AREEA director of legal and migration services Amanda Mansini and AREEA employment lawyer Lucy Duggan summarise a recent ruling from the Fair Work Commission, granting wage increases coinciding with an automotive manufacturer’s business outlook.

DISPUTES in the bargaining space are almost a certainty under the current legislative regime. A recent arbitration carried out by the Fair Work Commission offers a good example of how the tools in the Fair Work Act can deliver a useful outcome for employers.

The Facts

Negotiations between the Australian Workers’ Union (AWU), the Australian Manufacturing Workers’ Union (AMWU) and automotive parts manufacturer Chassis Brakes International, had been ongoing for several months.

After some protected industrial action, the terms and conditions of a replacement enterprise agreement were largely agreed upon. However, the parties consented to arbitration of one remaining issue in dispute, being the first years’ wage outcome.

The unions sought a 5% increase, the employer wanted 3%.

The Decision

In consenting to arbitration, the parties also defined the factors to be taken into account by the Fair Work Commission (in a way more favourable than the Fair Work Act provides in a workplace determination of a bargaining matter) and the parameters of the issue to be decided. The FWC approached the arbitration within this agreed framework.

In consideration of the merits of the parties’ claims, the FWC held that the following six principles were relevant:

• The financial situation of the business;
• The economic environment;
• The desirability of maintaining the real value of wages of the employees who will be affected by the determination (noting that the agreed parameters meant that even the worst case ruling, at 3%, would deliver a real wage increase to employees);
• Size of the wage increase compared with outcomes elsewhere;
• History of wage increase at this particular site (noting that ‘circumstances might change, as they have at this workplace, and bargaining needs to adjust’); and
• The wages package as a whole.

The FWC also found that it was in the interests of both the company and the employees that the business ‘continues to operate and hopefully improves its profitability, viability and employment opportunities’.

Taking all of this into account, the FWC ordered a responsible wage increase of 3.5%.

Implications for Employers

This decision highlights the importance of an employer taking the initiative and framing the power of the FWC to finally resolve a bargaining dispute.

It is also a current example of the trend in reducing annual wage increases and the propensity of the FWC to take relevant factors including broader economic environment and community standards into account.

Case decision: Chassis Brakes International Castings Pty Ltd v AWU and AMWU [2013] FWC 5615 (15 August 2013)