Certification of agreement allowing for discretion to pay below award rates

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Certification of agreement allowing for discretion to pay below award rates

The Australian Industrial Relations Commission has certified an enterprise agreement despite confirming that, in principle, it was unacceptable for an employer to retain a discretion to pay rates of pay at a level lower than a relevant award.

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The Australian Industrial Relations Commission has certified an enterprise agreement despite confirming that, in principle, it was unacceptable for an employer to retain a discretion to pay rates of pay at a level lower than a relevant award.
 
The AIRC certified a call-centre agreement that provided lower pay rates for employees on commission than those on wages. Vice-President Lawler found that it still passed the no-disadvantage test as the relevant award prescribed no minimum rates.
 
The agreement was titled Let's Agree 2003. Some working under the agreement would receive a lower hourly rate to supplement commission payments and others were employed on a 100 per cent commission.
 
The Contract Call Centre Industry (Interim) Award 2002 (Print AW819725) was the relevant award for the purposes of 170X.
 
Decision
 
The Vice-President noted:
'It leaves open the possibility that an employee could be required to work for a period of twelve months at rates substantially below rates in a "relevant award".
 
'In the present case, the absence of rates for pay, allowances and loadings in the Interim Award means that no such disadvantage is present. This is a consequence of the fortuitous operation of s.170XA and the definition of "relevant award" in s.170X....
 
'Salesforce offered the following undertakings as a sign of its bona fides:
  1. Salesforce Australia Pty Ltd undertakes that 100% incentive schemes will not be introduced under clause 25.2 capriciously or for the purposes of reducing employees earnings.
  2. Salesforce Australia Pty Ltd undertakes that in relation to the operation of clause 26, employees may request and will be granted a reconciliation every three months rather than every 12 months as specified in the clause.'
The Vice-President highlighted this apparent anomaly in the legislation:
'It beggars belief that the Parliament intended that the no-disadvantage test in s.170XA would be measured against an award such as the Interim Award which contains no clauses prescribing rates of pay.
 
'Section 170XF suggests that Parliament intended that the "no-disadvantage test" ought be applied against an award which contains substantive provisions in that regard.
 
'Nevertheless, the plain words of the relevant provisions compel, in my opinion, an application of the "no disadvantage test" in the present case by reference to the Interim Award only.
 
'The application is granted with effect from 12 May 2003.'
A formal certificate issued in conjunction with this decision.
 
See: Salesforce Australia Pty Ltd- Let's Agree (NSW) 2003 - FB of AIRC (Lawler VP) PR931292 (12 May 2003).
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