With the rise of industrial action among public sector employees in Australia, it is vital that employers understand their rights and obligations during the bargaining process, as well as the importance of drafting enterprise agreements correctly.

A recent dispute in the Fair Work Commission (the "FWC") between the Transport Workers' Union ("TWU") and Transit (NSW) Services ("Transit") shows the importance of drafting an enterprise agreement correctly. The dispute was about whether bus drivers who took part in protected action (by turning off Opal card readers) were eligible to receive a daily allowance provided under the relevant enterprise agreement. Consequently, the dispute was dependent on how the relevant allowance clause in the enterprise agreement should be interpreted.

Facts

The TWU brought a case against Transit after bus drivers participated in a partial work ban in December 2021, which saw bus drivers disabling Opal card readers. This action allowed passengers to receive a free bus ride.

The TWU claimed that Transit withheld a daily allowance of $16.3689, which was payable to bus drivers carrying fare paying passengers or conducting yard duties under the enterprise agreement. The relevant clause in the enterprise agreement stated that the allowance was applicable to an "employee who drives a bus in service carrying fare paying passengers". The TWU claimed that if the clause was interpreted in its plain and ordinary meaning, it would cause impracticalities, as this meant that bus drivers would not be entitled to the allowance if a bus remained empty.

Transit claimed that the allowance was not payable to bus drivers under the terms of the enterprise agreement because the partial work ban meant bus drivers would not be transporting "fare paying passengers". Transit further claimed that the clause was clear and must be interpreted in its ordinary meaning of the words. In this case, this meant that:

  • a "fare" refers to the price for a trip;
  • "paying" refers to making the payment; and
  • "passenger" refers to a person travelling on a bus.

The FWC agreed with Transit's argument that the clause was clear and should be interpreted in its plain and ordinary meaning. The FWC's interpretation of the clause ultimately meant that the allowance would be payable to employees who drive a bus in service for the purpose of carrying fare paying passengers. However, if a bus in service was operated in a way that there could not be any fare paying passengers (for example, due to industrial action or a 'free travel day' declared by the NSW government), the employee would not be entitled to the allowance.

How will the FWC deal with an interpretation of an enterprise agreement?

The case confirms how the FWC will deal with a dispute about an interpretation of an enterprise agreement (read the case here). The FWC will firstly look at a clause's ordinary meaning of the words before considering the context and purpose of the clause. If the agreement has a plain meaning, the FWC will not consider evidence of surrounding circumstances.

However, the FWC will consider evidence of surrounding circumstances which would establish background facts. This can include evidence of prior negotiations during bargaining or communications to employees about the employer's intentions.

Key takeaways

  • Disputes about the terms of an enterprise agreement are fertile grounds for union agitation which can cause disruption to an organisation's operations. For this reason, employers should ensure that the terms of their enterprise agreement are clear and consistent to minimise the risk of any ambiguities which may give rise to legal challenges.
  • The bargaining period for a new enterprise agreement should not be a simple "box-ticking" or "rollover" exercise; employers should take active steps to ensure the new enterprise agreement is appropriate for the organisation's operating environment and commercial needs.
  • If an organisation chooses to enter into an enterprise agreement, it should ensure that the agreement reflects the organisation's values, and strengthens and protects its brand.