The Tax Office has put controversial pay rises for its highest paid executives on ice, blaming wider economic conditions for the move.
ATO boss Chris Jordan says the pay rises for his 'Senior Executive Service' are on hold until a pay deal with the Tax office's 19,000 rank-and file public servants can be resolved after three years of industrial strife.
But peace seems a distant prospect, with one union opening up the new year with an aggressive legal move, taking the revenue agency to the Fair Work Commission, alleging breaches of the workplace bargaining rules.
Mr Jordan angered much of his workforce in December 2015 when he ordered the wage hike for senior executives just hours after a proposed pay deal, averaging 2 per cent a year, for tens of thousands of rank-and-file public servants at the ATO was crushed in a staff ballot by a margin of 85 to 15 per cent.
More than 200 of the elite 'senior executive service' were awarded pay rises with the "front loading" of 3 per cent meaning that many of ATO bosses would have banked annual pay rises of more than $9000.
But they will not be getting the next 1.5 per cent component of the rise, which was due to be paid on January 1, for six months and maybe longer.
"After conferring with the Executive, the Commissioner has decided to defer consideration of the second instalment of the pay increase if 1.5% and will reconsider this matter towards the end of this financial year," senior officials were told in an email on Wednesday.
"The Executive sincerely hopes we will be well progressed in having a new EA for non SES approved by that time."
An official ATO spokesperson said on Thursday that wider economic conditions and generally low wage growth had played a role in the decision to put the pay rises on ice.
"The Commissioner has deferred consideration of a 1.5 per cent pay rise for SES until mid-2017," she said.
"This decision has been made in light of the current economic situation, including the negative growth and record low wage growth of 1.9 per cent over the past year and budgetary pressures."
Meantime, the Australian Services Union has lodged an action with the Fair Work Commission seeking bargaining orders against Mr Jordan.
The union alleges the Commissioner is unreasonably withholding information it needs to participate properly in the bargaining process .
But the ATO says the union is on a "fishing expedition" and intends to draw the process into "unproductive and costly litigation," alleging the ASU has a track record of such activity.
The Tax Office's lawyers have asked for a directions hearing at the FWC, but the union is not happy.
"This is a delaying tactic," union official Jeff Lapidos wrote to his members.
"Commissioner Jordan is saying that he is at an impasse with the Unions and the ATO's employees.
"He again says his December 2016 proposal was the best offer he could make given the Government's Bargaining Policy.
"Of course, Commissioner Jordan has said that before previous votes, only to later improve his offer."
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