Pay equity under the Fair Work Act - Equal Remuneration Orders

Pay equity under the Fair Work Act - Equal Remuneration Orders

An equal remuneration order is an order that the Fair Work Commission (‘FWC’) is empowered to make to ensure equal remuneration (pay and other workplace entitlements) for all employees performing workplace duties and tasks of equal or comparable value, no matter what their gender. A party (for example, a worker or a union) can apply for an equal remuneration order, or the FWC can initiate a proceeding for one itself.

This blog will discuss who is able to apply for an equal remuneration order (‘ERO’), and what the FWC must consider when deciding an application for an ERO.

Background to equal remuneration orders

Before 1973, it was standard for a Federal Award to nominate different rates of pay for men and women performing the same work. A woman’s rate would typically be set at roughly 85% of a man’s rate.

This entrenched discrimination was rationalised based on a belief that women do not hold “breadwinner” responsibilities within a family, and thus women were not seen to be entitled to the ‘breadwinner component’ of a man’s remuneration.

Since that time, such a distinction in rates of pay has been unlawful in recognition of the fact that a person’s gender does not necessarily determine their responsibilities as a provider for their family.

In spite of significant steps to address the gender pay gap, it persists. Its continued existence is influenced by a number of contributing factors which together result in womens’ ordinary full-time remuneration being between 17% and 23% lower than men’s, depending on the method of calculation.

One of those contributing factors is the historical ‘devaluation’ or ‘undervaluation’ of female-dominated professions. This factor has been recognised in the industrial relations sphere since at least the 1970s. In an effort to combat this, equal remuneration provisions were introduced into the federal industrial legislation in 1993, to allow the industrial umpire to make orders addressing pay equity.

Equal remuneration orders under the Fair Work Act

The Fair Work Act 2009 gave Fair Work Australia (as it was then known) the power to make equal remuneration orders to address these devaluations or undervaluations. Since 2012, that power has been held by the FWC.

Unfortunately, in the 30 years since equal remuneration provisions were introduced in 1993, to 2023, there has only been one successful case (in the social and community services sector). This is largely because the requirements to allow an order to be made have been too technical and impractical.

In 2022, the Albanese Government took steps to expand that power in the Fair Work Legislation Amendment (Secure Jobs, Better Pay) Act 2022. The full effect of these recent amendments has yet to be realised.

Who can make an application for an equal remuneration order?

The FWC can make an equal remuneration order on its own initiative. Alternatively, the Sex Discrimination Commissioner or an employee who will be affected by an ERO or their union may make an application for an equal remuneration order.

What does the Fair Work Commission look at when considering an equal remuneration order?

When the FWC considers an application for an ERO, it must form an expert panel to decide the matter. They are required to take into account orders and determinations made by the Minimum Wage Panel (another type of expert panel of the FWC) in annual wage reviews and the reasons for those orders and determinations.

They may also take into account comparisons within and between occupations and industries to establish whether the work has been undervalued on the basis of gender or whether the work has been historically undervalued on a gender basis.

The FWC does not need to be convinced that the difference in pay is due to a discriminatory reason. They need only find that there is an undervaluation of work and that undervaluation is based on gender.

The new amendments clarify that where the FWC undertakes a comparison with other occupations/industries, that comparison is not limited to similar work, and significantly does not need to be a comparison with an historically male dominated occupation/industry.

If the FWC is satisfied that there is not equal remuneration for employees performing work of equal or comparable value, it must make an order for equal remuneration.

What can an equal remuneration order do?

If the FWC decides to make an ERO, it may only be to increase remuneration. It cannot make an order to reduce remuneration to provide pay parity.

The FWC may choose to implement the order in stages if it thinks it is not feasible to introduce equal pay immediately at the commencement of the order. The FWC might, for example, implement this in response to an argument from an employer that it would be too burdensome to increase remuneration immediately.

Contravening an equal remuneration order

An employer who contravenes an equal remuneration order is vulnerable to a civil penalty. If an employer contravenes an ERO, an application can be made by an employee affected by the ERO, their union, or the Fair Work Ombudsman to the Federal Circuit and Family Court of Australia to enforce it.

Equal remuneration orders cannot be made retrospectively

A recent decision of the FWC has made it clear that equal remuneration orders can only be made in relation to current employees of an employer and cannot be retrospective. That is, it cannot order ‘backpay’.

In Sabbatini v Peter Rowland Group Pty Ltd [2023] FWCFB 127, the Expert Panel of the FWC heard an application from Ms Sabbatini who was a Chef de Partie at Peter Rowland Group, but her employment had ended before her equal remuneration order application.

She was able to show the Panel that she was being paid significantly less than her full time Chef de Partie peers who were male. However, the Panel decided that, because she was no longer an employee of the Peter Rowland Group, she was not able to make an application for an equal remuneration order. The Panel was unable to make an order on its own initiative for the same reason.

The Panel also found that the Fair Work Act did not give them the power to order her former employer to provide her with back pay. It found that EROs were designed to only apply ‘prospectively’ (that is, they may only affect payments made to an employee or a group of employees made after the date of the order) rather than retrospectively.

Get help from an employment lawyer

Despite significant headway in recent years in campaigns for equal pay for women, we are still some way off pay equality. If you and/or your colleagues believe your remuneration is not equal to your male counterparts, and that is due to gender, you should seek advice from your union or a lawyer.

Hall Payne’s award-winning employment law team can assist you with any workplace issues or disputes, including those related to remuneration.

Contacting Hall Payne Lawyers

You can contact us by phone or email to arrange your consultation; either face-to-face at one of our offices, by telephone or by videoconference consultation.

Phone: 1800 659 114

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  This article relates to Australian law; either at a State or Federal level.

The information contained on this site is for general guidance only. No person should act or refrain from acting on the basis of such information. Appropriate professional advice should be sought based upon your particular circumstances. For further information, please do not hesitate to contact Hall Payne Lawyers.

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