2009 STATE WAGE ORDER PURSUANT TO SECTION 50A OF THE ACT

WESTERN AUSTRALIAN INDUSTRIAL RELATIONS COMMISSION

PARTIES on the Commission's own motion

CORAM Chief Commissioner A R Beech

 Senior Commissioner J H Smith

 Commissioner P E Scott

 Commissioner S J Kenner

 Commissioner S M Mayman

HEARD Tuesday, 19 May 2009, Wednesday, 20 May 2009

DELIVERED thursday, 11 june 2009

FILE NO. APPL 1 OF 2009

CITATION NO. 2009 WAIRC 00375

CatchWords State Wage order – Commission's own motion – Minimum wage for employees under Minimum Conditions of Employment Act 1993 – Award rates of wage – Award minimum wage –State wage principles – Industrial Relations Act 1979 s 50A

Result State Wage order issued

Representation Mr A Lyon and with him Ms J Gardner, for the Minister for Commerce

 Mr J Ridley, for the Chamber of Commerce and Industry of WA, Inc.

 Mr D Ellis, of counsel, for the Trades and Labor Council of WA

Reasons for Decision

1          This is the unanimous decision of the Commission in Court Session.  The Commission is required by s 50A of the Industrial Relations Act 1979 ("the Act") before July in each year to make a General Order (the State Wage order) setting the minimum wage applicable under s 12 of the Minimum Conditions of Employment Act 1993 ("MCE Act") to employees who have reached 21 years of age, and to apprentices and trainees.  The Commission is also to adjust rates of wages paid under State awards.

2          The Commission placed advertisements in two local newspapers on 21, 25 and 26 March 2009 calling for public submissions.  The advertisement was also published on the Commission's website and in the WA Industrial Gazette.

3          Written submissions were received from the Western Australian Council of Social Services Inc, the Employment Law Centre of WA (Inc), the Australian Retailers Association and the Australian Hotels Association Western Australia.  The Commission sat and heard oral submissions and evidence on 19 and 20 May 2009 from the Hon Minister for Commerce, the Chamber of Commerce and Industry of Western Australia (Inc) and the Trades and Labor Council of Western Australia.  Copies of all submissions were placed on the Commission's website and the proceedings were webcast. 

SUMMARY OF POSITIONS

Western Australian Council of Social Services

4          The Western Australian Council of Social Services Inc ("WACOSS") submitted that it is the peak body of the community services sector in WA and noted that many organisations in the community services sector are incorporated entities without significant or substantial trading or financial activities.  These bodies are therefore subject to the Commission's jurisdiction.  WACOSS stated that it has an interest in ensuring that wages for employees in this sector keep pace with the cost of living and with community standards.  WACOSS also has an interest in ensuring that wages for the sector's clients, many of whom live on low incomes, are adequate.

5          It seeks to make explicit the link between minimum wages and the community services sector, along with the impact the global economic downturn is having on minimum wage earners in WA.  While WACOSS does not dispute the seriousness of the prospect of rising unemployment, WACOSS cannot support the notion that the most vulnerable members of the community should see their living standards eroded by a failure to deliver a sufficient wage increase.  It advocates for an increase equal to the movement of the Wage Price Index ("WPI"), being 5.7% in WA over the year till December 2008.  This represents an increase of $31.77 per week.  In the absence of a wide ranging review of the basis for minimum wage setting, WACOSS advocates an increase to the minimum wage which will ensure that low income earners are able to maintain their real standard of living over time and that low income earners keep pace with community standards.  It pointed out the minimum wage in WA has not kept pace with increases with average earnings.

6          WACOSS submitted that WA has the largest gender pay gap of any State in Australia and larger than the national average.  The gender pay gap in WA is 27.4% which means that on average, for every dollar earned by a full-time male employee a full-time female employee earns only 72.6 cents.

7          WACOSS submitted that it is vital that minimum wages keep pace with the cost of living and community standards in order to avert severe financial hardship for low income employees.  WACOSS referred to housing repossessions and difficulties arising from increasing financial stress.

Employment Law Centre

8          The Employment Law Centre of WA ("ELC") is a not-for-profit community legal centre which specialises in employment law.  It is the only free employment law service in WA offering employment legal advice, assistance and representation.  Each year, ELC provides advice and assistance to approximately 4,000 non-unionised employees, many of whom are reliant upon the minimum wage and are described as vulnerable. 

9          The ELC referred to the economic situation but states that during times of economic uncertainty and rising unemployment, employees become increasingly vulnerable in the workplace as competition for jobs heightens.  It submitted that low paid workers may find it difficult to negotiate better conditions and wages; without an appropriate minimum wage employees may be forced to work for lower wages or risk losing their jobs.  The minimum wage provides a safety net.  The ELC referred to the Consumer Price Index ("CPI") increasing by 3.7% in the 12 months to December 2008 which should be matched by appropriate increases in the minimum wage.  The ELC submission included reference to the Henderson poverty line, the disproportionate numbers of casual and part-time workers in the low paid category, and urged the Commission to have special regard to the increase in numbers of these workers reliant on the minimum wage. 

Australian Retailers Association

10       The Australian Retailers Association ("ARA") presented a written submission in support of its strong recommendation to the Commission that there should be no increase in the minimum wage for 2009.  In a comprehensive submission, the ARA suggested that the decision would be "a landmark decision to reflect the unique times the great majority of Australian employers and employees are now experiencing - one with low interest rates, low commodity prices, low consumer confidence, low inflationary forecasts, low GDP growth, growing unemployment levels and significant cash injection via the Commonwealth Government's economic stimulus packages and tax rate changes".

11       The ARA believed this would encourage the private sector with an incentive to retain its low skilled workforce at a time of economic stress.  In the alternative, the ARA strongly supported deferring the making of a decision until such time as economic and consumer data has stabilised to demonstrate an unequivocal outlook of economic conditions.  It pointed out that the decision of the Commission must be taken in light of the most current data and yet that data is changing by the week.  It stated that at the time of making the submission, retail sales data is all but indicating a decline in consumer spending and consumer confidence.  The ARA referred to the "ARA Australian Retailers Index" based on its most recent survey in March 2009 to submit that Australian retailers recorded deteriorating business confidence in the past quarter, with confidence falling to the lowest level of any industry sector.  This was largely related to the current economic downturn.  There was relatively stable and improved performance in sales and profitability.  The ARA submitted that small retailers would not cope with increased labour costs whether it be due to compliance measures associated with new industrial relations legislation, modern retail awards or an increase in minimum wage rates that flow through to their relevant retail-based pay scales. 

12       The ARA submitted that the WA has the second highest retail labour force in Australia and that therefore the viability of the retail sector at large has a profound impact on any State employment growth.  It submitted that in 2006-07, 14% of workers were employed in the retail trade.  Of the employees in WA's retail industry, 55% are female.  The majority of workers in the retail industry are aged between 15-24 years (40%) and between 25-44 years (34%).  There were almost as many part-time workers in WA's retail trade as there are full-time workers.  The ARA's submission noted that over the 10 years to the September quarter 2008, average wages in Accommodation, Cafes and Restaurants and Retail Trade have grown more slowly than the average across all industries.  The submission noted that average weekly retail industry earnings between 2004-05 and 2006-07 were higher nationally than in WA.  The national average increase over that period was from $732 to $812; in WA the corresponding movement was from $715 to $769.

13       The ARA is a member of the Australian Chamber of Commerce and Industry and supports the submission put by the Chamber of Commerce and Industry of Western Australia (Inc) in these proceedings.  It states that it represents the industry which is the most heavily reliant upon Australian Pay and Classification Scales.  The ARA asked the Commission to consider whether it is feasible for a mostly unskilled sector such as retail to have minimum rates of pay higher than the State minimum wage.  The ARA's members prefer to use the minimum wage as a baseline and let market forces and productivity determine wages above the minimum.  The ARA included a submission regarding changes toward the total deregulation of trading hours and its possible effects.

Australian Hotels Association Western Australia

14       The Australian Hotels Association Western Australia ("AHA") submitted that it represents over 700 licensees in WA including hotel, tavern, restaurant and special facility licenses. It pointed out that the industry provides over 45,000 jobs, generates $2 billion for the State economy, pays over $200 million in taxes and contributes over $20 million a year to charities and community groups.  The AHA submitted that is likely that WA will see the worst of the financial crisis in 2010.  The AHA believes that the anticipated increase in unemployment to above 7% and changes to household saving levels will reduce the level of discretionary spending in the economy and hence the aggregate demand for the products and services provided by AHA member businesses.  The AHA submitted that real income for low paid workers has been significantly increased due to reductions in interest rates, lower petrol prices, tax changes and the benefits of government economic stimulus packages.  It stated that the $900.00 payment in the second stimulus package is equivalent to about a 3% wage increase for average workers in the industry sector represented by the AHA.

15       AHA member feedback has shown that cost increases in this sector have been incurred for a number of reasons.  The accommodation sector has had to introduce cost-cutting initiatives to lower room rates in order to attract corporate clients seeking to reduce costs in the current economic climate; the introduction of smoking laws has seen a drop in revenue of between 5% and 30%; there has been a lack of investment in new hotels because of Australia's comparatively high wage levels and low room rates; current levels of hotel occupancy are unlikely to be maintained by 2010 if an additional 1,000 rooms are not able to be provided; many AHA members have lost overnight stays in accommodation as people travel less by car because of cheaper airflights; and cost increases in the hotel supply chain through unaffordable wage increases will not be able to be absorbed in margins.

16       Amongst the feedback it has received from its members regarding changes in employment likely to occur over the next 12 months are diminishing employment numbers, salaried staff wages not being increased, and endeavouring to avoid making employees redundant by encouraging the taking of leave and reclassifying employees.  The AHA accordingly requests the Commission to decide that it is not appropriate to increase the minimum wage levels this year.  The AHA provided a copy of the Accommodation, Cafes and Restaurants Industry Profile which is a research report of the Australian Fair Pay Commission ("AFPC") and drew the Commission's attention to a number of issues raised within it.

The Hon Minister for Commerce

17       The submission of the Hon Minister for Commerce ("the Minister") is that the WA Government is strongly committed to flexible, balanced and productive workplaces.  This includes a focus on delivering an equitable labour relations system that meets the needs of all employers and employees, while contributing to improvements in productivity, competitiveness and broader economic performance.  The Minister submitted that there should be a flat dollar adjustment to the State adult minimum wage and adult award wage rates based upon the 2008-09 estimated CPI for Perth as published in the 2009-10 State Budget.  The Minister submitted that this adjustment would be a responsible and sustainable outcome in the context of the parameters the Commission is required to take into consideration under s 50A of the Act, the current economic climate, the capacity of WA businesses as a whole to afford an adjustment in meeting the needs of the low paid who are subject to the State industrial relations system.  The Minister submitted that the appropriate increase is $19.50 based upon the annual average movement in the CPI for Perth of 3.5%. 

18       The Minister submitted that for WA's lowest paid employees, the State minimum wage is an important mechanism for providing a reasonable standard of living in the context of living standards generally. 

19       The Minister submitted that minimum wages have declined relative to average earnings over the past decade in both nominal and real terms.  The Minister submitted that the average weekly ordinary time earnings movement over that time was 27.8% whilst over the same period the State minimum wage increased by only 8.1% in real terms.  Although the minimum wage in WA has increased by $184.00 per week over the past decade, the majority of this increase has been accounted for by inflation.  In the past year, low paid employees have faced ongoing financial pressure as a result of general inflation, higher housing costs and increases in the cost of essential items.  The increase in the Perth CPI of 2.2% to the year to March 2009 is now below the national weighted average of 2.5%. 

20       The Minister submitted that there have been significant increases in the costs of essential items such as food, housing, health and education.  Housing costs of low income households represent a greater proportion of their gross weekly income than other households.  Although the housing market appears to have stabilised, housing affordability remains at record lows.  The Minister submitted that the proposed increase in line with the Perth CPI movement would maintain the value of the minimum wage and that in the light of current economic conditions such an increase is both affordable and fair.

21       The Minister submitted that the decline in recent years in the number of enterprise bargaining agreements registered by the Commission is not linked to minimum wage increases but is due to the introduction of the previous Commonwealth Government's Work Choices legislation, which prevents employers who are constitutional corporations from entering into State industrial agreements.  There is thus no evidence to suggest that previous increases to the minimum wage and award wage rates have provided a disincentive to enterprise bargaining.

22       The Minister submitted that overall there has been a 10.1% increase in the uptake of apprenticeships in WA between March 2004 and February 2009.  The number of apprenticeships commenced between March 2008 and February 2009 has declined by 1,889 from the previous 12 months but it is not clear what is responsible for this reduction as there are many factors that may influence the short term uptake of apprenticeships.  The number of traineeships between March 2004 and February 2009 has increased by 20.2%.  Previous minimum wage increases for apprentices and trainees ordered by the Commission have not discouraged their uptake in WA.

23       In relation to the gender pay gap, the Minster submitted that it is likely that minimum wage rates have kept the gender pay gap relatively stable nationally over the past decade.  It notes the WA gender pay gap as currently 27.4%; it is the largest of any State and significantly higher than the national average of 17%. 

24       The Minister submitted that the Commission should look to maintaining the real value of the minimum wage in the 2009-10 financial year.  The current threats to the WA economic outlook make the CPI the most relevant benchmark for minimum wage adjustments in 2009. 

Evidence from the Department of Treasury and Finance

25       In support of his submission, the Minister called evidence from Nicola Cusworth who is the Director, Macro-Economic Policy within the Department of Treasury and Finance.  A primary role of the Department of Treasury and Finance is the compilation of economic analysis and forecasts as well as provision of advice on economic matters for the WA Government.  Ms Cusworth traversed the global economic position, the national economy and presented a comprehensive overview of the economic outlook for the State. 

26       Ms Cusworth described the global economy as probably in its worst economic downturn since the Second World War.  She indicated that the global economy will contract in 2009 for the first time since the Great Depression and that the prospects are for a weak recovery in 2010.  In relation to the State, she noted that the commodity boom was well and truly over.  Nevertheless, the business investment cycle is still increasing because of decisions made one to three years ago.  However, there is a lot less work coming through to replace the projects currently underway.  Ms Cusworth stated that there were indicators showing different economic trends.  The retail sector in particular was very volatile.  Although employment showed a strong growth to October, employment growth was tailing off.  Considerable uncertainty applied to a number of economic statistics.  Ms Cusworth indicated she had never seen such a quick and simultaneous deterioration in economic activity in so many markets around the world.  She believed that we are in a period of very substantial uncertainty where a "wait and see" approach was warranted.  We will refer in further detail to Ms Cusworth's evidence as it bears upon the decision we have reached. 

Chamber of Commerce and Industry of Western Australia (Inc)

27       The Chamber of Commerce and Industry of Western Australia (Inc) ("CCIWA") informed the Commission that it is the second largest organisation of its kind in Australia with a membership of over 5,500 organisations in all sectors.  Most members are a private business and employ a significant number of employees.  Nearly 73% of CCIWA's members employ up to 19 employees.  They are located in all geographical regions of WA and approximately 30% are described as being in industries or sectors which are likely to be covered by the State's industrial relations system, including accommodation, cafes and restaurants, health and community services, property services and retail industries.  CCIWA is also the direct employer of about 900 apprentices across WA as part of a Group Training Scheme. 

28       CCIWA requested the Commission not to increase the minimum wage and the award rates of pay because of the rapidly deteriorating economic outlook domestically and internationally as a consequence of the global financial crisis.  CCIWA submitted that all sectors of the economy have been affected and it no longer appears sustainable to conclude that minimum wages should increase in each calendar year across all phases of the economic cycle or that increases exceed inflation.  It submitted the general uncertainty means the consideration and determination of minimum wage adjustments is made more difficult and forecasting the effects of any decision is more uncertain.  CCIWA's approach is therefore one of caution where the paramount concern is to support business to retain and create jobs.  The CCIWA supported its submission with a number of documents relating to the State's economy and business surveys.  CCIWA referred significantly to the Commonwealth Government stimulus packages which provide a significant boost to low paid workers and submitted that the Commission should take all such relevant Commonwealth and State Government initiatives into account in assessing fair wage standards, living standards and meeting the needs of the low paid. 

29       CCIWA did not dispute the evidence given to the Commission from the Department of Treasury and Finance regarding the State's economy.  CCIWA submitted that labour market conditions across Australia are expected to deteriorate considerably in the near term in line with the slowdown in economic activity.  Employment is expected to contract through 2009 and remain weak in 2010.  Therefore, in a no or negligible growth scenario, any increase in minimum wages has the potential to increase unemployment.  CCIWA quoted from the AFPC 2008 decision regarding the relationship between employment and minimum wages continuing to be contentious. 

30       CCIWA has revised down its growth forecasts to the WA economy for the next two financial years.  The WA economy is expected to grow by just 2% in 2008-09 before contracting by 1% in 2009-10 as the full impact of the global financial crisis is felt locally.  CCIWA expects consumer price growth to slow to 3% in 2008-09 and 1¾% in 2009-10. 

31       CCIWA submitted that employment and other economic indicators are lagging behind the extent of the downturn at present.  Varying growth rates across the country have meant that some sectors have been struggling to keep up with the rapid growth in wages that has occurred.  Wages growth has been the weakest amongst the services sectors that are not directly benefiting from the resources boom, in particular the retail sector which has had an annual Wage Price Index ("WPI") growth averaging 3.2%.

32       CCIWA sees some benefit in enterprise bargaining becoming more focused on achieving efficiencies and flexibilities to ensure sustainable business operations and to stem job losses.  A decision about minimum award adjustments should consider the potential implications for enterprise bargaining.

33       CCIWA submitted that increasing minimum wages in the current environment will increase business costs at a time when they can least afford it and could lead to further job losses.  Businesses paying minimum wages, which are mostly small to medium enterprises, are already experiencing financial difficulties and are having considerable difficulty retaining staff and maintaining former levels of employment.  CCIWA's primary position is that there should not be any increase in minimum wages this year due to the lack of clarity on the extent, impact and duration of the global financial crisis and its implications for WA and Australia, together with the significant Commonwealth Government initiatives.  If, however, the Commission determines there should be an increase, CCIWA submitted that any such increase should not take effect prior to 1 January 2010.  We will refer further to the submission and supporting documentation of the CCIWA where appropriate in the course of these reasons.

Trades and Labor Council of Western Australia

34       The Trades and Labor Council of Western Australia ("TLCWA") submitted that an increase to the statutory minimum wage and an increase to award wages equivalent to the movement of the WPI in WA is moderate, sustainable and warranted on economic, industrial and equity criteria.  The TLCWA notes that the WPI increased by 5.7% through the year to the 2008 December quarter equating to a flat increase of $31.77 on the minimum wage.  The TLCWA stated that it reserved the right to amend the amount it seeks in accordance with March quarter WPI figures due to be released on 20 May 2009.  

35       The TLCWA submitted that, despite the global financial crisis, WA's economic performance continues to be strong.  At present, unemployment is low, labour participation rates are high, jobs growth continues to be strong and infrastructure investment remains high.  It submitted in support a copy of the ACTU's submission to the AFPC in March 2009.  It also supported the WACOSS submission. 

36       TLCWA submitted that despite the economic downturn, real wages in WA are growing and the increase sought by the TLCWA would ensure award wage and minimum wage earners do not fall further behind the rest of the workforce.  The TLCWA referred to other factors, including movements in the CPI, households generally considered to be experiencing housing stress and matters going to the need to contribute to improving living standards.  The TLCWA referred to the minimum wage in other States and submitted that the Commission should increase the minimum wage by 5.7%.

CONSIDERATION

37       In the 2008 State Wage order decision we stated that it was open to conclude on the then available ABS data that approximately 30% of the State's workforce are within the State jurisdiction ((2008) 88 WAIG 773 at [23]).  We consider this conclusion remains valid.  We also agree with the Minister's conclusion that the State Wage order directly affects approximately 2.2% of WA employees with a further 1.8% indirectly affected.

38       The requirement on the Commission to make a State Wage order before 1 July in each year is contained in s 50A of the Act.  The considerations set out particularly in s 50A(3) underpin the approach the Commission is obliged to take.  Section 50A of the Act was inserted in 2006 (Labour Relations Legislation Amendment Act No. 36 of 2006 s 14).  In the three State Wage order decisions which this Commission has issued since that time, the Commission has consistently had regard to the state of the WA economy.  We said in our 2006 decision ((2006) 86 WAIG 1633) that, in principle, the real value of the minimum wage should be maintained if the economic circumstances of the State permit it.  On that occasion, the Commission considered a report prepared for it by Professor David Plowman of the Graduate School of Management, University of Western Australia regarding the economic effects of past increases to the WA minimum wage.  Professor Plowman's report concluded that the State's economic growth moderates, perhaps to a considerable extent, any minimum wage effects.  We consider that conclusion, with respect, to have been confirmed by the evidence before us on this occasion.

39       In the last three State Wage order decisions, the buoyant state of WA's economy has allowed the Commission to not only maintain the real value of the minimum wage by reference to the CPI movement for Perth to the March quarter prior to the relevant State Wage proceedings, it has also allowed the Commission to grant an increase beyond the amount necessary to merely maintain the value of the minimum wage.  In 2008, an amount of $22.70 would have been required to maintain the level of the minimum wage by reference to the 4.3% increase to the Perth CPI for the year to the March quarter 2008; the $29.00 increase to the minimum wage awarded by the Commission was an additional amount of $6.30.  This built upon the real increase given to the minimum wage by our 2007 decision.  On that occasion, an amount of $17.65 would have been required to maintain the level of the minimum wage by reference to the 3.5% increase to the Perth CPI for the year to the March quarter 2007; the Commission's increase of $24.00 represented a real increase to the minimum wage on that occasion of $6.35.  There is no evidence, or submission, that the increases to the minimum wage we have ordered have had any negative consequences on the WA economy or on the level of employment, inflation or productivity in WA.  We conclude that to a significant extent this has been due to the buoyant state of the WA economy up to this point.

40       Section 50A speaks of the need to ensure that Western Australians have a system of fair wages and conditions of employment, to meet the needs of the low paid and to provide fair wage standards in the context of living standards generally prevailing in the community, as well as the need to contribute to improved living standards for employees.  We have met these considerations by maintaining the value of the minimum wage by reference to movements in prices as measured by the CPI, as well as taking into consideration the movements of wages in the community generally.  We take these considerations into account on this occasion also.  We are also obliged by s 50A(3)(b) and (c) to have regard to the state of WA's economy and to the extent that it is relevant, the state of the national economy in the context of the need to ensure that the WA award framework represents a system of fair wages and conditions of employment.

41       The evidence and the supporting material before the Commission, particularly from the Department of Treasury and Finance, but not solely from that source, shows a vastly different economic environment on this occasion from the economic environment on the last three occasions.  This is shown too by the supporting material from the CCIWA and from the submissions of the ARA and the AHA.  Some indicators show the State to be in a healthy position.  WA's Real Gross State Product increased by 5.2% which is higher than the national growth of 3.7%.  Real Gross State Income growth over 2007-08 was the fastest of the States at 12%.  Perth's CPI for the year to the March quarter was 2.2%.  Inflation peaked in September 2008 and is expected to decline markedly over 2009.  The WPI for Perth in the year to December 2008 at 5.7% was the fastest growth of the States although the WPI in the retail trade grew by less than the long-run average growth rate.

42       However, labour market conditions have started to deteriorate from late 2008.  Weakening domestic demand is likely to result in slower wages growth in the next two years.  Demand for labour has softened and this is expected to continue in the medium term.  Some businesses have implemented hiring freezes and redundancies.  The number of short term unemployed has risen sharply.  The State's unemployment rate reached 4.9% in March 2009 which is its highest rate since September 2004.  Although falls in global commodity prices have been partly offset by the decrease in the Australian dollar since mid-2008, now the dollar has started to pick up while commodity prices continue to decline. 

43       The level of business investment is likely to remain high for the rest of 2008-09 providing a short-term buffer to the weakening in other sectors, however investment is likely to fall once current projects are completed.  The State's labour participation rate is expected to drop from its record high as the labour market deteriorates.  The annual average growth rate of the CPI for Perth is expected to soften to 3.5% for the 2008-09 financial year.

44       The evidence before us makes it clear that the State's economy, and the national economy, has been significantly affected by what Ms Cusworth has described as probably the worst economic downturn in the global economy since the Second World War.  The national economy contracted by 0.5% in the December quarter of 2008.  The forecast in WA is for two consecutive years of negative economic growth.  WA's economy is in a process of transition from the boom that peaked in 2007-08 to much weaker economic conditions expected in 2009-10.  We accept the evidence before us that the effects of the economic boom have somewhat delayed the onset of any downturn in WA's economy so that while at present it is somewhat healthier than the forecasts for the national economy, the outlook for the State's economy for 2009-10 is most uncertain. 

45       We turn to consider the position in other States following the consideration in 2008 by their industrial tribunals of the minimum wage.  These are set out in Table Eleven extracted from the Minister's submission:

Table Eleven

Current Minimum Wage Rates in Each State Jurisdiction47

46       We observe that WA's minimum wage is the highest of any of the States with a difference of $11.30 between the highest and the lowest minimum wage.  No person appearing regarded the difference as significant and we are asked to give it little weight as an issue when setting the minimum wage in WA.  We accept that these differences have occurred because of the differing legislative criteria which each court or tribunal is required to observe, and the differing economic circumstances experienced by each State.  WA's minimum wage is also approximately $13.60 per week higher than the minimum wage payable under the Workplace Relations Act 1996 (Cth); this too was not seen by any person appearing before us as a matter of significance.  We do not attach great weight to these differences in this decision; however we consider these differences may have greater significance in the future as a result of changes to the setting of the Commonwealth minimum wage which are to occur once the Fair Work Act 2009 (Cth) commences operation on 1 July 2009.

47       We take into account the Commonwealth Government's fiscal stimulus packages.  The packages themselves are a matter of record.  Their significance for these proceedings lies in the fact of them having occurred.  They are unprecedented in recent times and thus underline the seriousness of the economic situation facing the nation and therefore this State.  We note that they have stimulated consumer spending in December 2008 and January 2009.  We have found helpful the quantification of the stimulus packages into weekly or fortnightly dollar terms, especially by the ARA in its table at page 9 of its written submission to us.  We observe that these payments are "one-off" in nature and are not designed as a substitute for increases to wages which otherwise might be expected to occur.

48       We also regard as relevant the WA Government's recent budget measures designed to give payroll tax relief to small and medium enterprises.  These are likely to comprise the majority of unincorporated private sector businesses affected by the WA minimum wage and such relief may assist businesses to retain employment.

49       In the current period of uncertainty, we consider that the submissions of CCIWA, supported as they are by the ARA and AHA, that businesses are becoming increasingly pessimistic are to be given some weight.  We take note of evidence supporting the submissions from the March quarter 2009 Commonwealth Bank - CCI Survey of WA Business Expectations, and the other documentation of broader scope which accompanied CCIWA's submission.  There is support for these submissions in the Minister's submission (Addendum A at page 26) that in recent quarters, business confidence has dropped to its second consecutive record low, that demand for labour has softened and this is expected to continue into the medium term.  The ARA points to the deterioration in business confidence for the last quarter being felt particularly in retailing.  The AHA points to wages growth being weakest in the services sector.  We consider that this shows a lessening in the capacity of employers as a whole who are affected by the WA minimum wage to bear the costs of increased wages, salaries, allowances and other remuneration.

50       That does not mean that we accept the submission that there should be no increase to the minimum wage on this occasion.  We reiterate our conclusion based upon the Plowman Report that the effect of minimum wage increases upon the level of employment is not certain.  The submissions of the Minister on this issue, taken together with those of CCIWA, lead us to conclude that much depends upon the state of the economy overall.  Awarding no increase in the WA minimum wage on this occasion will reduce its real value.  However, consumer prices in Perth have increased by 2.2% over the last 12 months and are forecast to increase by 3.5% in the current financial year; wages growth measured by the WPI is forecast to grow by 3% over the same period and the minimum wage has declined relative to average earnings over the past decade.  We consider it to be inconsistent with the Commonwealth's fiscal stimulus payments stimulating consumer spending to reduce the value of the minimum wage by awarding no increase at all.  The minimum wage is an important part of the social safety net and we consider that the requirements upon us in s 50A(3)(a)(ii) and (iii) in particular, to ensure that Western Australians have a fair system of wages which meets the needs of the low paid and provides fair wage standards in the context of living standards generally prevailing in the community, argue against no increase being ordered at all.  We take into consideration in accordance with 50A(3)(a)(vii) of the Act the need to provide equal remuneration for men and women for work of equal or comparable value.  We have already noted that the current gender gap between men and women's wages in Western Australia remains the largest of any State in Australia.  We are of the view that not to increase the minimum wage in 2009 may have a detrimental impact on those women employees in WA who are reliant on the minimum wage.

51       We also contrast the current economic crisis with the circumstances of the economic crisis in 1982-83 to which CCIWA referred us.  The record shows that on that occasion the Commonwealth and State Governments held that a "wages freeze" was necessary on economic grounds (see (1983) 63 WAIG 257) and in WA, the Parliament enacted the Salaries and Wages Freeze Act, 1982.  That is not the case on this occasion: there has not been a call from Commonwealth and State Governments generally for a wages freeze.  In fact the State Government on this occasion said that an increase to the minimum wage and to award wages based on the movement in the CPI would be a responsible and sustainable outcome in the context of the current economic climate and the capacity of WA businesses as a whole to afford an increase.  We also note that notwithstanding the adoption of a policy of wages restraint in January 1983, the WA minimum wage was increased in February 1983 by reference to the movement in the CPI to the September quarter 1982: (1983) 63 WAIG 379, and that the duration of the period of restraint in WA was of only 6 months (see (1983) 63 WAIG 2207).    

52       Nevertheless, we do accept that in the current environment, there are employers whose cost structures make them vulnerable to wage increases in the sense submitted to us by CCIWA.  We have concluded in recognition of this that the one-off effects of the Commonwealth's fiscal stimulus payments paid to, amongst others, low-paid employees, together with the large increase awarded by us in July 2008 do support the present minimum wage continuing past 30 June 2009 for a further 3 months.  We consider the 3 month period appropriate given that it is broadly within the time frame during which the other States', and the Commonwealth's, minimum wages are themselves determined.  This will not for that period of time increase the cost structure of employers with staff who are paid the minimum wage and will give a longer period of notice to both them and their employees of the minimum wage we intend to set; and it will not postpone the increase significantly beyond the dates at which other minimum wage earners in Australia have usually had their own wages determined.

53       As to the increase to be awarded after that time, we have considered the approach of the TLCWA relying as it does upon movements in the WPI.  We have given weight to that index in previous decisions because it assists in assessing the minimum wage, and award wages, relative to wage movements generally.  We have also considered the issues raised by WACOSS and, on this occasion, the ELC, particularly in their references to the needs of the low paid including by reference to the Henderson poverty line and their reference to the WPI representing the best measure of community standards of income because it is not subject to variations in the same way as are average weekly earnings figures. 

54       In our 2008 decision, when we increased the minimum wage by $29.00 per week, the largest single increase awarded by the Commission, we stated that although the increase was sustainable on that occasion because of the State's then present and forecast economic performance:

… as the rate of growth in the State's economy begins to slow there may be limited opportunity in the future to not only maintain the real value of the minimum wage but also to provide a real wage increase. ((2008) 88 WAIG 773 at [42]).

55       The vastly different economic evidence before us on this occasion shows that the rate of growth in the State's economy has indeed slowed.  We do not consider an increase as proposed by the TLCWA is sustainable having regard to the state of the economy of WA and the capacity of employers as a whole to bear the costs of the increase, particularly employers as a whole who are affected by the WA minimum wage.

56       The Minister has urged upon us an increase to the minimum wage of $19.50.  We understand the basis for the increase advanced by the Minister.  Annual average growth is used by the Department of Treasury and Finance in all of its published forecasts of economic indicators to match the budget fiscal analysis which is presented for full financial years.  Since the inclusion of s 50A in the Act, evidence provided by successive Ministers relating to the Western Australian economy has consistently relied on annual average measures for most indicators.  We consider the use of annual average measures quite appropriate for those purposes and it is also quite appropriate on a future occasion, as it was on this occasion, for the Commission to continue to be informed by the Minister of the movement of economic indicators on an annual average basis given its use by the Department of Treasury and Finance in all of its published forecasts.

57       In considering the Minister's submission, we note that whilst the increase proposed by the Minister is more modest than the $29.00 increase proposed in 2008, the evidence before the Commission from the Department of Treasury and Finance shows that it is not possible to determine the cost and employment effects of the proposed increase (Addendum A at page 26).  Given that the outlook for the State's economy in 2009-10 is most uncertain, it is fair to say that there may well be some measurable effect from the increase proposed by the Minister.  On all of the evidence before us, we have reservations about increasing the minimum wage by an amount which is almost the same in dollar terms as the $20.00 per week awarded by us in 2006 on the basis that the outlook then for the State's economy was strong.

58       An increase of $12.30 per week will adjust the minimum wage for cost of living changes as measured by the 2.2% growth in the Perth CPI for the year to the March quarter 2009 and thus will maintain its real value by reference to that measure.  The record will show that although we consider a wide range of economic indicators in our State Wage order decisions, we have consistently referred to the CPI movement for the year to the March quarter preceding the hearing.  We do not wish to be thought of as stating that this is a better measure of the CPI than the annual average method; we suspect that each measure has its strengths and weaknesses.  As Chart One of the Minister's supplementary submission shows, on some occasions the annual average growth of the CPI shows a higher measure at a given point in time than the corresponding year-end growth, and on other occasions the opposite is the case.  We would not wish to be seen to give weight in one year to a particular CPI measure and to give weight in another year to the alternate CPI measure.  We are aware that the annual average method has the disadvantage of being slow to reflect significant change in the CPI; conversely the year-end method may be considered a more volatile method.  We agree with the Minister that over the longer term these differences average out, and growth measured by both inflation measures is similar.  We do see some value in the Commission being consistent in its decision-making, and for the present in our own decision-making under s 50A as it is currently worded, we propose to give weight to the measure of the CPI over the year to the March quarter of the relevant year. 

59       We are confident that increasing the minimum wage by $12.30 will maintain WA's system of fair wages and conditions of employment, and in doing so meet the needs of the low paid.  To the extent that the past increases we have given are thus maintained in their value, the minimum wage to be set should also, to the extent possible in the current adverse State and national economic environments, protect employees who may be unable to reach an industrial agreement, encourage ongoing skills development.   We consider this increase is more likely to be within the capacity to pay of employers as a whole.  

CONCLUSION

60       We have therefore concluded that:

(a) The minimum wage will be set at $557.40 for the period of 1 July 2009 until the first pay period on or after 1 October 2009.

(b) The minimum wage will be set at $569.70 from the first pay period on or after 1 October 2009, being an increase of $12.30 per week.

61       No person appearing submitted that we should not correspondingly adjust rates of wages paid under awards.   Given that position, and the role of awards in providing fair wage standards, we will adjust award wages by $12.30 per week from the first pay period on or after 1 October 2009.  The increase will apply only to employees who are paid the award wage; any wage paid over the award wage is able to be used to offset the increase.  

THE MINIMUM WEEKLY RATE OF PAY APPLICABLE TO APPRENTICES AND TRAINEES

62      Section 50A(3)(a)(vi) requires the Commission to take into consideration the need to encourage ongoing skills development.  The evidence before us shows that previous minimum wage increases for apprentices and trainees have not discouraged their uptake in WA.  We accept the Minister's submission (at [35]) that a responsible increase to minimum apprentice and trainee wages, having regard to ss 13 and 14 of the MCE Act, award relativities and the methodology applied by the Registrar in previous State Wage orders, will not have a detrimental effect on the uptake of training arrangements in the current economic climate.  

63      No submissions were put to us on this occasion to warrant a departure from the manner by which the Commission has previously set minimum wages applicable to adult apprentices (see (2006) 86 WAIG 3129), and to apprentices and trainees generally.  We propose to apply the increase to adult apprentices, other apprentices and to trainees in accordance with the usual practice of the Commission. 

Trainees

64      Three issues in relation to trainees have arisen in the course of these proceedings.  The first issue is the process of adjustment of award trainee wage rates, initially raised by the Commission with the persons appearing in these proceedings.  The second issue relates to amendments to the Vocational Education and Training Act 1996 ("the VET Act"), the effect of which for present purposes, is to remove references to "trainee" in current legislation and incorporate it into an amended definition of "apprentice".  The third issue involves updating the list of industry/skills levels set out in Attachment A to the 2008 State Wage order. 

1. Award Trainee Rates

65      This issue involves the following eleven awards of the Commission which provide traineeship clauses, variously expressed:

(a) AWU National Training Wage (Agriculture) Award 1994;

(b) Food Industry (Food Manufacturing or Processing) Award;

(c) Furniture Trades Industry Award;

(d) Licensed Establishments (Retail and Wholesale) Award 1979;

(e) Metal Trades (General) Award;

(f) Motor Vehicle (Service Station, Sales Establishments, Rust Prevention and Paint Protection) Industry Award No. 29 of 1980;

(g) Printing Award;

(h) Sheet Metal Workers' Award No. 10 of 1973;

(i) The Shop and Warehouse (Wholesale and Retail Establishments) State Award 1977;

(j) Soft Furnishings Award; and

(k) Vehicle Builders' Award 1971

In each of these awards, the relevant trainee provisions do not provide a formula for the adjustment of trainee rates and the Commission has not been called upon to consider the matter in the past.

66       Historically, traineeship rates contained in these awards have been determined, at least initially, in accordance with the National Training Wage Award 2000 (Cth), an award of the Australian Industrial Relations Commission.  However, over time, and as a consequence of legislative amendments at both the Commonwealth and State levels, the relationship between the National Training Wage Award 2000 and the traineeship rates contained in these awards has been broken.

67       Whilst the issue has been raised with the Minster, CCIWA and TLCWA in previous years, no agreement has been reached between them for a procedure to be followed for the adjustment of award trainee rates of pay.  The practice followed by the Registrar of the Commission has been as follows:

Industry/Skill Level A, B and C top rates are increased by 80% of the arbitrated safety net adjustment.  The result is then rounded to the nearest dollar.  All other rates are increased by a percentage of the unrounded result of the first step.  The result is then rounded to the nearest dollar.  However, trainees who spend over an average of 20% of their time in approved training, have their wage rates adjusted in accordance with Industry/Skill Level B.  Where an existing rate in Industry/Skill Level B or C is the same as an existing rate in Industry/Skill Level A or B, then the former is adjusted in line with the latter rate in order to maintain consistency.

68       On this occasion the Minister submitted that presently, traineeship pay rates vary considerably across State awards resulting in differing provisions.  Whilst accepting that standardisation of traineeship rates of pay across State awards may be a desirable objective, the Minister submitted that this may be difficult to achieve in the context of a State Wage order.  The Minister submitted that the practice hitherto adopted by the Registrar should be formalised in these proceedings and included as a part of the State Wage order.  In this respect, the Minister tendered as Exhibit 5 a proposed draft clause to be incorporated into the State Wage order to provide consistency in adjustment of trainee award wage rates.

69       CCIWA, in its initial outline of submissions, expressed some reservations as to the proposal adopted by the Minister, preferring instead an approach based upon considering each award within its history and context in relation to trainee rates of pay, pursuant to s 40B of the Act.  However, upon further consideration, CCIWA now agrees in principle with the Minister's proposal to formalise the previous practice for the adjustment of trainee rates of pay and has suggested some minor amendments to the Minister's draft clause.

70       For its part, the TLC, on considering the Minister's draft clause, has no objection to the formalisation of the previous practice for the adjustment of trainee rates of pay as proposed.

71       The adjustment of rates of pay for trainees in the past has been somewhat problematic.  As a consequence of the Labour Relations Reform Act 2002, the Act was amended for the Commission to set for the first time minimum rates of pay for apprentices and trainees under the MCE Act.

72       In the June 2003 State Wage Case, the Commission determined that in relation to rates of pay for trainees to be established pursuant to s 15 of the MCE Act, two classes of trainee would be established.  The first class of trainee is covered by awards and employer/employee agreements and the second class of trainee is award-free.  The award-covered class of trainee had the minimum wage determined by reference to the relevant award covering the trainee; the award-free class of trainee had the minimum wage determined by reference to the rates prescribed for trainees in the Metal Trades (General) Award.  This is the structure which has operated to date.

73       The rationale for the practice applied by the Registrar is based upon the proposition that, on average, trainees spend approximately 20% of their time in structured training and the rate of adjustment to award wages should reflect this.

74       There are various approaches that could be taken in relation to the adjustment of traineeship rates contained in awards.  One approach involves the Commission of its own motion under s 40B of the Act considering trainee rates of pay for each of the eleven awards identified above.  Consideration could then be given, within the framework of the s 40B requirements, after giving the affected parties an opportunity to be heard, as to whether there should be any adjustments to the relevant award rates and if so, what they should be.

75       An alternative approach is for adjustments to trainee rates of pay arising from this State Wage order to be by separate application to amend each award in order that the circumstances of each award may be taken into account.

76       Either of the above approaches will necessarily delay, possibly considerably, any adjustment in award rates for these classifications, which generally are at the lower end of the award rate pay scales.

77       Having considered the issue, and on balance, we are inclined to the view that on this occasion, particularly as the Minster, CCIWA and TLCWA have agreed in principle to incorporate into the State Wage order the practice to date, this approach should be adopted.  However, it should not be assumed that this will necessarily occur on the next occasion the Commission is required to set minimum wages under s 50A of the Act.  It may be necessary for there to be further consideration of the manner of adjusting trainee award rates of pay, after giving the parties an opportunity to be heard.

78       In terms of the drafting of the clause to be inserted into the State Wage order, we prefer the amended form as suggested by CCIWA which results in some minor changes of style rather than of substance.

2. VET Act Amendments

79       The second issue relevant to trainees for present purposes relates to amendments to the VET Act which are to come into effect on 10 June 2009 as a consequence of amendments made by the Training Legislation Amendment and Repeal Act 2008 ("the Amending Act").  The substantive effect of the Amending Act for present purposes is to remove all references to "trainees" in both the Act and the MCE Act and to insert a new definition of "apprentice" contained in s 60A of the VET Act in the following terms:

"Apprentice means the person who is named in a training contract as the person who will be trained under the contract, whether the person is termed an apprentice, a trainee, a cadet, an intern or some other term".

80       Additionally, s 15 of the MCE Act, prescribing a minimum weekly rate of pay for trainees, is to be repealed.  Thus all references to minimum rates of pay for apprentices, trainees and the like will now be covered by s 14 of the MCE Act, adopting the amended definition of "apprentice" as set out above.

81       The net effect of these legislative changes is to remove any separate statutory recognition of "trainees" and incorporate trainees into the broader class of persons undergoing formalised training in accordance with a training contract entered into and registered under the VET Act as amended.

82       Consequently, the Minster, CCIWA and TLCWA have proposed, and the Commission agrees, that the form of the State Wage order in relation to minimum wage rates for apprentices and trainees needs to be amended to take into account these legislative changes.  In this respect, the Minister helpfully provided to the Commission, by way of Exhibit 6, proposed draft clauses setting out changes to reflect the amendments to the VET Act.  These proposed clauses are agreed to by the TLC and only relatively minor amendments are suggested by CCIWA.

83       We are satisfied that the draft clauses as proposed by the Minister adequately reflect the legislative amendments, in particular the terms of the new s 60A of the VET Act, and they will be accordingly incorporated into the State Wage order.

3. Industry/Skill Levels

84       The final issue relates to the Minister's submission that upon advice from the Department of Education and Training, the industry/skill level classifications table, set out as Attachment A to the 2008 State Wage order, has, as a consequence of the gazettal of new traineeship programmes, become outdated.  We thank the Minister for this information and the updated traineeship industry/skill level classifications, as at 5 May 2009, will be incorporated as Schedule 1 to the State Wage order.

THE STATE WAGE PRINCIPLES

Rounding of Allowances

85       In its Reasons for Decision in the 2007 State Wage Case ((2007) 87 WAIG 1487 at [140]) the Commission considered two methods of calculation of allowances.  These were:

• Method 1 – Two Step Calculation

The amount to be adjusted be calculated by applying the appropriate increase and then rounding to the 'appropriate level'.  If any second increase is necessary the same calculation method be repeated.

• Method 2 – One Step Calculation

If multiple increases are warranted, the increases are to be compounded and the total result applied to the figure to be amended.

• An example

• Assume a weekly wage of $500.00.  The wage has not been increased for two years and the Commission has determined that each yearly increase should be 3.5% in year 1 and 4.0% in year 2.

• Method 1 – Two Step Calculation

• $500.00 x 103.5 = $517.50

         100

• $517.50 x 104.00= $538.20

         100

• Method 2 – One Step Calculation Compounded

• $500.00 x 107.64 = $538.20

NB 107.64 = 103.5 x 104.00."

86      After considering the submissions made to it, the Commission held at [144] to [146]:

144    "Taking account of the submissions, and of Kenner C's decision in The Australian Workers' Union, West Australian Branch, Industrial Union of Workers v. Kalgoorlie Consolidated Gold Mines Pty Ltd and Others (op. cit. at [139] above), it is appropriate that the Commission provide some guidance to parties so as to avoid disagreements arising out of a relatively mechanical issue such as this.  As to whether Method 1 or 2 ought to apply, the outcome in each case ought to be the same.  However, rounding or the lack of it, in a series of calculations will affect the result in the long term.

145    The best way to ensure there is no disadvantage to employees in the calculation of rates is to calculate those rates as if they were being calculated each year.  Accordingly, Method 1 ought to apply, that is, each increase is to be calculated, then rounded, before the next increase is calculated on the rounded result.

146    In respect of the particular approach to rounding, the consensus view amongst those who addressed the methodology provides an appropriate approach to rounding and ought to be adopted unless there is an agreed, established custom and practise in an industry or for an award, or where arbitration has set a methodology.  Accordingly, rounding ought to be applied as follows:

1. (a) Yearly rates are to be rounded to the nearest dollar;

(b) Weekly rates are to be rounded to the nearest 10 cents;

(c) Daily rates are to be rounded to the nearest 5 cents; and

(d) Hourly rates are to be rounded to the nearest 1 cent.

2. Ideally, allowances ought be increased each year.  However, where multiple increases are warranted, the increases are to be compounded and a total result applied to the figure to be amended.

3. Where the parties to an award agree that there is a custom and practise to be applied to rounding for that award which varies from the method set out above, then the custom and practise should apply.  Alternatively, where arbitration has established a particular method of rounding appropriate to the circumstances, that arbitrated method ought to apply."

87      During proceedings to vary allowances in 2008 it was brought to the Commission's attention that there was an inconsistency between the statement that method 1 should apply to rounding of allowances,

that is, each increase is to be calculated, then rounded, before the next increase is calculated on the rounded result

and the statement in paragraph 2 that in the case of multiple increases,

the increases are to be compounded,

which could be inferred to mean that the Commission in the 2007 decision intended that where increases are sought to apply for more than one year, method 2 should be adopted.  Plainly that result was not intended as the Commission in 2007 was of the view that method 1 should apply to multiple increases.

88      Although the Minister, CCIWA and TLCWA have made a submission that the 2007 method of calculation of allowances should not change, the Commission is of the view that paragraph 2 should be amended to remove any argument in the future that the formula for the calculation of allowances is ambiguous.

89      In our view paragraph 2 of the formula should read as follows:

2. Ideally, allowances ought be increased each year.  However, where multiple increases are warranted, each increase is to be calculated, then rounded, before the next increase is calculated on the rounded result and a total result applied to the figure to be amended.

Principle 9.2 – Minimum Adult Award Wage – Exceptions

90       During the course of the hearing, the Minister raised an issue not contained in his submissions, dealing with that part of Principle 9.2 – Minimum Adult Award Wage, which reads:

"The minimum adult award wage shall not apply to apprentices, employees engaged on traineeships or Jobskill placements or employed under the Commonwealth Government Supported Wage System or to other categories of employees who by prescription are paid less than the minimum award rate."

91       The Minister suggested that this provision may need to be amended on account of the interrelationship of that part of Principle 9.2, the provisions of the MCE Act in respect of exemptions to the minimum wage, and provisions contained within certain awards and agreements of the Commission.

92       The awards and agreements concerned provide for rates of wages less than the minimum wage in clauses with titles such as "Under-rate, Aged and Infirm Workers" and "Supported Wage".  The Minister notes that approximately 100 awards contain clauses providing for under-rate, aged and infirm workers, and 19 awards and a significant number of industrial agreements contain Supported Wage clauses.

93       According to the Minister an agreement between parties made pursuant to the former type of clause to pay a lesser rate may be of no legal effect given the terms of the MCE Act.  The Minister also refers to the provisions of the MCE Act having no effect for employees who receive a disability support pension under the Social Security Act 1991 (Cth) and whose employment is assisted by supported employment programmes (see Minimum Conditions of Employment Regulations 1993 (WA) ("MCE Regulations") Schedule 1, clause 3).

94       The Minister has suggested that the paragraph referred to above from Principle 9.2 be amended to add:

"…. provided that no employee shall be paid less than any applicable minimum rate of pay prescribed by the Minimum Conditions of Employment Act 1993."

The State Wage Principles - Consideration and Conclusion 

95       It is notable that neither CCIWA nor TLCWA made submissions regarding this issue, although it had previously been the subject of informal communications from the Minister to them.  There has been no suggestion that any particular problems have arisen or that there has been any particular confusion or underpayments arising from the interrelationships referred to above.  However, we accept that there is a degree of complexity to the interrelationships between the various provisions which may require that some guidance is specified within the Principles.  That complexity commences with the requirement in s 5(2) of the MCE Act which provides:

"A provision in, or condition of, an employer-employee agreement, an award or a contract of employment that is less favourable to the employee than a minimum condition of employment has no effect."

96       There are exclusions from the minimum wage provided by the MCE Act.  Firstly, persons who receive a disability support pension and whose employment is supported by supported employment services are not employees for the purposes of the MCE Act (see MCE Regulations, Schedule 1, clause 3).  Secondly, s 9 of the MCE Act provides that the employer and employee may agree to a weekly rate of pay other than the minimum weekly rate if the employee is either permanently or temporarily mentally or physically disabled and the agreement is in writing.

97       We consider that the MCE Act makes clear that there can be certain arrangements for contracting out of, or exclusions from, the minimum wage, but that it may avoid confusion if Principle 9.2 is amended by the insertion of the provision suggested by the Minister.  Accordingly we will amend Principle 9.2 by adding the words:

"… provided that no employee shall be paid less than any applicable minimum rate of pay prescribed by the Minimum Conditions of Employment Act 1993."

98       The issue though of whether those under-rate, aged and infirm workers clauses contained in awards could breach the Equal Opportunity Act 1984 has merely been raised but has not been addressed before us.   This may be a subject upon which interested parties may wish to comment in the future.

MINUTE OF PROPOSED GENERAL ORDER

99       The minute of proposed General Order now issues.  A speaking to the minutes, if required, will occur on Friday, 19 June 2009 at 11:30 am.  The Commission should be advised by 4:00 pm on Wednesday, 17 June 2009 whether or not a speaking to the minutes is requested.