The Aurizon decision handed down on 22 April 2015 and endorsed by a Full Federal Court on 3 September 2015 has created a viable option for employers needing to move away from legacy industrial arrangements that are bad for business.
The Aurizon decision was a watershed ruling because it swept away a longstanding presumption that agreements should not be terminated whilst bargaining negotiations for a new agreement are occurring (see our earlier blogs about this decision here). The mere fact the option exists has given employers more leverage in bargaining, as well as providing an opportunity to change arrangements other than through a union-resisted employee ballot for a new agreement.
Figures released by the Department of Education last week show that applications to terminate agreements have almost doubled. The Fair Work Commission terminated 416 agreements in Q1 – Q3 2016, which represents an increase from 275 in 2015 and 156 in 2014.
Of course, not every agreement is a good candidate for termination – a lot depends on the context, the reasons for the application, what has occurred during the bargaining process, and a list of other factors. An employer making an application to the FWC without the consent of employees covered will need to show that termination of the agreement is not contrary to the public interest, and is appropriate in all of the circumstances.
The union response to these recent developments has been multi-layered, with the following key strategies observed:
- Deal with it “on the ground” using traditional IR tactics and weapons (including ramping up protected action and/or taking covert unprotected industrial action)
- Go after the “brand” with media campaigns and the like
- Lobby for changes to the legislation – unlikely at present
- Look for suitable test cases to run to try to overturn Aurizon, and / or
- Try to agree restrictions in the agreements currently being negotiated to the effect that if the employer applies to terminate the agreement in the future, specified terms and conditions considered particularly important will be maintained by way of undertaking.
This fifth strategy is itself a result of a recent development. Late last month, VP Hatcher stayed a decision of DP Clancy to terminate the Loy Yang Power Enterprise Agreement 2012. The stay was issued on the grounds that termination was ordered despite a specific clause in the EA requiring the Company to maintain a suite of conditions until a replacement agreement was negotiated. While AGL gave an undertaking it would maintain certain conditions, the undertaking was narrower than the list of conditions specified in the clause.
The appeal will be heard on 21 February 2017. The appeal will look closely at the effect of this clause and particularly whether AGL moving away from it impacts on the “appropriateness” of terminating the agreement. This part of the test requires the FWC to consider a range of discretionary factors.
The impact of the AGL stay has been immediate. Across our partnership, we have seen unions ask for a similar protective clause in over half a dozen separate bargaining negotiations in the past week. Major employers will increasingly need to deal with this kind of claim and the public campaigning that results if there is a rejection of the claim. Of interest over the next month will be how far the AGL appeal goes – and whether it has ramifications beyond the specific facts of that case.