NSW wages cap includes super, appeal court rules

The NSW Government has had a victory in its long-running battle to include compulsory superannuation increases within the 2.5% public sector pay ceiling after the State’s Court of Appeal quashed last year’s IRC ruling that the wages cap only applied to Commission-awarded increases.

The State successfully argued that if it incurred employee costs in passing on the Federal Government’s superannuation increases, the Commission was required to take these costs into account when making awards.

The Government argued that it had already been established that the Commission’s power to increase the pay and conditions of NSW public servants was limited to 2.5% (see Related Article) and “therefore it was necessary to take into account increased costs resulting from the superannuation legislation”.

Opposition IR spokesperson Adam Searle MLC told Workplace Express that the court’s decision means that NSW public servants will now receive sub-CPI pay rises and, in effect, have to “pay their own superannuation increase”.

He said with superannuation inside the cap, public sector workers will now be limited to a 2.27% pay increase in the first year, followed by 2.04% in the next two years – well below the 2.5% wage cap and the 2.9% CPI.

Searle said “any other employer that sought to pay increased superannuation by cutting wages would be rightly criticised, and so should the NSW Government”.

The PSA tried to argue for a broad reading of the Commission’s powers in setting wages and conditions and said that when the Government announced its wages cap, it did not foreshadow any discounts that would mean public servants received less than 2.5%.

However, the Court of Appeal found that both the Commission’s full bench (see Related Article) and now retired president Justice Roger Boland (when it was remitted to him) were mistaken in ruling that the Coalition’s wages cap policy excluded superannuation increases.

Chief Justice Tom Bathurst, President Justice Margaret Beazley and Justice John Meagher ruled that the Commission had wrongly determined that the 2.5% wage cap only applied to employee cost increases awarded by the Commission, rather than other costs such as those brought about by changes to compulsory superannuation.

NSW Greens IR spokesperson David Shoebridge MLC said today’s decision meant that the NSW Government would now try to ensure that wage increases are limited to 2.25% so that the 0.25% super increase does not take the total increase paid to public servants over 2.5% per year.

“Having budgeted for a 2.5% wage increase it will be hard for many public servants to deal with this cut in their wages,” he said.

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http://www.workplaceexpress.com.au/nl06_news_print.php?selkey=52285 7/05/2014

Secretary of The Treasury v Public Service Association & Professional Officers’ Association Amalgamated

Union of NSW [2014] NSWCA 138 (6 May 2014)

Article first published in Workplace Express