The Fair Work Principles ("FWPs") are
a procurement policy of the Commonwealth government which requires
that government suppliers have a particular form of dispute
settlement provision ("DSP") in new
enterprise agreements. This requirement does not sit comfortably
with the Fair Work Act 2009 and could lead to exposure for
government entities and their suppliers.
The Commonwealth government considers that best practice for
DSPs includes the capacity for one party to be able to refer a
dispute to independent arbitration. The FWPs reinforce that view by
requiring that procurement be only from suppliers who have DSPs
modelled on that practice in any new enterprise agreements (after 1
January 2010). However, that DSP model is not something that is
required under the Fair Work Act. A common alternative is
for enterprise agreements to make arbitration of disputes available
only by agreement of both parties to the particular dispute.
Prescribing only one method for arbitration of disputes to
occur, when the Fair Work Act allows for others, could
amount to a restriction on a workplace right of the parties to the
agreement – that is, the workplace right to use a
different DSP model. It follows that in these circumstances
applying the FWPs to refuse to engage a particular supplier could
amount to adverse action taken for reasons that include the
existence of that workplace right. Adverse action motivated by that
reason can be contrary to the Fair Work Act.
The Commonwealth government has implemented the FWPs to promote
what it regards as best practice workplace arrangements amongst its
suppliers. If that alone were enough to justify the use of
commercial pressure to promote particular workplace arrangements,
then any other level of government or purchaser could take a
different view on what DSP model is "best practice", and
what workplace arrangements amongst its suppliers are a
pre-condition for procurement contracts. This could leave suppliers
in an impossible position.
The existence of the FWPs should not encourage a view that
procurement polices can be introduced without taking into account
the Fair Work Act. The general protections provisions of
the Fair Work Act, including protection from adverse
action based on workplace rights, mean that procurement policies
need to be constructed and applied with care whenever they have
potential to restrict or alter choices that are protected under the
Fair Work Act itself.
A government entity or supplier which is considering refusing
services of a contractor on the basis of a requirement under the
FWPs should carefully consider whether a refusal would be
consistent with the Fair Work Act.
A viewpoint about whether a supplier's enterprise agreement
is "best practice", when considered in procurement
decisions, is not in itself an excuse for a failure to comply with
the Fair Work Act.
The Fair Work Act's general protections provisions
prevent legitimate choices about conditions in enterprise
agreements from being a basis to discriminate between suppliers in
certain commercial dealings.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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