Despite strong union and employee opposition, the Full Bench of
the Fair Work Commission (FWC) permitted the termination of 12
enterprise agreements that had passed their nominal expiry date
while the parties were bargaining for a new agreement. We discuss
the Commission's decision of Aurizon Operations Limited;
Aurizon Network Pty Ltd; Australian Eastern Railroad Pty
Ltd  FWCFB 540 and its implications for employers
Aurizon was formally known as QR National before it was
privatised in 2010. Aurizon brought an application before the FWC
to terminate 12 enterprise agreements (EAs) after bargaining
negotiations reached a deadlock. The EAs had been negotiated prior
to the privatisation process and contained a number of generous
'legacy provisions' reflective of the government policies
at the time.
These clauses included:
strict work demarcations that regularly resulted in employees
being idle for significant portions of their shift;
no forced redundancies;
inflexible rostering arrangements;
limited means of drug and alcohol testing;
free rail travel for employees, dependents and partners;
recruitment restrictions with requirements to internally
advertise all vacant positions; and
a dispute resolution clause that enabled the unions to delay
Aurizon argued that the clauses constrained its ability to
operate effectively, productively and competitively. In particular,
Aurizon submitted that its EAs were placing it in a position of
competitive disadvantage when tendering for work.
Objections from Aurizon employees
A large number of employees and relevant unions opposed the
termination of the EAs. In particular, the unions argued that given
Aurizon was engaging in bargaining for new EAs, the termination of
the existing EAs would diminish any incentive for Aurizon to
bargain while it had a cost advantage, and therefore, giving it an
unfair advantage in the current bargaining process.
The decision of the Full Bench
The FWC considered extensive evidence from both Aurizon and the
unions, including an analysis of its competitor's EA and
economic data on current market conditions. The FWC rejected the
union's argument that the termination would give Aurizon an
unfair advantage. It stated that there should be no
'predisposition' against terminating an EA and that it
cannot be expected that once a nominal expiry date has passed,
terms and conditions in an EA should continue in perpetuity.
Implications for employers
There have been numerous cases where members of the FWC have
declined to terminate EAs when requested by an employer to do so.
However, this decision is a positive development for employers
seeking to terminate expired enterprise agreements that are no
longer suited to the current economic climate and its operating
Winner – EOWA Employer of Choice for Women Citation 2009,
2010, 2011 and 2012
Winner – ALB Gold Employer of Choice 2011 and 2012
Finalist – ALB Australasian Law Awards 2008, 2010, 2011 and
2012 (Best Brisbane Firm)
Winner – BRW Client Choice Awards 2009 and 2010 - Best
Australian Law Firm (revenue less than $50m)
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guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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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.
Australian employees receive certain entitlements (such as annual leave and superannuation) where contractors do not.
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