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Last updated: 29 November 1999

Public Service Act 1999 Advice No. 16: Machinery of Government changes

Introduction

This advice is one of a series of advices to be issued by the Public Service and Merit Protection Commission (PSMPC) concerning the Public Service Act 1999 (the new PS Act) and the Public Employment (Consequential and Transitional) Amendment Act 1999 (the PECTA Act). It is proposed that the new legislation will come into operation on 5 December 1999 and the information contained in this advice will take effect on commencement of the legislation.

Key legislative references

2 Section 72 of the new PS Act is the head of power for moving employees to give effect to Machinery of Government (MoG) changes. Under s. 72(1), the Public Service Commissioner is able to do any of the following, if the Commissioner is satisfied that it is necessary or desirable in order to give effect to an 'administrative re-arrangement':

1. move APS employees to another Agency (without anyone's consent);
2. determine that persons cease to be APS employees and become employees of a specified Commonwealth authority;
3. determine that non-APS employees cease to be non-APS employees and become engaged as APS employees in a specified Agency; and
4. engage any person as an APS employee in a specified Agency.

3 There is no power under the new PS Act to move employees out of the APS to non-Commonwealth employment.

4 The term 'administrative re-arrangement' is defined in s. 72(6) as 'any increase, reduction or re-organisation in Commonwealth functions, including one that results from an order by the Governor-General'. Subsection 72(6) also defines a 'Commonwealth authority' as including 'a company in which the Commonwealth has a controlling interest' and a 'non-APS employee' as 'a person who is employed by the Commonwealth or by a Commonwealth authority, but does not include an APS employee'.

5 Chapter 4 of the Public Service Commissioner's Direction provides that an engagement under ss. 72(1)(c) or (d) is not subject to the normal merit selection requirements. Under the Public Service Regulations, however, the engagement of a person under ss. 72(1)(c) and (d) as either an ongoing employee or as an employee engaged for a specified term or the duration of a specified task, where the period of employment is more than 12 months, will need to be notified in the Gazette by the gaining Agency.

6 Subsections 72(3) and (4), and the regulations made for the purpose of s. 72(5), provide for certain matters in relation to remuneration and other conditions of employment for employees in categories (a), (b) and (c) above. This is discussed in more detail in the section below on Remuneration and Other Terms and Conditions of Employment.

7 The powers in s. 72 replace the following provisions of the old PS Act:

• ss. 29, 33C, 51AA and 82BA in relation to movements within the APS;
• s. 81B in relation to transfers into the APS from either Commonwealth or non-Commonwealth employment; and
• s. 81C in relation to transfers out of the APS to non-APS Commonwealth employment.

8 Following the repeal of the mobility provisions in Part IV of the old PS Act, staff transferred out of the APS to non-APS Commonwealth employment will have no automatic rights of return to the APS.

MoG changes under the new PS Act

9 In future, MoG changes will be handled in a more streamlined way than under the old PS Act. For example: for moves within the APS, there will no longer be a requirement formally to abolish and recreate offices in which to move the staff; and for transfers into and out of the APS, there will no longer be a requirement for the Public Service Commissioner formally to seek separate Ministerial certification before approving transfers of staff.

10 In seeking the exercise of the Commissioner's powers under s. 72 of the new PS Act, agencies will need to indicate whether the proposed change has been endorsed by the Agency Minister(s) and/or the Prime Minister.

11 The following principles will apply to MoG changes in the future.

Staff follow function

12 The principle that 'staff follow function' will generally apply to transfers of functions within the APS and to transfers between the APS and non-APS Commonwealth bodies. The operation of this principle may be limited, however, by the following factors:

• where a MoG change involves the duties usually performed by the employee being performed at a different locality, an employee will not be required to move with their function but may be given the opportunity to do so;
  • in these circumstances, different locality has been interpreted to mean a relocation from one capital city to another, or a move of a similar scale such as from a country town to a city, and it would generally be necessary and reasonable for the employee to move house in order to maintain that employment;
• where a function is to be transferred to a non-APS organisation which is to operate as a commercial body in competition with private sector providers, it is generally accepted that the new body should have the flexibility to determine the level of staffing it needs;
  • the extent to which staff follow function in such cases will be determined by such factors as the level of staffing required by the new organisation and the extent to which the functions of the new body correspond to those performed by the APS Agency;
  • once the level of staffing has been determined, the gaining agency is expected to be staffed to the maximum extent possible from the relevant employees of the APS Agency to ensure that the gaining agency has adequate and appropriate staffing resources to be able to perform its functions immediately.

13 The movement of staff affected by the transfer of a function into the APS from a non-Commonwealth organisation will continue to be on a voluntary basis. Under s. 72(1)(d) of the new PS Act, the Public Service Commissioner will be able to engage, as an APS employee, a person who was previously performing the function. The usual procedure would be for offers of employment to be made to some or all of the persons concerned and those accepting the offers would be engaged under this subclause. The engagement of an employee under this subclause may be made subject to conditions notified to the employee, including those contained in s. 22(2) of the new PS Act.

Costs to the Commonwealth are to be kept to a minimum

14 In any MoG change involving the transfer of staff from the APS to non-APS Commonwealth employment, it is important that APS agencies are sensitive to issues concerning the commercial viability of the new body and their ability to introduce more flexible employment arrangements. There should be appropriate consultation between the responsible Minister(s) and the Minister for Employment, Workplace Relations and Small Business, the Minister for Finance and Administration and the Minister Assisting the Prime Minister for the Public Service on these matters.

• In March 1998 the Government agreed to a framework for the management of HR issues relating to corporatisation/privatisation of Commonwealth functions with a view to improving the coordination, planning and Ministerial accountability for employment outcomes. The framework includes principles to guide decision making on staffing and employment conditions matters and requires that a human resource management strategy be incorporated into each proposal bought forward to Cabinet or the Expenditure Review Committee.
• Responsibility for developing the human resource strategy rests with the relevant Portfolio Minister and the Minister for Employment, Workplace Relations and Small Business, in consultation with the Ministers for Finance and Administration and (in APS cases) the Minister Assisting the Prime Minister for the Public Service.

15 In seeking to limit the costs associated with the transfer of staff to non-APS Commonwealth bodies and to minimise the retrenchment of APS employees, the effective implementation of the 'staff follow function' principle will be important:

• as noted above, situations may arise in a MoG change which involve the movement of employees out of the APS to non-APS Commonwealth employment where the gaining body's staffing requirements are less than those required for the performance of the function in the APS. In such cases, there should be appropriate consultations between the affected agencies and the PSMPC over the use of the Commissioner's powers under s. 72; and
• the timing of any redundancies arising out of a MoG change need to be considered carefully, including whether it is preferable to undertake any necessary restructuring prior to the transfer of staff to the new body to help avoid transferring unnecessary liabilities to the new organisation.

Remuneration and other terms and conditions of employment of staff

16 The new PS Act and Public Service, Regulations set out certain arrangements in relation to the remuneration and other conditions of employment of staff affected by MoG changes. Extracts from the Act and Regulations are at Attachment A.

Employees transferred within the APS

17 Under s. 72(5) of the new PS Act, regulations may be made which set out the arrangements for determining any variation of the remuneration and other conditions of employment applicable to APS employees who are moved to another Agency under s. 72(1)(1)(a). Regulations will provide that:

• the annual salary of an employee affected by a such a move will be the greater of the salary that the person was entitled to before the move or the annual salary payable after the move in the gaining Agency;
  • in other words, a person who is transferred to another APS Agency as a result of a MoG change will be no worse off in terms of annual salary than they were before the move; and
  • if higher salaries apply in the gaining Agency, the employee will be entitled to receive that higher salary;
• the other terms and conditions of employment of an employee affected by such a move are those that apply in the gaining Agency, with the proviso that the Head of that Agency may determine, under s. 24(1) of the new PS Act, that some or all of the terms and conditions of employment of the transferring staff are to be the same as those that applied to the employee or group of employees immediately before the move if the conditions are better than those in the gaining Agency.

18 Such a determination:

• may be made before or after the move occurs, but will have effect no sooner than the date the staff are moved;
• must involve consultation with the APS employees affected by the move, or the class of employees that includes the APS employee; and
• ceases to have effect when the terms and conditions of employment applying to the transferred employee in the gaining Agency are next varied by way of a change to an Award, certified agreement or AWA.

19 It should be noted that under s. 24(1) of the new PS Act, a determination made by an Agency Head cannot reduce the conditions of employment that an employee is entitled to under an Award, certified agreement or AWA. Finally, it is important to note that, where no determination is made by the Agency Head of the gaining Agency, the staff affected by a MoG change are covered by the gaining Agency's terms and conditions of employment.

20 These arrangements in relation to moves within the APS supersede those set out in DEWRSB's Supporting Guidance for the Policy Parameters of Agreement Making in the APS, May 1999. The Policy Parameters are being amended to delete references to MoG issues. The arrangements set out in the new PS Act and Regulations override any specific arrangements that have already been included in any Second Round Agreements.

Employees transferred to non-APS Commonwealth employment

21 The effect of ss. 72(3) and (4) of the new PS Act is that, where an APS employee is transferred out of APS employment to a non-APS Commonwealth authority under s. 72(1)(b) of the new PS Act, the employee is entitled to remuneration and other terms and conditions of employment that are no less favourable than the remuneration and other terms and conditions of employment the person was entitled to in the APS Agency.

22 This provision continues in force until there is a variation in the terms and conditions of the non-APS Commonwealth body which affects the APS employees who have been transferred to that body.

Employees transferred into the APS from non-APS Commonwealth employment

23 Under s. 72(5) of the new PS Act, regulations may set out the arrangements for determining any variation of the remuneration and other conditions of employment applicable to a person who ceases to be employed by a non-APS Commonwealth employer and becomes engaged as an APS employee under s. 72(1)(c). Regulations will provide that:

• the remuneration and other terms and conditions of employment of an employee affected by such a move are those that apply in the gaining Agency, with the proviso that the Agency Head may determine, under s. 24(1) of the new PS Act, that the remuneration and some or all of the terms and conditions of employment of the transferring staff are to be the same as those that applied to them immediately before the move.

24 Such a determination:

• may be made before or after the move occurs but will have effect no sooner than the date the staff are moved;
• must involve consultation with the person affected by the move who is to be, or who has become, an APS employee, or a class of persons to be moved that includes the person; and
• ceases to have effect when the terms and conditions of employment applying to the transferred employee in the gaining Agency are next varied by way of a change to an Award, certified agreement or AWA.

25 It should be noted that, under s. 24(1) of the new PS Act, a determination made by an Agency Head cannot reduce the conditions of employment that an employee is entitled to under an Award, certified agreement or AWA. Finally, it is important to note that, where no determination is made by the Agency Head of the gaining Agency, staff affected by a MoG change are covered by the gaining Agency's terms and conditions of employment.

Employees engaged as an APS employee under s. 72(1)(d)

26 As noted above, the movement of staff affected by the transfer of a function into the APS from a non-Commonwealth organisation will continue to be on a voluntary basis. The terms and conditions of employment of persons offered employment in the APS under this section will be subject to negotiation betweeen the relevant Agency and the persons concerned.

Transitional arrangements

27 Subsection 51AA(3) of the old PS Act operates to preserve staffing action in train at the time of a MoG change involving the transfer of employees from one APS Agency to another APS Agency. Any action outstanding at the time the new PS Act comes into effect will continue to be preserved by transitional regulations made under the PECTA Act. There will also be a transitional regulation made which preserves the effect of any existing determinations made under either ss. 81B(5) or 81C(3) of the old PS Act.

28 In addition, the PECTA Act sets out transitional arrangements for staff who have been compulsorily transferred out of the APS under s. 81C of the old PS Act and who acquired second tier mobility rights under that Act. Further details of these arrangements are contained in Advice No 27 - Regulations under sections 6 and 7 of PECTA (former Part IV Mobility).

Further advice

29 Urgent enquiries from Comnet members and their senior staff should be made by E-mail to psact@apsc.gov.au or the PSMPC's Helpline on 6202 3859.

30 Advice from DEWRSB is accessible through the government employment web sites at www.dewrsb.gov.au or through the PSMPC's web site.

 

Jeff Lamond
Team Leader
Staffing, Structures and Performance Team

26 November 1999

Attachment A: Extracts from the new Public Service Act and Regulations dealing with remuneration and other conditions of employment of staff affected by MOG changes

Under section 72(5) of the new PS Act, regulations may prescribe arrangements for determining any variation of the remuneration and other conditions of employment applicable to APS employees moved to another Agency and to non-APS employees who become engaged as APS employees in a specified Agency.

Movements within the APS - s72(1)(a)

It is intended that the Public Service Regulation provide that:

2. The annual salary that applies to the APS employee on the day on which the move occurs is the greater of:
   1. the annual salary that applied to the APS employee immediately before the move; and
   2. the annual salary that would, apart from this regulation, apply to the APS employee after the move.
3. Before or after the move, the other conditions of employment of the APS employee may be varied:
   1. after consultation by the Agency Head with:
      1. the APS employee; or
      2. that APS employee and the other APS employees (if any) who are to be or who have moved to the Agency; or
      3. a class of the APS employees who are to be or who have moved to the Agency that includes the APS employee; and
   2. in accordance with a determination under subsection 24 (1) of the Act to the effect that some or all of the conditions of employment are to be the same as those that applied to the APS employee immediately before the move; and
   3. to have effect no sooner than the day on which the move occurs.

   Note A determination by an Agency Head under subsection 24 (1) of the Act is of no effect to the extent that it would reduce the benefit to an APS employee of a condition of employment applicable to the employee under an award, certified agreement or AWA.

4. However, if:
   1. a determination mentioned in paragraph (3) (b) applies to the APS employee; and
   2. an award, certified agreement or AWA:
      1. commences on or after the day on which the APS employee moves; and
      2. applies on its face to the APS employee or to a class of APS employees that includes the APS employee;

      the determination mentioned in paragraph (3) (b) ceases to apply to the APS employee, and the conditions of employment under the award, certified agreement or AWA (as the case may be) apply to the APS employee.

Movements out of APS employment - s72(1)(b)

Sections 72(3) and (4) of the new PS Act provide that:

3. If an APS employee (the transferred employee) becomes an employee of a Commonwealth authority under paragraph (1)(b), the employee is entitled to remuneration and other conditions of employment that are not less favourable than the terms and conditions to which the employee was entitled as an APS employee immediately before ceasing to be an APS employee, under:
   1. an award, certified agreement or AWA; or
   2. a determination under this Act.
4. Subsection (3) ceases to have effect on the next occasion when there is a relevant variation in remuneration and conditions in the Commonwealth authority. For this purpose, relevant variation means a variation that:
   1. results from the making or variation of an award, certified agreement or AWA; and
   2. applies to the transferred employee, or to a class of employees that includes the transferred employee.

Movements into the APS from non-APS Commonwealth employment - s72(1)(c)

It is intended that the Public Service Regulation provide that

2. Before or after the engagement, the remuneration and other conditions of employment of the person may be varied:
   1. after consultation by the Agency Head with:
      1. the person; or
      2. that person and the other persons (if any) who are to be or who have become engaged as APS employees; or
      3. a class of the persons who are to be or who have become engaged as APS employees that includes the person; and
   2. in accordance with a determination under subsection 24 (1) of the Act to the effect that some or all of the remuneration and other conditions of employment are to be the same as those that applied to the person immediately before the person ceased to be employed as a non-APS employee; and
   3. to have effect no sooner than the day on which the person becomes engaged as an APS employee.

   Note: A determination by an Agency Head under subsection 24 (1) of the Act is of no effect to the extent that it would reduce the benefit to an APS employee of a condition of employment applicable to the employee under an award, certified agreement or AWA.

3. However, if:
   1. a determination mentioned in paragraph (2) (b) applies to the person; and
   2. an award, certified agreement or AWA:
      1. commences on or after the day on which the person becomes engaged as an APS employee; and
      2. applies on its face to the person as an APS employee or to a class of APS employees that includes the person;

   the determination mentioned in paragraph (2) (b) ceases to apply to the person, and the remuneration and other conditions of employment under the award, certified agreement or AWA (as the case may be) apply to the person.

Engagement of an employee of a non-Commonwealth body - s72(1)(d)

The movement of staff affected by the transfer of a function into the APS from a non-Commonwealth organisation will continue to be on a voluntary basis. The terms and conditions of employment of persons offered employment in the APS under this section will be subject to negotiation between the relevant Agency and the persons concerned. This is not prescribed under the new PS Act or in the regulations.

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