Shire of Mundaring v Australian Municipal, Administrative, Clerical and Services Union

[2019] FWC 4714

[2019] FWC 4714

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.240—Bargaining dispute

Shire of Mundaring
v
Australian Municipal, Administrative, Clerical and Services Union
(B2019/211)

DEPUTY PRESIDENT BEAUMONT PERTH, 5 JULY 2019

s 240 - Application to deal with a bargaining dispute - agreed arbitration on wages outcome within set parameters - basis of wage determination considered - circumstances and considerations advanced by the parties assessed - determination made

[1] This matter concerns an application that has been made by the Shire of Mundaring (the Shire) under s 240 of the Fair Work Act 2009 (Cth) (Act) seeking assistance to resolve a bargaining dispute.

[2] The dispute arose during negotiations between the Shire, municipal employees working within the Operations Service Team of the Shire, and the Australian Municipal, Administrative, Clerical and Services Union (ASU). Currently, the Shire, municipal employees and the ASU are covered by the Shire of Mundaring Municipal Employees Collective Enterprise Agreement 2015 (the 2015 Agreement).

[3] The Shire has employees employed across numerous locations and offices. The employees perform a variety of roles servicing the greater Mundaring community. 1

[4] There are two enterprise agreements in place at the Shire. The 2015 Agreement and the Shire of Mundaring (Local Government Administrative Employees) Enterprise Agreement 2018 (the LGA Agreement). The municipal employees under the 2015 Agreement are generally referred to as the ‘outside employees’, ‘depot employees’ or ‘municipal employees’. 2 Employees covered by the LGA Agreement are generally referred to as ‘inside employees’, ‘inside workforce’ or ‘administration (admin) staff’.3

[5] Negotiations have been on foot for some time to replace the 2015 Agreement. A 2017 draft agreement was put to the vote in May 2017, but was not supported by the municipal employees because of the pay increases offered.

[6] Negotiations were suspended in 2017 due to external industrial matters, and they recommenced in August 2018. A 2018 Agreement was put to the vote in December 2018, but again was unsupported by the majority of municipal employees that voted.

[7] Both the Shire and the ASU have now reached an understanding on all issues within the package, save for the wages outcome. During the course of an extended conference convened by the Fair Work Commission on 21 March 2019, a proposed basis to advance a resolution of the outstanding matter was raised and subsequently endorsed by both parties.

[8] The parties have now agreed that the Commission will arbitrate the two remaining issue between them as contemplated by s 240(4) of the Act.

[9] The issues in dispute are:

a) the percentage amount to be attributed to guaranteed wage escalations or pay increases; and
b) whether the new agreement will retain a ‘safety net’ clause.

[10] While further detail is provided concerning the operation and significance of the safety net clause later in this decision, in short, it provides a mechanism by which the agreement continues to provide pay increases notwithstanding it having passed its nominal expiry date. This type of clause was included in the 2015 Agreement. Until a replacement agreement is in operation, municipal employees receive a pay increase aligned with the percentage increase handed down by the Commission in the annual national minimum wage determination (3.5% in 2018).

[11] As a result of a subsequent directions conference, the parties also agreed upon a timetable and process. That process included that the parties would rely upon written submissions and responses, and witness statements, and that the matter would proceed to a hearing. Parameters for the arbitration have also been agreed and these are outlined at paragraphs [47] – [48].

[12] The Shire placed reliance on the evidence of Mr Jonathon Throssell, Chief Executive Officer. Mr Kevin Etchells, and Ms Diane Richmond, both bargaining representatives, also gave evidence.

[13] It is observed that all witnesses provided a credible account. Mr Kevin Etchells presented in his work gear and appeared to be a most earnest gentleman. While there was no witness statement filed on his behalf, no party objected to him being heard. Ms Richmond, a fellow bargaining representative, similarly had come from work, and gave oral evidence. Again, there was no objection raised concerning the absence of her witness statement. Mr Throssell provided a detailed and candid account of the challenges faced by the Shire, and the legacy left by sequential enterprise agreements.

[14] The ASU relied upon its submissions.

Background

[15] During negotiations for the Shire of Mundaring Municipal Employees Collective Enterprise Agreement 2018 (the 2018 Agreement) the Shire and ASU have been unable to agree on the wage increases under the 2018 Agreement, and whether the safety net clause that currently sits in the 2015 Agreement, should be retained.

The Safety Net Clause – its significance and history

[16] It is worthwhile explaining the operation of the safety net clause at this juncture. Steeped in history, and of late, significance, its use was triggered under the 2015 Agreement in July 2017 and 2018, to deliver what the employees, I am sure, considered welcome pay increases.

[17] To explain further, cl 9.5 of the 2015 Agreement provides:

Until a replacement Agreement is certified an increase shall be paid to all rates for each subsequent 12 month period commencing first pay period 12 months after that in clause 9.4 equivalent to each last Fair Work Commission decision.

[18] In May 2017, the draft agreement that was being negotiated at that time, the Shire of Mundaring Municipal Employees Collective Enterprise Agreement 2017 (2017 Draft Agreement), included a safety net clause at 9.6, in the same terms of that included in the 2015 Agreement. The 2017 Draft Agreement was not supported by the municipal employees because the pay increase of 1.6% was evidently not enticing.

[19] Given the rejection of the 2017 Draft Agreement and ongoing negotiations, the 2015 Agreement reached its nominal expiry date and consequently, in July 2017 the safety net clause (cl 9.5) delivered a sizeable 3.3% pay increase to the existing rates of pay.

[20] Due to an external industrial, matter the negotiations for a new agreement were suspended in 2017. That matter was an application to the Commission concerning, according to the ASU, the Shire’s failure to discuss adequately and in good faith the removal of the safety net clause in the Shire of Mundaring (Local Government Administrative Employees) Enterprise Agreement 2014.

[21] With no agreement having been reached by July 2018, a 3.5% pay rise was forthcoming; again courtesy of the safety net clause (cl 9.5 of the 2015 Agreement).

[22] Safety net clauses are thought to have existed in a succession of enterprise agreement agreements for municipal employees at the Shire since 2000:

a) Shire of Mundaring Municipal Employees Union Enterprise Agreement 2000-2003 (cl 16.3 and 16.5);
b) Shire of Mundaring Municipal Employees Workplace Agreement 2008 (Union Collective) (cl 7.6) (2008 Agreement);
c) Shire of Mundaring Municipal Employees Collective Enterprise Agreement 2011 (cl 9.6) (2011 Agreement);
d) Shire of Mundaring Municipal Employees Collective Enterprise Agreement 2015 (cl 9.5).

[23] The ASU submitted that over the years the safety net clause had provided two important functions. First, it was a mechanism by which pay increases could be provided in circumstances where the relevant agreement had passed its nominal expiry date and yet negotiations were still ongoing. Second, it incentivised the Shire to be proactive in negotiating a replacement agreement because any percentage increase was unknown - it was reliant on a decision handed down by the Commission concerning the percentage increase to the minimum wage. That percentage would be adopted to increase the remuneration across the classifications of the replacement agreement notwithstanding that such remuneration was above that provided in the relevant award.

[24] Mr Throssell gave evidence that the safety net clause was inserted in the ‘2008 Agreement’. 4 He said that its inclusion was to address the concerns of municipal employees about negotiations extending past the termination date of agreements without wage increases in place. Exploring this point further, Mr Throssell clarified that he meant extending past nominal expiry dates.

[25] The wording in the 2008 Agreement regarding the safety net clause read:

Clause 7.6

Until a replacement Agreement is certified an increase shall be paid to all rates for each subsequent 12 month period commencing 36 months after that in clause 7.3 equivalent to each last Australian Fair Pay Commission (or successor body) decision.

[26] The 2011 Agreement similarly provided:

Clause 9.6

Until a replacement Agreement is certified an increase shall be paid to all rates for each subsequent 12 month period commencing first pay period 12 months after that in clause 9.5 equivalent to each last Fair Work Australia decision.

[27] Mr Throssell’s evidence was that at the time the original safety net clause was introduced in 2008, it was the height of the mining boom, and pre-global financial crisis. 5 Therefore, there was significant competition in the market for labour.6

[28] At the time of hearing the municipal employees had been awarded two consecutive pay increases in excess of 3%, and as such had clearly noted the utility of the clause. There was, according to the ASU, an interest amongst the workforce regarding its preservation.

[29] When the 2018 Agreement was presented to the bargaining representatives on 24 October 2018, the safety net clause had been struck out.

[30] There were three more negotiation meetings that followed. The dispute over wage increases and the safety net clause remained unresolved.

[31] Before the Shire put the 2018 Agreement to the vote, the ASU proposed an amendment to the safety net clause. As the Shire and the ASU had negotiated a wage increase that would take effect on the nominal expiry date of the 2018 Agreement, the safety net clause could be reworded so that the Commission minimum wage decision would not apply until 12 months after the nominal expiry date, rather than on the nominal expiry date. Pay increases would take effect every 12 months thereafter if no replacement agreement was negotiated.

[32] The ASU viewed the compromise concerning the delayed operation of the safety net clause as effectively providing both Shire and unions with adequate time to negotiation a further agreement.

[33] The final offer that the Shire made to the municipal employees in the 2018 Agreement was a 2.0% wage offer in July 2019 in addition to non-monetary benefits. 7 Mr Throssell said that to compensate employees for the loss of the safety net clause the Shire had offered to commence negotiations six months before the proposed agreement’s expiry and provide a 2% pay increase upon expiry.8 This meant that if a new enterprise agreement was not operational the employee would receive a 2% pay increase in the 2020/21 financial year as a minimum.9

[34] The 2018 Agreement was put to the vote but was unsupported by the majority of those that voted.

Guaranteed wage escalations

[35] As observed, the proposed 2017 Draft Agreement offered the municipal employees a pay increase of 1.6%, which was rejected.

[36] Of concern to the ASU was the disparity in wages between the municipal employees and the local government officers. By way of example the ASU submitted that notwithstanding the pay increases in 2017 and 2018 (3.3% and 3.5% respectively) the difference between a municipal employee working at a level 6 classification and a local government officer supervisor at level 5.1 was $7,325.

[37] As of the end of negotiations in December 2018, the ASU offered the following wage increases:

a) an increase of 2.27% shall be paid to all salary rates as from the first full pay period commencing on or after 1 July 2019;
b) an increase of 2.75% shall be paid to all salary rates as from the first full pay period commencing on or after the nominal expiry date being 30 June 2020;
c) maintain the current safety net with a determined amount of 2.75%.

[38] As observed, the Shire made a 2% increase wage offer in the proposed 2018 Agreement. Mr Throssell in his evidence provided a list of reasons for the offer made, they were, verbatim:

a) Relativity to other local governments. In February 2017 the Employment Relations Consultant we engaged, Aladair Malloch of Ohura Consulting, presented me wage data that other comparable and geographically close local governments were offering through their enterprise agreements. This is shown at Exhibit D.
b) This showed me that increases around 2% were competitive and around industry level.
c) The Shire’s long term financial plan only allows for 2% pay increases per annum.
d) The long term financial plan is based on WA State Government Treasury forecasts.
e) The amount is fully budgeted for within the projected rates and charges determined by Council. This amount is funded without the need to find ongoing savings elsewhere.
f) It is above all recent Perth Australian Bureau of Statistics Consumer Price Index figures for the preceding 12 month periods during negotiations.
g) It maintains relativities between depot employees and ‘inside workforce’ employees.
h) It maintains relativities between depot employees and their supervisors (who are ‘inside workforce’ employees).
i) It is in line with the wage offer agreed to by the inside workforce in the Local Government Administrative Employees Enterprise Agreement 2018. 10

[39] Mr Throssell continued that as far as a comparison could be drawn to the Local Government Industry Award 2010 (the Award), the municipal employees were paid what he considered to be well above the Award:

Current Agreement Level	Current Minimum Weekly Wage	Translating LGIA 2010 Level	Minimum LGIA Weekly Wage	% Above the translate LGIA rate
Level 1	$978.02	Level 1	$768.90	27.19%
Level 2	$1,015.36	Level 2	$794.70	27.77%
Level 3	$1,130.00	Level 2	$794.70	45.97%
Level 4	$1,154.35	Level 3	$825.20	39.89%
Level 4A	$1,182.21	Level 4	$837.40	41.18%
Level 5	$1,199.60	Level 4	$837.40	43.25%
Level 6	$1,251.96	Level 5	$889.90	40.68%

[40] With regard to the pay increases afforded to the inside employees under the LGA Agreement,they were 1.6% in July 2017, 2.0% in July 2018, and 2.25% in July 2019. 11 When a comparison is drawn between the municipal employees and the inside employees, the municipal employees had received an 8.8% wage increase over three years in comparison to the inside employees who had received 5.85%.12

[41] While the ASU voiced concerned regarding the disparity between the wages of the municipal employees and inside employees because the difference was too great, the Shire’s concern was to the contrary. Over a period of 4 years it had identified a ‘wage creep’ where, for example, the difference in wages between a Supervisor Turf and Reticulation (inside employee) and Team Leader Mowing Operations had reduced from $8,439 in 2014 to $7,325 in 2018.

[42] Relativities of wages between the municipal employees and inside employees were provided in the following table:

Why arbitrate the matter?

[43] Following the rejection of the 2018 Agreement, the ASU submitted that the Shire had made it clear that there was the threat of an application being made to the Commission to have the 2015 Agreement terminated if an arbitrated outcome could not be reached.

[44] On this basis the ASU has said that its members have agreed to have an arbitrated outcome in relation to the two outstanding matters and have provided direction to the ASU Bargaining Representative to provide the Commission with the power to do so.

The clauses in dispute

[45] The wage element of the dispute relates to clauses 9.1, 9.3. 9.4 and 9.5 of the 2018 Agreement.

[46] The safety net clause relates to cl 9.5 of the 2015 Agreement.

The agreed parameters of the arbitration

[47] The parties to the arbitration are said to be:

a) Shire;
b) ASU;
c) Ms Richmonds, Employee Bargaining Representative; and
d) WA Local Government Racing and Cemeteries Employees Union (LGRCEU).

[48] It has been agreed by the parties that the Commission would arbitrate the dispute in this matter within the following parameters:

a) The Commission will determine the wages outcome that is to be applied as part of the proposed enterprise agreement otherwise agreed between the bargaining representatives. The arbitration will specifically determine a wages outcome involving the current competing proposal or something between those proposals:

Adjustment	Shire	ASU
2.0%	2.75%

b) The Commission will determine whether a ‘safety net’ clause should be retained, and if so, the form that should be retained with the Commission deciding on the construction and elements of this clause. The competing proposals are:

Adjustment	Shire	ASU
Nominal Expiry	2.0%	Existing safety net clause
July 2020	2.0% if new agreement in place	Existing safety net clause

[49] It is observed that Ms Richmond and the LGREU were silent regarding claims made.

[50] As a result, and noting that this matter does not involve a workplace determination as contemplated by Part 2-5 of the Act, the parties are in effect seeking the determination of the wages content that is to form part of a proposed enterprise agreement that the employer (and the ASU) intend to subsequently put to employees through a request under s 181(1) of the Act.

[51] Given the agreed parameters, it is not intended that an order be made in this matter as would be permitted by s 255(2) of the Act.

Legislative framework for bargaining disputes

[52] Section 240 is contained in Part 2-4 of the Act and its objects are set out in s 171 in the following terms:

171 Objects of this Part

The objects of this Part are:

(a) to provide a simple, flexible and fair framework that enables collective bargaining in good faith, particularly at the enterprise level, for enterprise agreements that deliver productivity benefits; and

(b) to enable FWA to facilitate good faith bargaining and the making of enterprise agreements, including through:

(i) making bargaining orders; and

(ii) dealing with disputes where the bargaining representatives request assistance; and

(iii) ensuring that applications to FWA for approval of enterprise agreements are dealt with without delay.

[53] Although I will not set them out in this decision, the broader statutory objects of s 3 are also relevant to this matter.

[54] Section 240 of the Act relevantly provides as follows:

240 Application for FWA to deal with a bargaining dispute

Bargaining representative may apply for FWA to deal with a dispute

(1) A bargaining representative for a proposed enterprise agreement may apply to FWA for FWA to deal with a dispute about the agreement if the bargaining representatives for the agreement are unable to resolve the dispute.

(2) If the proposed enterprise agreement is:

(a) a single-enterprise agreement; or

(b) a multi-enterprise agreement in relation to which a low-paid authorisation is in operation;

the application may be made by one bargaining representative, whether or not the other bargaining representatives for the agreement have agreed to the making of the application.

(3) If subsection (2) does not apply, a bargaining representative may only make the application if all of the bargaining representatives for the agreement have agreed to the making of the application.

(4) If the bargaining representatives have agreed that FWA may arbitrate (however described) the dispute, FWA may do so.

[55] The ASU is a bargaining representative and the proposed new agreement is a single-enterprise agreement.

[56] The provisions of s.255 of the Act are also potentially relevant in this matter.

255 Part does not empower FWA to make certain orders

(1) This Part does not empower FWA to make an order that requires, or has the effect of requiring:

(a) particular content to be included or not included in a proposed enterprise agreement; or

(b) an employer to request under subsection 181(1) that employees approve a proposed enterprise agreement; or

(c) an employee to approve, or not approve, a proposed enterprise agreement.

(2) Despite paragraph (1)(a), FWA may make an order that particular content be included or not included in a proposed enterprise agreement if the order is made in the course of arbitration undertaken when dealing with a dispute under section 240.

Note: FWA may only arbitrate a dispute under section 240 if arbitration has been agreed to by the bargaining representatives for the agreement (see subsection 240(4)).

Will the safety net clause be retained, and if so, what will be its content?

The Shire

[57] Mr Throssell had been an employed as the Shire’s CEO for some time. He had been in several agreement negotiations and he said that inevitably, the expectation was that more would be provided even when there was no request on behalf of the Shire for offsets. Mr Throssell said that he had explained to the municipal employees the Shire’s financial constraints and that non-cash benefits had been forthcoming. These included flexible working arrangements, a well-being program and a self-insurance scheme.

[58] The inside workforce did not have an equivalent safety net clause in their enterprise agreement. This, according to Mr Throssell, had created a serious perception of disparity. Mr Throssell said the perception of supervisory employees was that they were not fairly remunerated for their additional responsibilities relative to the employees they were supervising. 13 By way of example, Mr Throssell stated that the difference between the Supervisor Turf and Reticulation and the Team Leader Mowing Operations was $8439 in 2014, but by 2018 it had reduced to $7325.

[59] The Shire submitted that the safety net clause could not be retained in the 2018 Agreement in its current state and the Shire wanted it removed. It discouraged the municipal employees from engaging in meaningful negotiations because there was a ‘holding out’ to see what the next Commission percentage increase to the minimum wage would be. The intention of the clause, according to Mr Throssell, was to maintain the status quo regarding cost of living and the municipal employees’ income position, when there was a delay in finalising a replacement agreement. 14 This had not been achieved.15 Further, it was in effect the Commission that decided the increase to the rates in Agreement, notwithstanding that the Commission’s decision pertained to the minimum wage.

The ASU

[60] The ASU submitted that the rejection of the 2017 Draft Agreement, the time frame of the negotiation process, and the 2015 Agreement reaching its nominal expiry date had resulted in the safety net clause delivering the pay increases it did. Negotiations had been suspended in 2017 due to external industrial matters. It was therefore the case that there was not a ‘holding out’ by ASU members as part of an overall negotiation strategy. The increases were the outcomes of precisely what the safety net clause was designed to achieve in the circumstances of delayed negotiations beyond the control of the municipal employees.

[61] The ASU observed that there was a $7234 difference between a municipal employee working at level 6 and a Local Government Officer supervisor at a level 5.1. However, if the supervisor was remunerated at a level 5.4 then the difference would increase to $11,306. The ASU members did not see wage creep between these two levels as a significant issue at this point of time.

[62] Prior to its final position on wage increases, the ASU had proposed an alternative safety net clause. As there was to be a negotiated increase to wages at the expiry of the replacement agreement, the safety net clause could be reworded to negate the Commission minimum wage increase being applicable at expiry point. Instead, submitted the ASU, the safety net clause would operate 12 months after the nominal expiry date of the agreement continuing until a new replacement agreement was reached. With those covered by the agreement being obliged to commence discussions for a replacement agreement 6 months before the nominal expiry date, the ASU stated that this provided adequate time of the negotiation of a replacement agreement.

Conclusions and determination

[63] Having considered the substantive merit of the proposals and all the circumstances of the case including the considerations outlined above, it was evident that the safety net clause, in part, appeared to be operating in accordance with the intent of those that were ‘party’ to it. That is, on the nominal expiry of 2015 Agreement, the municipal employees continued to receive wage increases. However, as Mr Throssell pointed out, those wage increases were determined by an arbitral body in reference to a minimum wage. A circumstance removed from that of the Shire and its municipal employees.

[64] The intent of the safety net clause had been to maintain the status quo regarding cost of living and the municipal employees’ income position. Its genesis derived from Mr Throssell himself who clearly did not want to see the Shire’s municipal employees disadvantaged in circumstances where negotiations became protracted past the nominal expiry date of the relevant agreement at the time. It was not until the expiry of the 2015 Agreement that the Shire and the municipal employees bore witness to the pragmatic realities of the clause’s operation.

[65] For the Shire, it was placed in a position of uncertainty not knowing what the increase would be therefore making workforce budgeting challenging, and thereafter having to initiate steps to address any budget shortfall. Further, the percentage wage increases, were, in the Shire’s view, impacting upon the wage relativity between some inside employees, namely the relevant supervisors, and the municipal employees. For the municipal employees they received a percentage wage increase that was perhaps in excess of that which they could otherwise have anticipated, and clearly would have assisted with the cost of living.

[66] I consider the desirability of maintaining the real value of the wages of the municipal employees who will be affected by this determination to be relevant to the merits of this matter. Of further relevance is the size of the wage increase proposed in this matter compared with outcomes elsewhere. I have duly considered the materials handed up by the parties on this point. The parties have advanced various figures to support their respective contentions.

[67] It is in the interests of both the Shire and the employees that the Shire continues to operate and hopefully improves its profitability, viability, employment opportunities, and retention of employees. From a crude economic standpoint, the Shire’s interests may be best served by the lowest wage increase via a safety net clause and the employees’ interests are best aligned with the highest increase.

[68] I am charged with the responsibility of determining whether a safety net clause should be retained, and if so, the form it should take - deciding on the construction and elements of the clause.

[69] I have determined that the safety net clause will be retained. It will operate to give effect to the rationale for its inclusion in the agreements some ten years ago. That is, to maintain the status quo regarding cost of living and the municipal employees’ income position. However, there is a requirement to balance the competing interests of both the Shire and the municipal employees. Clearly the safety net clause included in the agreement should avoid operating in a manner that disincentivises those covered by the agreement from negotiating its replacement. In this respect, I observe the ASU’s suggestion that the clause could be reworded to not apply until 12 months after the nominal expiry of the agreement.

[70] The substantive elements of the clause are:

a) this clause comes into operation 12 months after the nominal expiry date of the Agreement;
b) if a replacement Agreement has not come into operation within the 12-month period from the nominal expiry date of the Agreement, then on the day following the 12-month anniversary date of the nominal expiry date, salaries as set out clause 9.1 will be increased in accordance with the Consumer Price Index (CPI);
c) a subsequent CPI increase to the salaries set out in clause 9.1 will occur on the day following the 24-month anniversary date of the nominal expiry date, if a replacement Agreement has not come into operation;
d) following the CPI increase to salaries as referred to in subclause (c), no further increases to salaries will be provided while this Agreement is in operation.

CPI means the percentage change from the corresponding period of the previous year of the Consumer Price Index (all groups) for Perth, published in respect of the March quarter immediately prior to the review date.

[71] Consistent with the agreement between the parties the parties will, as agreed, cooperate to apply this outcome and consolidate it within the existing proposed enterprise agreement (subject only to editorial changes).

What will be the amount of a wage increase(s)?

The Shire

[72] Mr Kevin Etchells, a bargaining representative, gave evidence at the hearing. Briefly put, Mr Etchells’ concern was understandably about making ends meet. He spoke of the bargaining representatives making a claim for a wage increase of 3%. In effect the 3% would, according to Mr Etchells, assist toward the payment of diesel as it would equate for him to approximately $33 a week. He said that there were several municipal employees within the Shire who earned around or under $60,000 per annum and they were just trying to make a living.

[73] Ms Diane Richmond, a fellow bargaining representative, similarly presented evidence. She said that the very first offer put forward by the employees was for 3.5% for each of the years. However, Ms Richmond confirmed that she, and those that she was representing, were after a fair and reasonable pay rise; although there did not appear to be a consensus amongst the employees.

[74] Mr Throssell gave evidence that the predominate external pressure from a cost perspective for the Shire was the expectation of rate payers regarding the maintenance of low costs for service delivery. There was, according to Mr Throssell, a community demand for low rates, which had been communicated to him via the Council. Mr Throssell explained that there was requirement upon him to balance rate payer expectations and pay for the Shire’s employees or workers. In the scheme of shires per se, the Shire was, in Mr Throssell’s view, relatively small in comparison to those in the metropolitan area.

[75] Mr Throssell gave evidence that 40% of the Shire’s operating expenditure arose from labour costs. 16 The Shire’s long-term financial plan had allowed for 2% pay increases per annum, having been based upon the Western Australian State Government Treasury forecasts. That amount had been fully budgeted. Clearly the safety net clause, while introduced by Mr Throssell, was proving problematic for the Shire.

[76] The pay increases to the municipal employees under the safety net clause in the 2015 Agreement, were 3.3% and 3.5% for 2017 and 2018 respectively. This in turn meant that the 2019 increase was to be on top of a higher base rate than that which was budgeted; and equated to 8.8% over three years compared to 5.85% for the inside workforce. 17 An obligation to increase the wage offer to municipal employees above 2.0%, would result in an amount being unbudgeted and a need to source funds from other means.18

[77] Due in part to the unbudgeted wage increases and additional costs of implementing the Commission increases under the safety net clause, Mr Throssell directed the Director of Infrastructure Services to find ongoing savings. 19 A restructure followed resulting in the redundancy of two positions.

[78] Mr Throssell’s evidence was that the municipal employees were paid between 36% and 74% above the national minimum wage and well above Award levels. 20 Attached to Mr Throssell’s witness statement was an analysis undertaken on behalf of the Shire of the wage increases that other Shires or Councils had provided to its ‘outside’ employees. The increases to salaries varied from 1.8% to 3% for such employees, although on average the increases equated to 2.5%. However, it is observed that the arrival at such a figure is speculative rather than forensically based, given the information provided by the Shire is in the form of a rudimentary table absent the particulars of each enterprise agreement referred to, and the relevant circumstances specific to each Shire.

Conclusions and determination

[79] Having considered the substantive merit of the proposals and all of the circumstances of the case including the considerations outlined above, I have determined that the wages outcome to be included within the proposed enterprise agreement is as follows:

The following increases shall be paid to all salary rates as from the first full pay period commencing on or after:

Date	Adjustment
1 July 2019	2.25%
29 June 2020	2.5%

[80] The overall adjustment of 4.75% over the life of the proposed enterprise agreement is reasonable and fair given all the circumstances. The adjustments represent a moderate additional increase on the Shire’s proposal but recognises the considerations and competing contentions touching upon this matter. The highest increase has been placed at the back end of the 2018 Agreement to soften the cost impact whilst elevating the rates established at the conclusion of the nominal life.

[81] Consistent with the agreement, the parties will cooperate to apply this outcome and consolidate it within the existing proposed enterprise agreement (subject only to editorial changes).

[82] In line with the agreement between the parties, I will not issue an order as contemplated by s 255(2) of the Act. The parties will, as agreed, cooperate to apply this decision and consolidate it within the existing proposed enterprise agreement and put the agreement to the employees for approval in accordance with the Act.

DEPUTY PRESIDENT

Appearances:

A Malloch for the Applicant

P. Cecchini for the Respondent

Printed by authority of the Commonwealth Government Printer

<PR710090>

 1   Witness Statement Jonathon Throssell 23 April 2019 (Throssell Statement).

 2 Ibid [11].

 3 Ibid [12].

 4   Shire of Mundaring Municipal Employees Workplace Agreement 2008 (Union Collective).

 5 Throssell Statement [18].

 6   Ibid.

 7 Ibid [19].

 8 Ibid [20].

 9   Ibid [20] – [21].

 10   AG2018/5430 AE501180.

 11 Throssell Statement [23].

 12 Ibid [24].

 13 Ibid [32].

 14   Ibid.

 15   Ibid.

 16 Ibid [29].

 17 Ibid [24].

 18 Ibid [25].

 19 Ibid [30].

 20 Ibid [32].