The Full Bench of Fair Work Australia (FWA) has
overturned the decision which held that a dispute resolution term
in an enterprise agreement must allow for disputes to be settled by
arbitration, whether the parties want to or not.
As foreshadowed in our last Alert, significant interest was
generated by the original decision. The employer appealed, and the
proceedings were joined by the Minister for Education, Employment
and Workplace Relations.
The original decision
In January, Commissioner Smith rejected an enterprise agreement
on the sole basis that the agreement did not contain a procedure to
settle disputes about matters arising under the agreement and the
National Employment Standards, as required by section 186(6) of the
Fair Work Act 2009 (Cth). This was because the relevant dispute
resolution term allowed a dispute that is not able to be resolved
by conciliation or between the parties to proceed to FWA for
arbitration only where the parties agreed. Commissioner Smith held
that section 186(6) of the Act requires that compulsory arbitration
is a necessary ingredient in a dispute settlement provision.
On appeal, the Full Bench held that Commissioner Smith's
interpretation of section 186(6) was wrong on twobases.
First, by looking at other parts of the Act which deal with the
powers of FWA, the Full Bench found that FWA has no power to
arbitrate a dispute without agreement between the parties. FWA can
deploy voluntary methods of dispute resolution, such as
conciliation, without the consent of the parties, but "can
only arbitrate if it has been specifically empowered to do
Secondly, a similar statutory provision, section170LT(8) of the
Workplace Relations Act 1996 (Cth), had been considered by the Full
Bench of the Commission, which held that section 170LT(8) required
a procedure for preventing and settling disputes, but not one which
guaranteed a settlement in each case.
The Full Bench of FWA followed this decision. It held that:
"If the legislature had intended to alter the affect of the
Full Bench decision in Ampol it could easily have made that
intention explicit. The absence of an express statement of
intention suggests there is no such intention. Furthermore, as we
have endeavoured to show, other relevant parts of the Fair Work Act
do not support the conclusion the Commissioner reached, rather they
tell strongly against it."
What should employers do now?
Although this decision removes some doubt about the content of a
dispute resolution clause, there are still some things which you
must ensure is in your agreement. You will need to ensure that your
dispute resolution clause:
is drafted with regard to all requirements of the Act; and
requires or allows a dispute to be arbitrated whether by FWA or
some other independent party.
However, the dispute does not have to be compulsorily referred
to FWA or another person for arbitration, if the parties do not
agree to it.
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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