It is common to find aspirational statements in
enterprise agreements. Often they are simply intended to extol
organisational aims, rather than create binding obligations.
Although permissible, the danger of such statements is that they
might be construed as creating binding obligations, which carry
with them penal consequences for non-compliance.
This is amply demonstrated by the decision of the
majority of the Full Court of the Federal Court in National
Tertiary Education Union v La Trobe University  FCAFC
142 (8 October 2015).
The appellant (NTEU) and the respondent
(La Trobe) were covered by an enterprise agreement
known as the La Trobe University Collective Agreement 2014
Clause 74 of the Agreement provided as follows:
The University is committed to
job security. Wherever possible redundancies are to be avoided and
compulsory retrenchment used as a last resort. The University
reserves the right to use the agreed redundancy procedures and
provisions set out in this Agreement when all reasonable attempts
to mitigate against such action and to avoid job loss have been
Section 50 of the Fair Work Act 2009 (Cth) (FW
Act) prohibits a person from contravening a term of an
The NTEU alleged that (in breach of section 50) La Trobe had
implemented a proposed restructure with the consequence that 280
employees of La Trobe would have their employment terminated for
redundancy. The NTEU alleged that in the implementation of the
proposed restructure La Trobe should have taken, but failed to
take, specified action in contravention of cl 74 of the
not to use compulsory redundancies other than as a last
to ensure that redundancies were avoided wherever possible;
to make reasonable attempts to mitigate against compulsory
redundancies and to avoid job losses.
THE ISSUE WAS THE PROPER CONSTRUCTION OF CL 74
The key issue determined by the Federal Court was:
Whether, on its true
construction, Clause 74 imposed any and, if so, what binding
obligations on the University.1
It was not in dispute that the first sentence of cl 74 was
aspirational. As to the remainder, Tracey J at first instance
concluded that the second and third sentences of cl 74, either
separately or collectively, did not impose obligations on La Trobe.
The NTEU's application was, therefore, dismissed. The NTEU then
appealed to a Full Court of the Federal Court.
REASONS FOR ALLOWING THE APPEAL
A majority of the Full Court (Bromberg and White JJ, with Jessup
J dissenting) allowed the NTEU's appeal.
In essence, Bromberg J allowed the appeal for the following
The second sentence [of cl
74] deals with method. It identifies the means or mechanism by
which the overarching goal [in the aspirational first
sentence] is to be effected or carried into practice ... The
words specify what is to be done (redundancies are to be avoided)
and what is not to be done (compulsory retrenchment is only to be
used as a last resort) and when and in what circumstances that is
to occur ("wherever possible"). In that context, there is
nothing aspirational conveyed by the word "are" in the
phrase "are to be avoided". Nor does a direction made in
that context that something only be done as "a last
resort" connote an aspiration ... It imposes a stringent
limitation upon action otherwise available.
The ... reservation of La
Trobe's rights in the third sentence would be unnecessary if
the second sentence left those rights unaffected ... It would not
have been necessary for La Trobe to have reserved its rights as
against something that was merely aspirational. The qualified
nature of the reservation in the third sentence [when all
reasonable attempts to mitigate] is also couched in
prescriptive rather than aspirational terms ...
Bromberg J rejected the contention that the expression
'wherever possible' in the second sentence of cl 74 of the
Agreement was too vague and uncertain. Instead, the expression
recognised that the content and extent of the limitation would
shift with the prevailing circumstances.3
Bromberg J noted that a 'reasonable endeavours' or
'best endeavours' clause in a legal contract serves a
similar purpose of conditioning the extent of an obligation to the
prevailing circumstances; that reasonableness is often used as a
standard or criterion to qualify a legal obligation; and that the
FW Act is replete with examples of this, including provisions with
penal consequences. For these reasons, his Honour also rejected the
contention that the expression in the third sentence of cl 74,
'all reasonable attempts to mitigate', did not create any
White J agreed with Bromberg J's overall conclusion that cl
74 of the Agreement imposed binding obligations on La
White J also emphasised the fact that it did not seem plausible
that, by the third sentence of cl 74, La Trobe would have sought an
express acknowledgment of its rights if the second sentence was
IMPORTANCE OF THE NTEU DECISION FOR EMPLOYERS
It is common for parties to include aspirational statements in
an enterprise agreement that are intended to be enforceable
obligations or entitlements. However, employers should carefully
consider the ramifications of doing so.
As observed by White J:
It is in the very nature of these
agreements that they are intended to establish binding obligations.
The manner of making such agreements is subject to detailed
prescription and their operation is contingent upon approval by the
Fair Work Commission, the obtaining of which is itself a matter of
detailed prescription. In my opinion, it is natural to suppose that
parties engaging in this detailed process intend that the result
should be a binding and enforceable
With this in mind, care should be taken when drafting an
agreement to make it evident that a statement that is intended to
be aspirational is only that and nothing more. Express language
could be used to make it clear that a statement is not intended to
create any obligation, albeit that it is a term of the agreement.
Also, consideration could be given to 'quarantining'
aspirational statements in a preamble or recitals to the agreement
rather than in the main body of the agreement.
1National Tertiary Education Union v La
Trobe University  FCA 142 at .
2National Tertiary Education Union v La
Trobe University  FCAFC 142 at -.
3 Ibid at -.
4 Ibid at -.
5 Ibid at  et seq.
6 Ibid at .
7Ibid at .
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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