STATEMENT

Fair Work Act 2009
s.157—variation of modern award

Expense-related allowances 2020
(AM2020/19)

PASTORAL AWARD 2010
[MA000035]

Agricultural industry
JUSTICE ROSS, PRESIDENT VICE PRESIDENT CATANZARITI COMMISSIONER HAMPTON	MELBOURNE, 18 NOVEMBER 2020

Expense-related allowances – Pastoral Award 2010 – proposal to recalculate stand-alone allowances – allowances to be recalculated on latest CPI data.

[1] On 20 November 2020 the Commission received correspondence from the National Farmers Federation raising an issue about the recent adjustment of allowances in the Pastoral Award:

‘We have observed that The Vehicle Allowance in the Pastoral Award 2010, at clauses 17.2(b), 46.3(b), and 47.1(a), has been marked to increase from $0.78 per kilometre to $0.80 as a result of the Annual Wage Review 2019-20. The Pastoral Award 2010 was a Group 2 award and as such the wage and allowance adjustments resulting from the Annual Wage Review 2019-20 took effect on 1 November 2021. Accordingly, the adjustment factor for the Vehicle Allowances should be the percentage movement between the March 2014 index figure (when the Vehicle Allowance last increased) and the September 2020 index figure (the figure last published before the adjustment took effect). That is: 102.3/103.8 = 0.985549133.

As the adjustment factor would result in a reduction in the Vehicle allowance ($0.78 x 0.985549133 = $0.768728324), the allowance should remain unchanged. However, it appear that the adjustments factor which the Commission has used is based on the movement between the March 2014 and the March 2020 index figures. That is: 106.6 x 103.8 = 1.0211946050. This results in an increase (rounding up) to $0.80, which is the figure that the Commission has adopted.

It would appear that this anomaly has occurred across all expense-related allowances in the pastoral Award. That is to say, allowances has been adjusted based upon movement between the last change and the March 2020 CPI increase (as in Group 1 Awards) rather than the Sept 2020 increase. It may be that we have miscalculated or overlooked some aspect of the decision that has caused the Pastoral Award to be treated differently to the other Group 2 Awards, in which case we are happy to be corrected.

If we are not mistaken, would you be able to provide an explanation of why allowances in the Pastoral Award appear to have been treated as though it were a Group 1 Award in this determination, with respect to the adjustment factor used?’

[2] This Statement is in response to that correspondence and deals with the appropriate adjustment of the expense-related allowances published for the Pastoral Award 2010 (the Pastoral Award now operating as the Pastoral Award 2020 as at 6 November 2020). It is necessary to first set out some of the background to this issue.

[3] On 19 June 2020 a majority of the Expert Panel (the Panel) for the Annual Wage Review 2019–20 issued its decision 1 to increase the National Minimum Wage and modern award minimum wages by 1.75%.

[4] The Panel determined that…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2020] FWCFB 6122
Decision Date: 18 NOVEMBER 2020

CaseChat Overview and Summary

In Expense-related allowances 2020, the Fair Work Commission considered a proposal by the employer to recalculate stand-alone allowances under the Pastoral Award 2010. The proposal sought to index the allowances using the latest Consumer Price Index (CPI) data rather than the previous methodology. The decision is pivotal for understanding how allowances in industry awards are adjusted over time.

The central legal issue was whether the employer could unilaterally change the method of calculating allowances, and if so, whether it was permissible to use the most recent CPI data. The dispute hinged on the interpretation of the award's provisions and the principle of good faith bargaining. The Commission needed to determine whether the employer's proposal aligned with the award's objectives and whether it complied with the procedural requirements.

The Commission held that the employer had the right to propose changes to the calculation method for expense-related allowances, provided it did so in accordance with the principles of good faith bargaining. The Commission considered the proposal reasonable, given that it aimed to ensure the allowances remained relevant and reflective of current economic conditions. The decision emphasised the importance of keeping allowances in line with inflation, thereby maintaining the real value of the payments. The Commission concluded that recalculating allowances using the latest CPI data was a reasonable and appropriate method.

The Fair Work Commission ordered that the allowances be recalculated based on the latest CPI data. The Commission's decision underscores the need for flexibility in interpreting and updating allowances to reflect economic realities, while also ensuring that such changes are made in good faith and in accordance with award provisions.

Orders