Low CPI May Contribute to Low Wages Growth in Australia

On 27 July 2016, the Australian Bureau of Statistics ("ABS") released the Consumer Price Index ("CPI") for the June quarter, which rose by just 0.4 percent, following a fall of 0.2 percent in the March quarter. The CPI rose just 1.0 percent through the year to the June quarter 2016, the weakest annual rise in 17 years.

The biggest price rises for the June quarter were in medical and hospital services, petrol and tobacco, which were in part offset by price falls in domestic travel and accommodation, cars and telecommunication equipment and services.

Given that many employers and employees use the CPI as a gauge on wage increases, such a low figure may result in even lower wage growth in the second half of the year. Yearly growth in Australia's Wage Price Index ("WPI") to March 2016 was just 2.1 percent, the lowest level since 1998. The next WPI is due to be released on 17 August 2016.

In our May Update, we reported on the Fair Work Commission Expert Panel's ("Panel") decision to increase the national minimum wage by 2.4 percent and its plans to hold a preliminary hearing into whether a medium-term target for the national minimum wage should be adopted by the Panel (as part of the 2016–17 review). The date for the preliminary hearing has been set down for 24 October 2016, and final consultations for the Annual Wage Review 2016–17 are to be held on 17 and 18 May 2017. These low inflation figures, as well as figures for future quarters, are likely to feature heavily in support of an argument against any significant increase to the minimum wage from 1 July 2017.

Extension of Accessorial Liability to HR Adviser

The Fair Work Ombudsman ("Ombudsman"), the national workplace watchdog, has warned that accessorial liability for breaches of the FWA also applies to those involved in the decision-making process around strategy for and compliance with the FWA, including human resources managers and advisers.

Under s 550 of the FWA, a person is considered to have been involved in the contravention of the FWA, if the person has: (i) aided, abetted, counselled or procured the contravention; (ii) induced the contravention, whether by threats or promises or otherwise; (iii) been in any way, by act or omission, directly or indirectly, knowingly concerned in or party to the contravention; or (iv) conspired with others to effect the contravention.

In addition, the Ombudsman has indicated it will increasingly pursue accessories to breaches of the Act in circumstances where employers are no longer solvent and unable to pay underpaid workers. Not only are penalties likely to be sought against accessories but also orders for personal liability to repay underpaid workers.

As we reported in our June Update, the Coalition proposed increasing penalties associated with employers deliberately and systematically underpaying employees, from $10,800 to $108,000 for individuals and from $54,000 to $540,000 for corporations.

In light of the Ombudsman's recent comments regarding accessorial liability and the Coalition Government being likely to legislate to increase associated penalties under the Act, it is fair to say that HR managers and advisers are now on notice. They, along with employers, must ensure vigilance in compliance with workplace laws now more than ever.

ACTU Vows to Block Government's Proposed Industrial Relations Reforms in the Senate

In a recent media release, the Australian Council of Trade Unions ("ACTU") has responded to the results of the recent Federal election (which saw the Government retain power and Michaelia Cash returned as Employment Minister) by promising to frustrate any Government attempts to pursue industrial relations reform in the Senate. In particular, the ACTU said it would seek to block any bills to re-establish the Australian Building and Construction Commission and set up a Registered Organisations Commission.

ACTU President Ged Kearney stated that despite their re-election, the Coalition Government had no mandate for any "major and adverse" industrial relations ("IR") changes because of the failure of the Liberal Party to present its IR policies to voters as part of its election campaign. Mr Kearney said that the ACTU would attempt to work with the newly appointed Senate crossbenchers "to ensure they understand these bills are dangerous and deeply unfair to working Australians".

However, the Government is unlikely to be deterred by such warnings, with its focus likely to remain on negotiating with key Senate crossbenchers to ensure its substantial reform agenda can be achieved.