Tuff Staff Blog

Australian Fair Pay Commission

Fri, 03 Sep 2010 01:50:00 GMT

The Australian Fair Pay Commission (AFPC) was an Australian legislative body created under the Howard Government's "WorkChoices" industrial relations law in 2006 to set the minimum rate of pay for workers. Established to replace the wage setting functions of the Australian Industrial Relations Commission, the AFPC set and adjusted a single adult minimum wage, non-adult minimum wages (such as training wage), minimum wages for award classification levels and casual loadings. The AFPC was abolished in December 2009 when the wage setting function was given to the Minimum wage panel of Fair Work Australia. The profile of the members of this commission was different from that of the Australian Industrial Relations Commission which previously had responsibility for determining the above quantities. There was less representation on behalf of the trade unions, and less transparency in decision-making, making it possible for the Australian Fair Pay Commission to make judgments with no community oversight or consultation. Unlike the Australian Industrial Relations Commission, the commission funded substantial research on the economic effects of raising the minimum wage, and proponents claimed that this placed more of an emphasis on determining whether the economic evidence suggested that raising the minimum wage made the poor better off.

On 26 October 2006, the AFPC handed down its first decision. The Australian Fair Pay Commission today announced an increase of $27.36 per week in the standard Federal Minimum Wage and in all Pay Scales up to $700 per week. This covers just over one million Australian workers who rely on the Commission’s decisions for adjustments in their wages. The Commission also awarded an increase of $22.04 per week to all Pay Scales paying $700 per week and above, or more than $36,000 per year, representing another 220,000 workers, about 2% of the workforce. Many commentators were surprised that the AFPC's first decision was so large. For example, the Australian Council of Trade Unions had asked for a minimum wage increase of $30 per week. Despite this, the rise barely kept up with inflation since the previous pay rise handed down by the AIRC in June 2005.

On 5 July 2007, the AFPC handed down its second wage decision. The decision increased minimum wages from $13.47 to $13.74 per hour, or $10.26 a week for wages below $700, and by $5.30 for wages above $700. The rise took effect from the first pay period commencing on or after 1 October 2007. This was a change of policy from the AFPCs first decision, which took effect on the 1 December 2007 and was criticized by employer groups for causing difficulties for businesses, which had to implement a pay rise within a pay period. Traditionally, the Australian Industrial Relations Commission implemented wage and allowance rises from the first 'pay period commencing' from a set date. Another historic feature of the decision was that for the first time, farmers were granted a deferral from the wage increase on account of severe drought. Incapacity to pay had been argued numerous times over the last twenty five years, for the most part unsuccessfully, before the Australian Industrial Relations Commission. The AFPC's decision granting the deferral was therefore a landmark in the history of industrial relations for the National Farmers' Federation.

Australian trade unions view the AFPC as a conservative business-friendly organization that threatens the basic rights, pay and entitlements of Australian workers. Further, they argue that the FPC will benefit business at the expense of workers. Unions mockingly call the AFPC the Australian Low Pay Commission. Unions view the IRC as independent and wish to keep it as the minimum wage setting body.

Australian Industrial Relations and Pay Scales

Fri, 03 Sep 2010 01:55:00 GMT

The Australian Industrial Relations Commission, or AIRC (known from 1956 to 1973 as the Commonwealth Conciliation and Arbitration Commission, and from 1973 to 1988 as the Australian Conciliation and Arbitration Commission), was a tribunal with powers under the Workplace Relations Act 1996. It was the central institution of Australian labor law. The AIRC replaced a previous system of industrial courts, which broadly speaking, was engaged in the same functions, but with superior independence and powers than the AIRC.

The Commonwealth Court of Conciliation and Arbitration was created in 1904 by the Conciliation and Arbitration Act 1904, an Act of the Parliament of Australia. Its functions were to hear and arbitrate industrial disputes, and to make awards. It also had the judicial functions of interpreting and enforcing awards, and to hear other criminal and civil cases relating to industrial relations law. The early role of the Commonwealth Court of Conciliation and Arbitration was to resolve industrial disputes which extended beyond the limits of any one state. In practice this became a system of 'paper disputes' where a union or other employee organization would write to a group of employers and demand certain terms and conditions (a log of claims, or log of demand). The Employers would then reject part or all of the demands creating an industrial dispute.

The court was initially less important than the various State commissions, which had jurisdiction over all disputes which occurred within states. The court's workload was so low that it only made six awards in the first five years after it was created. One of these early awards was the famous Harvester Judgment, delivered by H.B. Higgins, which first introduced the concept of the living wage (also known as a basic wage). Another of its early acts was to set the standard working week at 48 hours. The court was reformed in 1926 following amendments to the Conciliation and Arbitration Act. The changes included replacing the President with a Chief Judge alongside other judges, and ensuring that all cases involving the basic or living wage would be heard by a full bench of the court. The changes also allowed for the appointment of Conciliation Commissioners, with a role similar to mediators. The court was changed again in 1947 to increase the role of the Commissioners, leaving the judges to conduct the judicial work, and a select few matters of arbitration including the basic wage and the minimum wage for women.

Throughout the years from 1904 to 2006 the Australian Industrial Relations Commission created Awards which set the minimum terms and conditions of employment for people who worked for certain employers. A standard Award would have approximately 20-30 conditions and would be around 40 pages in length. The Awards were periodically reviewed. The Australian Industrial Relations Commission would also certify enterprise bargaining agreements. These agreements were negotiation collective contracts commonly between a union (as representative of the employees on the site) and an employer of a site.

The Workplace Relations Amendment (Workchoices) Act 2005, commonly known as WorkChoices, significantly amended the Workplace Relations Act 1996. Work Choices removed wage rates from Federal Awards and Notional Agreements Preserving State Awards (NAPSAs). On 27 March 2007, for employees covered by the WorkChoices system, notional Australian Pay and Classification Scales (Payscales) were established.

Payscales contain coverage provisions, classifications, frequency of payment provisions, and wage rates including casual loadings, junior, trainee and apprentice rates. Wage rates may be as basic periodic rates of pay (an hourly rate) or, where an Award or NAPSA contains such provisions, as basic piece rates of pay. Changes from the previous system of wages contained in Awards include that basic periodic rates are now in an hourly (rounded) form rather than weekly as was generally the case in Awards, and that wage rates are now adjusted by the Australian Fair Pay Commission rather than the Australian Industrial Relations Commission.

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