Award Modernisation

[2010] FWA 3857

[2010] FWA 3857

FAIR WORK AUSTRALIA

STATEMENT

Fair Work Act 2009
s.157— variation of modern award

Award Modernisation
(AM2010/66)

JUSTICE GIUDICE, PRESIDENT MELBOURNE, 20 MAY 2010

AWARD MODERNISATION – EXPENSE-RELATED ALLOWANCES

[1] This statement concerns the adjustment of expense-related allowances in modern awards. Modern awards which contain at least one expense-related allowance also contain a provision for adjustment of the allowance at the time of any adjustment to the standard rate. Should the standard rate in modern awards be adjusted as a result of the Annual Wage Review 2009-10, a process will be required to alter the amount of expense-related allowances at the same time.

[2] The award modernisation request made by the Minister for Employment and Workplace Relations, as amended on 16 June 2008, contains the following paragraph:

“27 The Commission is to ensure that all modern awards include an appropriate method or formula for automatically adjusting relevant allowances when minimum wage rates are adjusted.”

[3] In response to this paragraph the Australian Industrial Relations Commission (AIRC) developed a standard clause to deal with the adjustment of expense-related allowances in modern awards. The clause, allowing for variations in the nature of the allowances under the various modern awards, typically is in the following form:

“32.8 Adjustment of expense related allowances

(a) At the time of any adjustment to the standard rate, each expense related allowance must be increased by the relevant adjustment factor. The relevant adjustment factor for this purpose is the percentage movement in the applicable index figure most recently published by the Australian Bureau of Statistics since the allowance was last adjusted.

(b) The applicable index figure is the index figure published by the Australian Bureau of Statistics for the Eight Capitals Consumer Price Index (Cat No. 6401.0), as follows:

Allowance	Applicable Consumer Price Index figure
Carbon black overall allowance	Clothing and footwear group
Meal allowance	Take away and fast foods sub-group
Vehicle allowance	Private motoring sub-group
Tool allowance	Tools component of the household appliances, utensils and tools sub-group”

[4] Pursuant to s.286(1) of the Fair Work Act 2009 a determination varying modern award minimum wages that is made in an annual wage review comes into operation on 1 July in the next financial year. Should minimum wages in modern awards be varied in the current annual wage review, and assuming there are no exceptional circumstances, the variation will come into operation on 1 July 2010. This will trigger an increase in expense-related allowances from the same date.

[5] The standard clause provides that each expense-related allowance is to be increased by the percentage movement in the applicable index figure published by the Australian Bureau of Statistics since the allowance was last adjusted. The last general adjustment in allowances in federal awards was in August 2008 when the AIRC varied a large number of awards with effect from 1 October 2008. In August 2008 the most recent Consumer Price Index (CPI) publication was for the preceding June quarter. In the majority of cases, therefore, we would expect that expense-related allowances should be increased by the percentage movement in the applicable index figure between the June quarter 2008 and the March quarter 2010.

[6] In order to give interested parties adequate time to consider the position, arrangements have been made for the publication of draft variations to all expense-related allowances in modern awards. The drafts will be prepared on the basis that the CPI for the June quarter 2008 is the default starting point for the increase in the applicable index figure. The increase will therefore be calculated on the basis of the change in the applicable index between June 2008 and March 2010. It will be open to any interested party to make a submission supporting an increase based on a different time period or to raise any other relevant matter.

[7] The draft variations will be published, if necessary, shortly after the publication of the decision of the Minimum Wage Panel in relation to the Annual Wage Review. Any interested party may make a submission concerning a draft variation. 1 Where a submission involves a substantial objection to a draft variation, a process will be established with a view to Fair Work Australia determining the matter by 1 July 2010.

PRESIDENT

 1   Submissions can be lodged by email ([e-mail]), facsimile ([phone]), or at any Fair Work Australia office.

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