Enterprise agreements cannot contain discriminatory terms
– but what is discriminatory? Fair Work Australia has
held that age-based redundancy benefits breach the Fair Work
Act's ban on discriminatory terms, in a decision which
could have important implications not just for similar terms but
any term which generates differential treatment (Australian
Catholic University Limited T/A Australian Catholic University
 FWA 3693).
The redundancy benefits in the proposed enterprise
The employer, the Australian Catholic University, applied for
approval of an enterprise agreement which set out generous
redundancy benefits for all employees except for those
"whose employment proceeded beyond staff member's
normal retirement date as defined by the staff member's
superannuation fund". Those employees would receive
These sorts of terms are not unusual in industrial agreements,
and the Australian Industrial Relations Commission
(AIRC) considered several of them over the years,
generally not finding any problem with them.
In this case, the unions contended that this term fell foul of
the Fair Work Act's ban on discriminatory terms in
What is a discriminatory term?
"Discrimination" isn't defined in the
Fair Work Act, and there is a question as to whether it is limited
to direct discrimination, or extends to indirect
Fair Work Australia in this case decided that it did extend to
terms that are indirectly discriminatory as well as to those that
are directly discriminatory.
Is this term discriminatory?
As noted above, there have been several decisions which have
found these terms to be a reasonable way to limit the windfall
gains that an employee close to retirement age might gain upon
redundancy. Why weren't they followed in this case?
The reason ultimately comes down to context. All of these
decisions were made at a time that compulsory retirement was
relatively common. That position has changed. In addition, the term
in this enterprise agreement was not a redundancy cap of the sort
the AIRC had considered.
Fair Work Australia found that, in the context of the more
generous benefits provided to other employees, this term
discriminates against employees who are reaching or who have passed
their normal retirement date because of, or for reasons including,
the employee's age.
It considered that this was a case of direct discrimination, but
it could be indirect too if "normal retirement
date" is not properly to be seen as a reference to age.
This is because only older employees can have reached their
"normal retirement date".
Without any evidence that these employees would be able to
access their superannuation while working past their
"normal retirement date", there was no issue of
What does this mean for employers?
First, the assumption that these terms are not discriminatory is
wrong. Any such terms in an enterprise agreement should be
carefully scrutinised in the light of this decision. This will be
important for employers negotiating any new enterprise agreement.
Employers that already have such terms in their enterprise
agreement should seek further advice as to what impact this
decision may have.
Secondly, the expansive meaning given to
"discriminatory" means that a greater range of terms
might fall foul of section 195.
Lastly, it should be borne in mind that discriminatory terms in
an enterprise agreement can otherwise be potentially challenged
under anti-discrimination law. The Australian Human Rights
Commission is able to refer complaints of discriminatory enterprise
agreements to Fair Work Australia and if Fair Work Australia
considers that an enterprise agreement contains discriminatory
terms in contravention of the Age Discrimination Act 2004
it must take steps to vary the agreement to address the
Long experience representing many of Australia's leading employers has taught us that in employment litigation the identity of an employee's representative is a major factor in how employee litigation runs.
Treasurer Scott Morrison recently announced changes to a number of 2016 Budget superannuation contribution measures.
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