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1 Feb 12
Full bench splits on equal pay findings

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The Full Bench of Fair Work Australia today handed down its decision in the Equal Remuneration Case, which will result in pay increases for a large number of social and community services sector workers.  McCullough Robertson Partner, Tim Longwill, outlines the decision and its impact in practical terms.

The decision today supplements the decision made by the Full Bench in May 2011 where it concluded that those in the social, community, home care and disabilities services sector were not being equally remunerated for work of equal or comparable value by comparison with workers in State and Local Government employment.

The Full Bench’s May finding partially attributed the lack of equal remuneration to gender and requested the parties make submissions on the extent to which gender played a part in the disparity.

A Majority of the Full Bench in today’s decision consisting of President Justice Giudice, Senior Deputy President Acton and Commissioners Harrison and Cargill (VP Watson dissenting) found favour with the joint submission made by the applicant unions and the Federal Government. That submission invited the Full Bench to adopt government pay rates as a comparator and then identify what proportion of the difference was due to gender issues.

The applicants’ submission then suggested that the proportion attributable to gender was equivalent to that component of the work performed which was ‘care’ work. That is if the employee was involved in 100% care work the entire difference was gender-related and so on.

The Full Bench effectively conceded that while it was an imperfect measure it was sufficiently cogent to use and that the rates in the modern award should be increased by separate order. This will mean that there will be a notation in the award to the effect that the rates are subject to the increases contained in the order.

Accordingly, Modern Award levels are to be increased in accordance with the following table:

Level Percentage increase in excess of modern Award rates
2 19%
3 21%
4 28%
5 33%
6 36%
7 38%
8 41%

 

The majority also decided that the phase in period for these increases should be eight years.

Finally, the Full Bench decided that an annual loading of 1% over the first four years of the implementation period was warranted to compensate for the industry’s historical inability to bargain while transitioning to the new funding and workplace relations environment.

This 4% increase will also be transitioned in nine equal instalments over the period 1 December 2012 to 1 December 2020.

In a dissenting decision, Vice President Watson disagreed with the majority, finding that the applicants had not established:

  • that the public sector was an appropriate equal remuneration comparator
  • that the wage gap between the not for profit SACS industry and the public sector is primarily due to gender based undervaluation, and
  • that it is appropriate to extract the entire SACS industry from the enterprise bargaining framework of the Act for the foreseeable future.

Vice President Watson found that it was indisputable that SACS employees deserved more recognition and reward for the work they undertook but that while the nature of the work performed by these workers and the historical undervaluing had strong emotional appeal, the case presented by the applicants did not sufficiently address the statutory tests proposed by Fair Work Australia.

He indicated that the case was highly unusual, particularly as it sought an equal remuneration order for both men and women workers. Vice President Watson was very concerned that there was no legitimate comparator which is plainly critical in circumstances where the applicant must demonstrate that a class of workers had been undervalued.

Vice President Watson was also critical of the majority decision which increased remuneration for workers to a point where there would be ‘very little or no enterprise bargaining in the entire SACS industry for very many years, probably decades’.  He went on further to say:

 ‘To selectively extract an entire industry from the enterprise bargaining legislative framework is a change of mammoth proportions. It is significant enough for the SACS industry alone. The precedent it creates from any other industries who cannot afford to pay significantly above the Award and are female dominated highlights the need for great caution.’

It is likely that for many operators in the sector, the increases in wages foreshadowed have already been factored into planning for the next few years.  Indeed, the Full Bench made reference to evidence which indicated that many providers in the sector had already indicated that without sufficient funding, the wages increases would consequently be matched by a reduction in services or staff. 

The realities are however, that increases in the sector are long overdue and must be met by Federal Government and State Government funding. The limited comfort that can be drawn from the decision is the Full Bench reference to the Federal Government’s commitment they would fund their share, coupled with the further observation by the Full Bench that no State government had indicated an unwillingness to meet funding commitments.

The extent to which this decision will impact on Government will no doubt be spelt out during the next Federal Budget.


Focus covers legal and technical issues in a general way. It is not designed to express opinions on specific cases. Focus is intended for information purposes only and should not be regarded as legal advice. Further advice should be obtained before taking action on any issue dealt with in this publication.

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