Principles for interpreting enterprise agreements updated by FWC
Background
Recently, in an appeal lodged by the AMWU (the Union), a Full Bench of the Fair Work Commission (the Commission), which was headed by the President, was asked to consider whether employees covered by the Berri Pty Ltd (Leeton) Enterprise Agreement 2014-2017 (the Agreement) were entitled to be paid a laundry allowance for work clothing provided by the employer. In the process, the Commission updated the principles it established for interpreting enterprise agreements under the leading Golden Cockerel decision.
The Agreement provided a rate for laundry allowance in a schedule. However, the Agreement itself did not provide that laundry allowance would be payable. In fact, no laundry allowance had been paid under the Agreement.
First instance
At first instance, Lawrence DP determined that the clause was ambiguous. The ambiguity arose from the failure of the Agreement to specify how the allowance is to be paid and explain the basis of the payment. He then considered the surrounding circumstances. Ultimately, he determined that no laundry allowance was payable.
On appeal
On appeal, the Full Bench agreed that the clause was ambiguous. However, it found that two errors were disclosed in the decision at first instance regarding the surrounding circumstances. Lawrence DP relied on the subjective evidence related to the 1999 enterprise agreement, not the objective evidence surrounding the negotiation of the Agreement which was the subject of the dispute. He also wrongly relied on the post agreement conduct of the parties.
The Full Bench upheld the appeal and referred the matter back to another member of the Commission for hearing and determination. The parties were given the opportunity to lead whatever evidence they deemed appropriate in the rehearing.
Critically, the Full Bench in considering the appeal updated the principles for the interpretation of enterprise agreements it previously set in the Golden Cockerel decision.
Lessons for employers
What has changed as a consequence of this decision is that statements made to employees about the agreement and its effect prior to voting will be key to the interpretation of enterprise agreement clauses that are ambiguous. Further, the conduct of the parties following the approval of the agreement will only be relevant if it reflects the meeting of the minds on that issue.
Employers should ensure that they keep thorough records of all pre-vote employee communications. Communications which support the employer’s position on an issue will be of significant importance if a dispute subsequently arises in relation to that enterprise agreement issue.
If you would like to know more about this case or obligations on redundancy, please contact National Workplace Lawyers on (02) 9233 3989.
National Workplace Lawyers
Note — this is for information purposes only and does not purport to be comprehensive or to render legal advice.
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