Industrial Relations Bill sees return of NSW Industrial Court

The Industrial Relations Amendment Bill 2023 passed in the final sitting week of NSW Parliament. Introduced by the state's Minister for Industrial Relations, Sophie Cotsis, the Bill will:

• amend the Industrial Relations Act 1996 (NSW) to
  • re-establish the Industrial Relations Commission in Court Session (the Industrial Court);
  • provide for mutual gains bargaining;
  • require the Industrial Relations Commission (the Commission) to consider the New South Wales government’s fiscal position and outlook in the exercise of the Commission’s functions about public sector employees; and
  • repeal section 146C concerning the duty of the Commission to give effect to government policies on conditions of employment of public sector employees prescribed by the regulations
• amend certain other legislation consequent on the re-establishment of the Industrial Relations Commission in Court Session.

Key takeaways

• The primary impacts of the Bill are aptly summarised in the second reading speech: “NSW will have a modern industrial relations system that enables fair wages to be negotiated and disputes to be resolved"
• The Bill contains amendments relating to dispute resolution and bargaining which apply to public sector employment. However, the recognition of mutual gains bargaining could signal similar developments more widely
• The Industrial Court may be considered more accessible by parties than the Supreme Court, which may translate into greater activity within that jurisdiction
• The removal of the public sector wages cap provides an opportunity for agencies to review and vary applicable industrial instruments, while also enabling staff to pursue significant wage increases after the restraints imposed by the previous limitation.

Explore the Bill in further detail by navigating to the relevant sections below:

Origins of the Bill

Return of the Industrial Court

Mutual gains bargaining

End of wage cap

Origins of the Bill

The rationale for the amendments is two-fold. Firstly, the Minns government intended to deliver on an election promise to abolish the public sector wages cap and ease the recruitment and retention crisis in the public sector. Secondly, the Bill responds and implements recommendations from the report of the Industrial Relations Taskforce (Taskforce).

The government established the Taskforce in June 2023 and selected the newly appointed Fair Work Ombudsman, Anna Booth, and the Hon. Roger Boland to lead consultations with stakeholders and present a report. The final report canvasses the following categories:

• interest-based bargaining;
• structure, powers, and functions of the Industrial Relations Commission;
• the modernisation of the Industrial Relations Act; and
• how any of the proposed changes may impact the local government sector.

The Taskforce engaged with 40 relevant stakeholders with an interest in the function of the NSW industrial relations landscape to inform the report. The recommendations propose a modernisation of the current system to include interest-based bargaining and the return of the Industrial Court.

Return of the Industrial Court

As recommended by the Taskforce, the Bill re-establishes the Industrial Relations Commission in Court Session as the Industrial Court of New South Wales and contains provisions regarding jurisdiction and membership.

Constitution of the Commission

The office of Chief Commissioner is abolished, and the title of Chief Commissioner is replaced with the President of the Commission. The Commission will consist of four distinct roles: a President, a Vice-President, Deputy Presidents, and Commissioners. The President, Vice-President and Deputy Presidents of the Commission are referred to as Presidential Members, separate to Commissioners.

The Governor may appoint a Presidential Member of the Commission as a member of the Industrial Court, referred to as a judicial member of the Commission. A Full Bench of the Commission in Court Session must include only judicial members. A judicial member of the court may also act as a conciliator or arbitrator at the Commission.

The revitalisation will allow for the Commission to operate both as a "tribunal for an arbitral purpose and as a separate industrial court for judicial purposes." Therefore, creation of rights will remain within the ambit of the Commission and enforcement will occur at the court level.

Status

Constitutionally, the court will act as a superior court of record with status equivalent to the Supreme Court and the Land and Environment Court.

Jurisdiction

Certain jurisdiction will be transferred from the Supreme Court, the District Court and the Commission to the Industrial Court. Key jurisdictional features of the court are set out as follows:

Appellate jurisdiction

The court may hear:

• proceedings on an appeal or case stated from an Industrial Magistrate or another court;
• proceedings on an appeal from a member of the Commission exercising the functions of the Commission in Court Session; and
• proceedings on a superannuation appeal.

Appeal may occur:

• from the Industrial Court to the Court of Criminal Appeal from the Full Bench of the Industrial Court in relation to criminal proceedings in the same way as those taken before a judge of the Supreme Court in its summary jurisdiction.

Transfer of proceedings

Transfer of proceedings may occur to the Industrial Magistrates Court and between the Supreme Court and the Industrial Court.

Mutual gains bargaining

The Bill inserts Chapter 2A into the Industrial Relations Act. The chapter provides for mutual gains bargaining and the modernisation of good faith bargaining, and sets out applicable bargaining principles, notification requirements and new facilitation and resolution provisions.

Principles

The principles of mutual gains bargaining in s129L are as follows:

• mutual gains bargaining is a collaborative approach to bargaining;
• parties to the bargaining are to identify and communicate their key needs to reach an agreement that maximises common interests and reconciles conflicting interests;
• the negotiations that are part of the bargaining are to be consensus-seeking in nature and parties are to work together to solve problems;
• the parties will aim to reach an agreement that meets the core needs of the parties so that the parties are satisfied with the content of the agreement;
• the bargaining is to be efficient in terms of time and resources expended;
• the bargaining aims to create, maintain or strengthen good relationships between the parties;
• the bargaining aims to ensure that each party is satisfied that their interests have been addressed.

Policy

The amendments will be introduced alongside government policy:

"The NSW government's Fair Pay and Bargaining Policy [to be implemented via a Premier's Memorandum] will enable public sector employees and unions to engage effectively with government agencies through a cooperative approach to bargaining, departing from the traditional adversarial approach to industrial relations. The policy aims to restore the sector to being an employer of choice and a leader in innovative work practices."¹

Commencement

Notification of intention to commence mutual gains bargaining can occur by written notice to the Commission by an industrial organisation or an employer who is or is likely to be a party to the bargaining.

The Commission can also recommend that the parties undertake mutual gains bargaining.

The Commission will act as a facilitator, or a third party mutually agreed upon may be appointed. A person must not be appointed as a facilitator unless they possess the skills, experience or qualifications prescribed by the regulations, if any.

Good faith in mutual gains bargaining

This chapter also clarifies the meaning of "good faith" in relation to mutual gains bargaining. The amendment proposes good faith to mean:

• attending and participating in meetings requested at reasonable times;
• providing other parties, as soon as practicable, with relevant information necessary to enable the other parties to make informed contributions to negotiations;
• considering proposals made by other parties and responding to the proposals as soon as practicable with reasons for the responses;
• refraining from capricious or unfair conduct that undermines other parties or the bargaining.

Good faith does not require parties to make concessions during bargaining or come to an agreement.

End of wage cap

The Bill repeals the wage cap on the public sector imposed by section 146C. In her second reading speech, Cotsis stated: "There is no doubt the wages cap has had a repressive effect on public sector bargaining, modernising awards and genuine engagement between employees, their unions and public sector agencies."

For more information about the Industrial Relations Amendment Bill 2023 and how the changes might apply to your organisation, please contact Lander & Rogers' workplace relations and safety legal experts.

¹ NSW Government Fair Pay and Bargaining Policy 2023