APS Bargaining update: out with the old, in with the… interim?

Jennifer Wyborn, Belinda Miller
12 Oct 2022
Time to read: 3 minutes

The Australian Public Service Commissioner (APSC) has given a first glimpse of workplace relations policy for the Australian Public Service (APS) under the new Albanese Government, with an interim 3% pay rise and a promise of good things to come.

The APSC has issued the Public Sector Interim Workplace Arrangements 2022 (the Interim Arrangements), completely replacing the Liberal government’s controversial Public Sector Workplace Relations Policy 2020 (Workplace Relations Policy).

The times they are a’changin: bargaining in the APS

Bargaining within the APS is done on an agency level, meaning individual agencies negotiate with their employees for enterprise agreements. To ensure a level of consistency, proposed enterprise agreements and bargaining are subject to the review and approval of the APSC, which in turn is guided by a Government-approved central policy.

The previous Workplace Relations Policy took a restrictive approach to terms and conditions of employment. It featured the “no enhancements” rule, preventing agencies agreeing to any terms which enhanced employees’ conditions of employment overall and requiring any enhancement to be offset by a reduction in other conditions. It also capped wage increases to the Wage Price Index for the Private Sector, keeping public sector wage increases in line with the private sector and community expectations. In the June quarter 2022, the Wage Price Index sat at 2.7%.

The effect of the restrictive policy was that many agencies abandoned bargaining for new agreements and instead introduced determinations under section 24 of the Public Service Act 1999 (Cth), a mechanism which allows an Agency Head to unilaterally determine the terms and conditions of employment within that agency (subject to certain limitations). Many of these determinations sought to extend the life of an existing enterprise agreement, with adjustments made to allow for APSC-capped pay increases. This has meant that many agencies have not bargained for over five years.

It was widely expected that the Albanese Labor Government would shake up APS workplace relations, and take a less restrictive approach in line with its policy ideals. True to expectations, the APSC has announced that the Workplace Relations Policy has been abolished in its entirety and has been replaced with the Interim Arrangements.

A spoonful of sugar: What has been promised under the Interim Arrangements

The Interim Arrangements are a temporary measure and will only be in force from 1 September 2022 until 30 August 2023, at which point it is intended the APSC will be in a position to issue a new workplace relations policy. While this means they don’t contain much substantive policy, they have given a strong indication of the Government’s approach to APS employment and where they intend to go with future policy. The Interim Arrangements foreshadow some significant changes, which will appeal to employees and union representatives. Most notably, the Interim Arrangements contemplate APS-wide bargaining and common conditions across the APS. This would be a significant change designed to address disparity between agencies and support the Government’s “same job same pay” policy agenda.

The Interim Arrangements also establish a 3% remuneration increase, to be passed on to employees within the next 12 months. This might soften the blow for agencies who had commenced bargaining under the old Workplace Relations Policy but who had not yet finalised their proposed agreements. Agencies in that position are required to either cease bargaining or negotiate a maximum one-year duration agreement under the Interim Arrangements, and wait until the new bargaining policy is issued in 2023.

How does the 3% work?

The 3% remuneration increase provides certainty for APS employees about what their next pay increase will be, removing their dependence on the unpredictable Wage Price Index.

The pay increase is to be paid within the next 12 months. Most agencies would likely have a scheduled pay increase due to fall within that timeframe, in which case the Interim Arrangements require them to increase pay adjustment to 3% regardless of what was scheduled.

The Interim Arrangements create an administrative issue for agencies. They can’t simply unilaterally adjust employee pay increases. Instead, it is likely most agencies will need to use section 24 of the PS Act to pass on the 3% pay rise.

What this means for you

APS agencies should take immediate steps to ensure staff receive the 3% pay rise within the next 12 months. Depending on current industrial arrangements, this may involve amending or introducing an Agency Head Determination under section 24 of the PS Act. For those agencies who have already commenced bargaining, the Interim Arrangements mean delaying existing negotiations for the foreseeable future, a move that will hopefully be made more acceptable to staff by the 3% pay rise. Unions have already indicated that they believe staff deserve more than a 3% pay rise so be on alert for majority support determination applications as your agreement nears its expiry date ensure you have a good strategy in place to deal with any such application. .

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Clayton Utz communications are intended to provide commentary and general information. They should not be relied upon as legal advice. Formal legal advice should be sought in particular transactions or on matters of interest arising from this communication. Persons listed may not be admitted in all States and Territories.