Remuneration is a key component of the Defence employment package. It attracts people to join Defence and plays a significant role in retaining talent. Defence’s employment offer provides fair and competitive remuneration, consistent with the parameters laid down by the Government.

The diverse remuneration structures of the ADF and APS are explained further in this section.

Australian Defence Force members

The independent Defence Force Remuneration Tribunal, established under section 58G of the Defence Act 1903, is responsible for setting salary and salary-related allowances for ADF members.

The Workplace Remuneration Arrangement 2017–2020 is the framework that allows for annual wage adjustments for ADF members. It is part of the ADF remuneration initiative aimed at attracting and retaining military personnel, and forms a significant part of ADF members’ total employment package.

The Workplace Remuneration Arrangement increases salary and salary-related allowances in return for enhanced Defence capability. Other conditions of service are determined by the Minister for Defence under section 58B of the Defence Act. The current arrangement came into effect on 2 November 2017. Table 6.20 details salary ranges for permanent ADF members as at 30 June 2020.

Australian Public Service employees

APS (non-SES) employees have their terms and conditions of employment set out in an Enterprise Agreement made under the Fair Work Act 2009. The agreement is developed through consultation with employees and their representatives and is negotiated consistent with legislation and the Government’s bargaining policy.

The Defence Enterprise Agreement 2017–2020 nominally expired on 16 August 2020; however, it will continue to operate alongside the determination under section 24(1) of the Public Service Act 1999 signed by the Secretary, which provides three consecutive annual increases to salary and salary-related allowances, and preserves current conditions throughout the three-year period to August 2023.

Given the unprecedented nature of the global COVID-19 pandemic, the Government announced on 9 April 2020 that all Commonwealth agencies are to defer by six months their next scheduled increase to salaries and salary- related allowances. For the APS, this decision came into effect via a determination under section 24(3) of the Public Service Act 1999 signed by the Minister for the Public Service. This power is rarely used, being limited to situations where the circumstances are exceptional. The decision delayed the first Defence APS pay rise by six months from August 2020 to February 2021. The other pay rise dates in August 2021 and August 2022 remain unchanged.

Table 6.21 details Defence APS salary rates as at 30 June 2020. The majority of Defence employees receive salaries within the standard ranges. However, the Enterprise Agreement allows for remuneration and other benefits to be varied so that Defence can develop, attract and retain selected employees with the necessary skills and knowledge to deliver capability.

Table 6.22 shows the number of employment arrangements for SES and non-SES employees.

Australian Public Service benefits

All Defence APS employees enjoy a range of non-salary-related benefits. These include generous leave entitlements and access to flexible working arrangements such as flex time, part-time work and teleworking. Defence invests heavily in training and development of staff and has a number of formal and informal schemes to recognise exemplary performance and achievements.

Australian Defence Force superannuation

The Defence Legislation Amendment (Miscellaneous Measures) Bill 2020 was passed on 14 May 2020, with an effect date of 6 July 2020, allowing ADF members to continue contributing to ADF superannuation after leaving ADF employment.

Senior Leadership Group

As part of the response to the COVID-19 pandemic, Defence has supported a request from Government for a stay on increases to remuneration, entitlements and allowances, as well as any performance or incremental adjustments in salary for all SES employees and Star-ranked officers. Increases for higher duties and promotion are exempt from the deferrals.

During the reporting period to 30 June 2020, Defence had 21 executives who met the definition of key management personnel. Their names and lengths of term as key management personnel are shown in Table 6.23.

Australian Defence Force senior officers

All ADF senior officers (excluding statutory/public office holders) are remunerated under the 2017–2020 Australian Defence Force Workplace Remuneration Arrangement. Other non-pay-related conditions of service are determined by the Minister for Defence under section 58B of the Defence Act 1903.

Public officeholders

Public officeholders, including the Secretary and the Chief of the Defence Force, are remunerated under determinations decided by the independent Remuneration Tribunal under the Remuneration Tribunal Act 1973.

The Remuneration Tribunal determined no adjustment to remuneration for public offices in its jurisdiction for the period from 1 July 2020.

Senior Executive Service

SES terms and conditions of employment are set by a single determination made under section 24(1) of the Public Service Act 1999. The determination is supplemented on an individual basis by a common law agreement covering remuneration.

Performance pay

Non-SES APS employees move through their salary range subject to fully effective or better performance. Employees at the top of the range receive a 1 per cent lump sum bonus or a minimum payment of $725.00, whichever is the greater. This bonus is considered a form of performance pay.

SES employees may have their salary increased based on the outcome of their annual performance appraisal. An SES employee may also be paid a bonus at the discretion of the Secretary as a reward for exceptional performance.

Performance-based pay is not a feature of any existing ADF remuneration framework. Career development opportunities, including promotion, are the key means of recognition of performance.