The NSW Government has introduced significant amendments to state industrial relations legislation. Those amendments follow significant promises the Government made to the Union movement prior to its election, and the recommendations made to the Government by the Industrial Relations Taskforce it established shortly after its election. This week, the Industrial Relations Amendment Bill 2023 (NSW) (Bill) passed through both houses of parliament, and it is expected to soon receive royal assent and come into effect. Our summary of the key changes is below.

Wages Cap Repealed

The Bill repeals the provision of the Industrial Relations Act 1996 (NSW) which requires the Commission to give effect to the Government’s declared wages policy. This wages cap has been seen as a restriction on the Commission’s ability to exercise its discretion taking into account all factors relevant to a dispute in circumstances the resolution of a dispute would lead to increased employee-related costs which were not offset by employee-related costs savings. The repeal of this provision was foreshadowed before the election and was a core commitment that was made by the new Government. The removal of this limitation on the Commission’s powers is likely to lead to additional claims by unions in respect of public sector conditions of employment.

The apparent trade-off for this amendment is the inclusion of the fiscal position and outlook of the Government as a mandatory consideration for the Commission in respect of the Commission’s function in determining public sector conditions of employment. It is not yet know what comparative weight will be given to this factor by the Commission, amongst the various factors in any given dispute.

Mutual Gains Bargaining

The Bill introduces the new concept of ‘mutual gains bargaining’ in respect of public sector and local government employers. Where a union and employer agree to engage in mutual gains bargaining, the Industrial Relations Commission will be required to act as a facilitator of these bargaining processes unless the parties appoint an alternative third party facilitator. The bargaining is underpinned by principles of collaboration and identification of areas of mutual need and desire and aims to build consensus. The process is underpinned by good faith bargaining obligations. This is similar to the federal system.

The facilitator or any party to the bargaining may declare the bargaining unresolved and give a report to the Commission regarding the conduct of the parties during bargaining and the outstanding issues. This will be treated by the Commission as a notice of dispute and will proceed through the Commission’s ordinary processes. Any arbitration following this process will take into account the parties’ conduct during mutual gains bargaining.

Reintroduction of the Industrial Court

In a change which has the potential to affect both public sector and private sector employers across the state, the Bill re-establishes the Industrial Relations Commission in Court Session, also known as the Industrial Court. The Industrial Court will resume its pre-2016 jurisdiction, and will have broad power to:

1. deal with offences and civil contraventions under work health and safety, worker’s compensation, workplace surveillance and explosives legislation;
2. make declarations and award remedies in respect of unfair contracts of employment;
3. make declaration of law in respect of any matters over which the Industrial Relations Commission has jurisdiction;
4. deal with appeals in accordance with certain superannuation legislation; and
5. make orders in respect of underpayment claims in excess of the small claims limit.

These changes consolidate in the Industrial Court work-related enforcement mechanisms which were previously allocated variously to the District Court and Supreme Court. The Industrial Court will be a superior court of record with equivalent status to the Supreme Court.

Reintroduction of Regional Allocations for the Industrial Relations Commission

The Bill reintroduces the practice of allocating members of the Industrial Relations Commission to particular regional areas of responsibility. This allows a greater level of local knowledge in respect of peculiarly regional matters to be relied upon.