2 min read

Terminating an enterprise agreement doesn’t undermine new bargaining

By Charles Power

If an enterprise agreement has passed its nominal expiry date, it will continue to operate unless terminated or replaced. However, any of  the persons covered by the agreement can apply to the Fair Work  Commission (FWC) for it to be terminated.

If such an application is made, the FWC must terminate the agreement if satisfied that it is not contrary to the public interest to do so and it considers termination is appropriate.

In determining the appropriateness of termination, the FWC must take into account whether the persons covered by the agreement want it to be terminated and the circumstances of those persons, including the likely effect that the termination will have on each of them.

The FWC has confirmed in Aurizon (2015) that in considering whether to terminate an expired enterprise agreement, the  FWC should not assume that termination will undermine good faith bargaining for a new enterprise agreement.

If the existing expired agreement does not or has ceased to deliver productivity benefits, termination of such an agreement might better support good faith bargaining for an agreement that delivers productivity benefits at the enterprise level. This has led to a series of applications to terminate expired enterprise agreements based on the shortcomings of the existing agreement, for example, NTEU v Murdoch University (2018).

In Gangell v Lobethal Abattoirs Pty Ltd T/A Thomas Foods International  (2018) an employee applied to the FWC to terminate a 2008 collective agreement-based transitional instrument (which under transitional legislation was deemed to be an enterprise agreement). The FWC delayed the determination of the application by two months to allow for both the recommencement of bargaining at the workplace level and for conciliation by the FWC.

On appeal the FWC Full Bench ruled the FWC at first instance was wrong to delay the determination of the termination application. The Full  Bench observed that the FWC’s approach did not align with the principle in the Aurizon case, i.e. a termination is not incompatible with good faith enterprise bargaining.

Moreover, there was a particular urgency to deal with the application, given it was asserted the agreement provided for earnings less than under the relevant modern award.

According to the Full Bench, the FWC should have scheduled a process for the hearing and determination of the application and, if it thought it desirable, scheduled concurrent conciliation conferences to assist the parties to make a new enterprise agreement.

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