Fair Work Commission

Overview

The AWRS collected information from enterprises about the types of industrial instruments used to set wages for its employees.

The AWRS also canvassed the reasons why enterprises use particular instruments for setting pay. This information can be used to give context to the employment practices that enterprises have in place.

Wage-setting and outcomes (in this report) provides further analysis of wage-setting and outcomes and explains some of the challenges of collecting and analysing this information.

This section of the report provides an overview of the different arrangements for setting pay, which can be a proxy for industrial instrument coverage, and an overview of the reasons why enterprises have particular instruments in place.

As presented in Wage-setting and outcomes (in this report), a relatively small proportion (14%) of enterprises reported using enterprise agreements to set wages for at least 1 employee.

Of note, Table 5.4 presents workforce estimates for application of these pay-setting methods which demonstrates that the incidence of enterprise agreement usage is significantly different to the degree of coverage of wage-setting arrangements across the employee workforce.

As presented in Figure 4.2, almost three-quarters (74%) of the enterprises with an agreement in place had just 1 enterprise agreement. A greater proportion of large enterprises had more than 1 agreement in place, with 40% reporting they had 3 or more.

Source: AWRS 2014, Employee Relations survey.

Base = 812 enterprises.

The enterprises that had an agreement in place were asked follow-up questions about why the enterprise had an agreement in place.

As demonstrated in Table 4.3, the most commonly cited reasons for having an agreement in place were to reward employees with higher wages than the applicable award rate (21%), due to demand from employees or employee representative bodies (22%) and that award terms and conditions were not suitable or flexible enough for the enterprise (20%).

Source: AWRS 2014, Employee Relations survey.

Base = 774 enterprises, percentages by cell. Enterprises that did not know whether there was an enterprise agreement in place are excluded from the analysis.

Columns will not add to 100% as multiple responses were permitted.

Enterprises that did not have an agreement in place were asked whether it had been considered and the reasons why they had not put an agreement in place. Most (80%) of these enterprises had not considered putting an enterprise agreement in place.

As demonstrated in Table 4.4, the reasons reported by enterprises differed according to the mix of pay-setting arrangements within the enterprise.

Among enterprises that only used awards to set pay for their employees, almost half (47%) indicated that they did not have an enterprise agreement in place because award rates and conditions were adequate. This was also the most commonly cited reason for enterprises with a mix of award and individual arrangements (33%).

However, the most commonly cited reason for not having an enterprise agreement in place among enterprises that were only using individual arrangements was a preference to negotiate with employees individually rather than collectively (38%).

Of note, reasons for award usage were canvassed in the Award Reliance Survey undertaken by the Workplace Research Centre, University of Sydney in 2013 on behalf of the Commission.

The main reasons cited in that research for enterprises in that research paying exactly the award rates were that enterprises felt that awards provided fair and appropriate remuneration and affordability.

Source: AWRS 2014, Employee Relations survey.

Base = 2177 enterprises. Enterprises that did not know whether a particular method of setting pay was used, or chose not to provide a response, are excluded from the analysis. Also excluded are enterprises that did not know if an enterprise agreement had been considered. Percentages by cell.

Columns will not add to 100% as multiple responses were permitted.