3.

[463] Ai Group submission in reply, 10 May 2022, at p. 2.

[464] SAWIA initial submission, 31 March 2022, at p. 7.

[465] ARA submission, 1 April 2022, at pp. 2, 5.

[466] MGA submission, 29 March 2022, at para. 14.

[467] R&CA submission, 28 March 2022, at paras 22; 24.

[468] ACOSS submission, 25 March 2022, at p. 19.

[469] AMWU submission, 1 April 2022, at p. 2.

[470] Adam Bandt MP submission, 1 April 2022, at p. 2.

[471] State Transit Authority Senior and Salaried Officers’ Enterprise (State) Award 2021 and State Transit Authority Bus Engineering and Maintenance Enterprise (State) Award 2020.

[472] State Transit Authority Senior and Salaried Officers’ Enterprise (State) Award 2021, State Transit Authority Bus Engineering and Maintenance Enterprise (State) Award 2020 and State Transit Authority Bus Operations Enterprise (State) Award 2021.

[473] By operation of Fair Work Act Part 2-8.

[474] Section 12 of the Fair Work Act contains definitions of ‘State public sector employer’ and ‘State public sector employee’.

[475] See ibid. s.768AD(1).

[476] Ibid. ss.768AD(1)(a)-(d).

[477] Ibid. ss.768AE(1) and 768AD(1)(a).

[478] Explanatory Memorandum for the Fair Work Amendment (Transfer of Business) Bill 2012 (Cth) p.4.

[479] Fair Work Act, s.768AG.

[480] Explanatory Memorandum for the Fair Work Amendment (Transfer of Business) Bill 2012 (Cth) [18]–[19].

[481] Fair Work Act, s.768AH.

[482] ‘State award’ is defined in s.768AJ.

[483] Fair Work Act, s.768AI.

[484] Ibid. s.768AI and s.768AE(2), and s.768AO(1).

[485] Fair Work Act s.768AI(2), and subject to other provisions in Part 6-3A.

[486] Fair Work Act s.768AN. ‘Re-employment time’ of a transferring employee is the start of the day the employee becomes employed by the new employer: s.768AE(3).

[487] Fair Work Act ss.768AM, 768AN and 768AG.

[488] Fair Work Act s.768AS(1).

[489] See Fair Work Act s.768AY.

[490] Fair Work Act s.768AU(2).

[491] Fair Work Act s.768AO(2)(a). Section 768AO(2) also provides for regulations to be made to prescribe a longer period of operation for a copied State award or to allow the Commission to make an order extending the period of operation of a copied State award. No such regulations have been made.

[492] The copied State award will cease to cover the transferring employee (s.768AN(6)), so that s.768AS(1) will no longer exclude modern award coverage and s.768AU will no longer exclude coverage by a pre-existing enterprise agreement.

[493] Fair Work Act s.768BR(1). Section 768BR(3) sets out where a transferring employee suffers a ‘reduction in take-home pay’.

[494] Fair Work Act s.768BS(1).

[495] Fair Work Act s.768BU. The note under this section observes that the take-home pay order will continue to apply even if an enterprise agreement starts to apply to the employee.

[496] Fair Work Act s.768AX allows the Commission to vary a copied State instrument in certain circumstances including to resolve ambiguities or uncertainties or to better align the instrument with the working arrangements of the new employer’s enterprise.

[497] See Fair Work Act s.768BY, including item 2 of the table in s.768Y(1) and column 3 of item 14 of the table in s.768BY(2).

[498] Fair Work Act s.285(2). Also see Annual Wage Review 2016–17 [2018] FWCFB 2 at [14].

[499] [2013] FWCFB 4000 at [556].

[500] Ibid at [559].

[501] Ibid at [560]

[502] See ibid.

[503] [2014] FWCFB 3500 at [572]; [2015] FWCFB 3500 at [536]; [2016] FWCFB 3500 at [593]; [2017] FWCFB 3500 at [699]

[504] [2018] FWCFB 2 at [43]

[505] Ibid.

[506] [2018] FWCFB 3500 at [446]–[451]

[507] Ibid at [452] and [495]

[508] [2019] FWCFB 3500 at [405] and [460].

[509] [2020] FWCFB 3500 at [411] and [471].

[510] [2021] FWFCB 3500 at [309].