Equal remuneration principle test case

Cases

Equal remuneration principle test case

Almost 18 months after the then Minister for Industrial Relations, Jeff Shaw, made the Pay Equity Report public, the Full Bench of the NSW Industrial Relations Commission gave its decision on the Pay Equity Test Case on 30 June. The Pay Equity Report had recommended that a Test Case be taken to have the Commission establish a new wage-fixing principle relating to Equal Remuneration and other Conditions. The Test Case was argued before the Commission in February and March of this year.

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HRLink Issue No: 80/00

Almost 18 months after the then Minister for Industrial Relations, Jeff Shaw, made the Pay Equity Report public, the Full Bench of the NSW Industrial Relations Commission gave its decision on the Pay Equity Test Case on 30 June. The Pay Equity Report had recommended that a Test Case be taken to have the Commission establish a new wage-fixing principle relating to Equal Remuneration and other Conditions. The Test Case was argued before the Commission in February and March of this year.

In a majority decision (Wright P, Hungerford and Schmidt JJ and Sams DP with Commissioner McKenna dissenting), the Full Bench decided to rescind its 1973 Equal Pay Principle and replace it with an Equal Remuneration and Other Conditions principle. The Commission decided that its new principle would be inserted into the Commission's Wage Fixing Principles.

The Full Bench decided to adopt its new principle because of the policy and requirements of the NSW Industrial Relations Act 1996 relating to the question of equal remuneration and other conditions for men and women doing work of equal or comparable value (see sections 3(f), 19(3)(e), 21(1)(b), 23 and 169 of the Act). The Full Bench was of the view that these requirements of the Act reflected important human rights. In that light, the Full Bench was also keen to ensure that its wage fixing principles in relation to equal pay reflect the priority, importance and failure hitherto in some awards to address appropriately the issue of equal pay for work of equal or comparable value.

The New Principle

The central part of the new principle is the provision of a mechanism for claims to be made to the Commission to vary wage rates or other conditions contained in an award on the basis that the work, skill and responsibility required or the conditions under which the work is performed have been undervalued on a gender basis. The principle further provides that the assessment of the work, skill and responsibility required under the principle is to be approached on a gender neutral basis and in the absence of assumptions based on gender.

Importantly, given the numerous references to pay equity matters in the Act (sections 3(f), 19(3)(e), 21(1)(b) and 23), the Full Bench's principle is not built directly on the interpretation and construction of those sections. Rather, the principle is based on s10 of the Act.

Section 10 gives the Commission the power to make awards which fix 'fair and reasonable' conditions of employment. It is in this light that the principle will operate. For, if on the basis of evidence brought in a case under the principle, a party can establish that there is some undervaluation of the work being performed by women under the award then it would properly follow that the award in question did not fix 'fair and reasonable conditions of employment'.

The Full Bench decided that sections 21(1)(b) and 23 were not concerned with wide-ranging inquiries into possible undervaluation of work of female employees. Rather, these sections are concerned with ensuring that the award in question provides or sets equal remuneration and other conditions for men and women doing work of equal or comparable value.

The Full Bench's new principle is consistent with its traditional approach to valuing work for the purpose of setting minimum rates of pay and other conditions in awards. In setting these rates and conditions, the Commission has regard to the following four components of the work:

  1. the nature of the work;

  2. the skills required to perform it;

  3. the responsibility required; and

  4. the conditions under which the work is performed.

In the context of the evidence before it about the persistent gap in the average earnings of men and women and the evidence about the undervaluation of female skills and gender biased assumptions about the value of work performed predominantly by women, the Full Bench acknowledged the possibility that the Commission's prior application of the four components of work value may have led to specific instances of gender related undervaluation. To remedy this problem, the Full Bench has adopted a principle that reaffirms the centrality of the fourfold approach but provides a mechanism to correct previous misapplications of it.

The Full Bench's principle provides a number of safeguards against wage leapfrogging that could arise as a flow on from a successful claim being made under the principle. The Full Bench said:

Undervaluation claims should not have the result of increasing minimum award rates for one classification by reference to the overaward payments of another classification so as to inevitably lead to a claim for increases in the award rates of the comparative classification. The risk inherent in such an approach is that further flow on claims may be brought in respect of other classifications which already have established relationships to the comparative classification, thereby triggering a general wages outbreak. The principle is designed to guard against this possibility...

The principle also provides for the phasing in of any wage increases arising out of a successful application as well as the absorption of increases into individual employees' overaward payments.

The principle provides that the Commission will guard against contrived classification and over classification of jobs and it will also consider:

  • the state of the economy of NSW and the likely effect of its decision on the economy;

  • the likely effect of its decision on the industry and or the employers affected by the decision; and

  • the likely effect of its decision on employment.

Claims under the principle will be processed before a Full Bench of the Commission, unless otherwise allocated by the President.

Implications of the Principle

The new principles does not open the flood gates to wage increases for the following reasons:

  1. The type of case that can be taken under the new principle could have been taken under the Commission's existing Special Case Principle.

  2. The effect of the Commission establishing a new principle in relation to applications that could have already been brought under the Commission's existing principles indicates that the equal pay matters are being given a new prominence. The Commission referred to one witness who talked about the need for the Commission to "re-badge" the issue.

  3. Despite its new prominence, the new principle is firmly grounded in the Commission's traditional approach to work value.

  4. Applications under the new principle will be approached on a case by case basis and the applicant will still have to make its case in the usual manner.

  5. The principle contains a number of protections and constraints relating to economic and employment factors.

 
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