On 8 October 2015 Justices Jessup, Bromberg and White of the Federal Court of Australia (Court) handed down separate judgments relating to the La Trobe University (University) Enterprise Agreement. This decision may now see employers paying closer attention to what is contained within their policies and enterprise agreements.

In October 2014 the University announced it was planning to impose proposed restructuring which would result in 280 employees having their employment terminated by way of redundancy.

The National Tertiary Education Union (the Union), relying on section 50 of the Fair Work Act 2009 (Cth) (the Act) (the section provides that a person must not contravene a term of an Enterprise Agreement) alleged that the University was not meeting all its obligations under the Enterprise Agreement with respect to redundancy.

The Enterprise Agreement specifically provided that:

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 unsuccessful.

The University submitted that the above clause amounted to “no more than a series of aspirational or hortatory statements” and despite there being options to mitigate job losses within the University that did not mean that the University could not make compulsory retrenchments.

Justice Bromberg commented that whilst the Enterprise Agreement permits for the University to have compulsory retrenchments the main aim of the clause was “concerned with both maintaining the overall numbers of positions and maintaining the employments of La Trobe employees.” Further, Justice White observed that the wording of the clause did not specify what the University was required to do in order to discharge its obligation that it had mitigated against the possibility of termination of an employee’s employment as a result of job loss.

Therefore, it was found that the Enterprise Agreement obligated the University to exhaust all options and attempts to mitigate job loss prior to utilising compulsory retrenchment.

Employers must be careful when drafting and negotiating Enterprise Agreements. This seems obvious, but it is important for employers to fully understand what the clauses in an Enterprise Agreement mean in a practical and legal sense.

Every time an Enterprise Agreement is up for re-negotiation a thorough review should be undertaken to ensure that the employer is still comfortable with the specific wording of commitments given in the document. Some Enterprise Agreements still contain historical terms that were first included in Agreements in the 1980s or 1990s and make no sense at all in today’s workplace relations regime.

Sweeping generalisations and “feel good” statements such as the terms considered in this case should be avoided – for exactly the reasons set out in this case.

An Enterprise Agreement is ultimately an industrial instrument and should be drafted with a care for clarity in its terms.

 

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