FWC has no jurisdiction to deal with unresolved disputes under superseded enterprise agreements
A recent decision of a Full Bench of the Fair Work Commission1 has resolved conflicting authorities and provided important clarification of the limits of the Commission's power to hear and determine disputes under enterprise agreements that have ceased to operate (e.g. because they have expired and been replaced by a new agreement).
The Commission has jurisdiction to hear and determine disputes if expressly authorised to do so by a dispute resolution term in an enterprise agreement.2 The specific term in the agreement is the source of the Commission's power to resolve disputes, which it exercises by way of private arbitration. Whether the dispute resolution power continues when an agreement ceases to apply has been the subject of conflicting decisions from the Commission.
The Full Bench's decision concerned an appeal of a decision by Deputy President Barclay, who found that the Commission had jurisdiction to deal with a dispute that had arisen over casual conversion provisions in an expired and replaced enterprise agreement.
The Full Bench overturned the first instance decision, determining that in the absence of a saving provision in the replacement agreement, the Commission has no jurisdiction to deal with a dispute under a dispute resolution procedure in an enterprise agreement which has ceased to operate – even if the dispute was on foot before the agreement was replaced.
Background
The underlying dispute concerned the refusal of food manufacturer, Simplot Australia Pty Ltd (Simplot), to convert two casual employees to permanent positions pursuant to the terms of its 2014 enterprise agreement (the 2014 Agreement).
The 2014 Agreement had ceased operation on 10 December 2018, when it was replaced by the subsequent Simplot 2018 enterprise agreement (2018 Agreement).
On 29 October 2018 (two months before the approval of the 2018 Agreement by the Commission), the Australian Manufacturing Workers' Union (AMWU) filed an application for the Commission to deal with a dispute in accordance with the dispute resolution provision in clause 44 of the 2014 Agreement.
On 3 December 2018, Commissioner Harper-Greenwell issued a decision approving the 2018 Agreement, which commenced operating seven days later. The 2018 Agreement contained the same scope and application clauses as the 2014 Agreement, such that the 2014 Agreement no longer applied to anyone.
After the 2018 Agreement commenced operation, Simplot submitted to Deputy President Barclay that the Commission no longer had jurisdiction to hear and determine the dispute that had been referred to it under the 2014 Agreement.
The decision at first instance
Simplot argued that section 58(1) of the FW Act, which provides that only one enterprise agreement can apply to an employee at a particular time, precluded the Commission determining the dispute. Simplot further contended that the AMWU’s position was contrary to section 58(2)(e) of the FW Act, which provides that once an agreement has ceased operating (as the 2014 Agreement did when the 2018 Agreement commenced in December 2018) it can never operate again.
These arguments were rejected by Deputy President Barclay, who found that the Commission continued to have authority under the disputes procedure in the 2014 Agreement to hear and determine the dispute, because the employees on whose behalf the AMWU had brought the application had an "accrued right" to have the dispute determined.
His Honour relied upon on a decision of Deputy President Sams in APESMA v NSW Electricity Networks Operations Pty Limited t/a TransGrid 3(TransGrid) concluding that once properly invoked (i.e. the dispute was notified while the agreement was in force) "clear words would be required to extinguish an accrued right, and that no such words existed." This was notwithstanding that section 51(1) of the FW Act expressly states that an enterprise agreement does not confer a right on a person unless it applies to them.
In finding that the Commission remained empowered to determine the dispute, the Deputy President reasoned that, at the time the dispute came before him, only the 2014 Agreement applied, and there was nothing in the 2018 Agreement which subsequently revoked or extinguished the parties’ earlier agreement under the 2014 Agreement to have disputes referred to the Commission.
Simplot's appeal
On appeal, Simplot argued that Deputy President Barclay erred in concluding that there was an "accrued right" to have an application made under the 2014 Agreement determined by the Commission following the cessation of the 2014 Agreement’s operation and that the Deputy President’s analysis of the significance of sections 58(1) and 58(2)(e) was "erroneous".
In contrast, the AMWU contended that the cessation of the 2014 Agreement did not affect the Commission's authority to continue to hear an application under that agreement and that the jurisdiction to arbitrate a dispute under an enterprise agreement fundamentally depends on the parties' consent, not an underpinning document with statutory force.
The decision on appeal
The Full Bench upheld Simplot's appeal, and on rehearing the matter dismissed the AMWU's application, concluding that the Commission lacks jurisdiction to deal with a dispute under a procedure in an enterprise agreement that has ceased operation.
The Full Bench rejected the AMWU's contention that section 738 of the FW Act, which deals with the Commission's power to deal with disputes under enterprise agreements, encompasses an inoperative agreement. The Full Bench also determined that:
- obligations are not imposed on a person and entitlements are not given to a person by an enterprise agreement unless the agreement applies to the person (as per section 51(1) of the FW Act). In addition, the FW Act does not contain a provision for any subsidiary, extra-operational effect of an enterprise agreement that has ceased operating;
- if enterprise agreements were to have some special, additional effect as a source of power for the Commission to deal with disputes beyond their operational life, this would have been included in the FW Act. In the absence of such a provision, no such continuing power could be said to exist;
- the key question to be determined in assessing the Commission's power of private arbitration of such disputes is not just whether a dispute was properly raised under a live agreement, but whether the source of the Commission's power was live at the time that a decision regarding the dispute was issued. If the source of the Commission's power to arbitrate has ceased to exist at the time the decision is to be made, so too has the power to make the decision; and
- there was no "accrued right" at law (as suggested by Deputy President Barclay at first instance (and in TransGrid)) to have the dispute determined under the defunct 2014 Agreement.
The Full Bench ultimately concluded that the Commission's authority to determine a dispute under an enterprise agreement is determined by the FW Act and the terms of the relevant agreement and that the Commission only has the authority conferred on it by statute. The Full Bench concluded that the Commission has no inherent jurisdiction otherwise and that invocations of policy and fairness cannot create jurisdiction where none exists.
The Full Bench opined that, in the absence of any jurisdiction to determine a dispute under a superseded agreement, it remained open for the employees to bring a dispute in court for an alleged breach of the 2014 Agreement, notwithstanding its expiry, given that such an avenue for relief was provided for in the terms of the FW Act itself. While acknowledging that this would likely prove more difficult than resolution under an agreement's disputes procedure, the inconvenience in this course of action could not prevail over the fact that the jurisdiction to hear the dispute simply did not exist.
Key takeaways
The Full Bench decision in Simplot provides helpful direction for employers in understanding where they stand with respect to disputes raised under enterprise agreements that are no longer in force.
Specifically, on replacement of an agreement, unless the new agreement provides some mechanism for the "preservation" of pre-existing disputes, there will be no jurisdiction for the Commission to deal with any such dispute – even if the dispute had been notified while the agreement was in force. The cessation of operation of an enterprise agreement means rights of dispute resolution under that agreement no longer exist. Instead, it will be incumbent on the party wishing to pursue the matter to allege a breach of the agreement in court proceedings.
[1] Simplot Australia Pty Ltd v Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union [2020] FWCFB 5054.
[2] Fair Work Act 2009 (Cth) (FW Act), section 739.
[3] [2018] FWC 6335 (applying Grabovsky v United Protestant Association of NSW Ltd [2015] FWC 2504).
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