The Full Bench of Fair Work Australia
("FWA") handed down a significant
decision on Friday, 26 February 2010, reversing a previous decision
by Commissioner Smith on 21 January 2010. The decision relates to
the requirements of dispute resolution clauses in enterprise
The Fair Work Act ("FW Act") requires enterprise
agreements to include a term that relates to the settlement of
disputes (about any matters arising under the agreement or in
relation to the National Employment Standards).
Woolworths Ltd submitted an agreement for approval to FWA with
the support of the Shop Distributive and Allied Employees
Association. The agreement contained a clause relating to dispute
resolution that restricted access to arbitration by FWA to
situations where both parties agree to that arbitration.
Last month, Commissioner Smith refused to approve this
agreement, on the basis that the dispute resolution procedure did
not provide for compulsory arbitration by FWA (i.e. arbitration
irrespective of whether both parties agree to it occurring). This
decision created a great deal of angst amongst employers.
The Full Bench of FWA decided that the FW Act does not require
compulsory arbitration clauses in dispute resolution
In looking at the powers of FWA to deal with disputes, the Full
Bench found a clear intention by Parliament that FWA can only
arbitrate a dispute if it has been specifically empowered to do
Implications for employers
The decision means the following:
existing approved agreements under the new system that contain
no compulsory arbitration " clause are not in danger of being
employers can resist union pressure for compulsory arbitration
clauses when negotiating " future enterprise agreements;
employers should expect to receive requests from unions to use
the model term for dealing " with disputes contained in the
Fair Work Regulations 2009. This model term does allow FWA,
although it does not require it, to arbitrate disputes, without the
consent of both parties.
Employers should obtain advice on precisely what type of dispute
resolution procedure suits them best, prior to entering into the
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.
To print this article, all you need is to be registered on Mondaq.com.
Click to Login as an existing user or Register so you can print this article.
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.
Some comments from our readers… “The articles are extremely timely and highly applicable” “I often find critical information not available elsewhere” “As in-house counsel, Mondaq’s service is of great value”
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).