Earlier this month, the Fair Work Commission (FWC) Full Bench handed down its decision in relation to an application to deal with a dispute in accordance with the dispute settlement procedure in the Kentz Pty Ltd Ichthys Onshore Construction Greenfields Agreement (the EBA).  This decision was an appeal of an earlier decision by Commissioner Bissett with respect to the interpretation of clause 19 of the EBA that related to payments into income protection insurance schemes.

The FWC Full Bench allowed the appeal, noting that the clause in the EBA was open to a range of different interpretations.

The clause in question referred to an “approved insurer” but did not state who the approved insurer was, what makes an insurer approved or provide a definition of “insurer”.

As the term was ambiguous, the FWC Full Bench was required to consider evidence tendered by the parties regarding the negotiations that lead to the development of clause 19.  The FWC Full Bench was also required to call witnesses who were involved in the EBA negotiations to understand the intention and intended operation of the clause, including the union organisers. The FWC Full Bench noted that this time consuming and costly process was all due to poor drafting.

The FWC Full Bench highlighted that poor drafting of enterprise agreements is a common problem. Parties often bring disputes before the FWC where the terms in their enterprise agreements are either not defined or are poorly defined.

Whilst there are some unavoidable circumstances with respect to disputes under an enterprise agreement, others relating to interpretation can be minimised with the following tips:

  • Have well written and clearly worded clauses (that have appropriate and relevant definitions);
  • Avoid using “template” or “standard” enterprise agreements;
  • Keep detailed notes and minutes of all meetings and negotiations;
  • Ensure the notes are clear and well written so that anyone looking at the file is able to understand the intentions of negotiations;
  • Ensure the notes and minutes are kept in a central location so that even after an employee leaves employment the notes can be readily accessed;
  • Keep the enterprise agreement clear and concise. If a matter requires detail, consider whether the detail needs to be in the enterprise agreement or should be dealt with by way of a policy.
  • Avoid including aspirational statements in the enterprise agreement as these may be considered to be representations or used against a party involved in a dispute under an enterprise agreement.

Most importantly, if an organisation is having difficulty drafting an enterprise agreement or feels it is being coerced into using a template enterprise agreement, the organisation should seek independent legal advice to ensure it does not contain any ambiguous clauses that have the potential to wind up before the FWC as part of an otherwise avoidable dispute.