Terms may be implied in certified agreements

Cases

Terms may be implied in certified agreements

The Federal Court has found that terms may be implied in a certified agreement if it is necessary for the reasonable or effective operation of the agreement.

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The Federal Court has found that terms may be implied in a certified agreement if it is necessary for the reasonable or effective operation of the agreement.
 
This principle is similar to that applying in relation to contracts of employment - terms such as 'good and faithful service is expected' may be implied in order to make contracts reasonable and effective.
 
The court said that casual award rates were superseded by new rates in a certified agreement, despite the fact there was no express provision in the agreement for casual wages. Justice Finkelstein stated that if this was not the proper construction of the certified agreement then there was an unintended gap that could be completed by an appropriate term. The employer had argued that casuals should be paid according to the current award rates.
 
Background
 
The AMWU applied under the workplace relations legislation for penalties against Skilled Engineering, over alleged underpayment of wages for casual employees.
 
In July 1998 the Metal, Engineering and Associated Industries Award came into force. The award was binding on a number of employee organisations, including the applicant union, several employer organisations and their members, one of whom was the respondent employer, and on certain categories of employees.
 
On 1 June 2001 the Skilled Engineering Limited, Pilkington Geelong Site Maintenance Certified Agreement 2002-2003 was certified by the Australian Industrial Relations Commission. This was the certified agreement in issue. It did not specifically provide for casual wage rates - it provided for benefits that were directed to 'all employees' which necessarily included casuals.
 
Authorities
 
Justice Finkelstain stated:
'I have found two cases, an English decision (where the legislation is analogous but not precisely the same) and one from the Federal Court which have considered whether a term might be implied into a certified agreement. ...
 
'The English decision [is] Ali v Christian Salvesen Food Services Ltd [1997] 1 All ER 721. ...
 
'The second decision is Construction, Forestry, Mining and Energy Union v Henry Walker Eltin Contracting Pty Ltd (2001) 108 IR 409. ...
 
'These cases suggest that the general approach is to apply the principles of contract construction, but with a predisposition against the implication of a term.
 
'For example, it was accepted in Ali v Christian Salvesen Food Services that there was a gap in the agreement which produced unfairness. However, this was not sufficient to convince the court that the gap should be filled.
 
'As a collective agreement is usually a carefully negotiated compromise between parties who have equal bargaining power, the tendency is to assume that the omission is intentional.
 
'... When the two documents are read together it is abundantly clear that a full-time employee's wages have been increased and his hours of work have been reduced. A contract lawyer would say this is implicit. ...'
Justice Finkelstein then turned to the facts of the case:
'We can now deal with the casual employee. As a general proposition one can say that, when appropriate, benefits provided to full-time and part-time employees are also provided to casuals. Turning to specific provisions, cl 22 is important. It contemplates that a casual employee will usually be engaged to work the same hours as the full-time employee whose absence he is "covering". That is to say, a casual employee is likely to be engaged to work at least 35 hours per week. …
 
'This suggests that the rate of pay is to be based on the new rates. So also does cl 18 which provides that wages payable to casuals for the purposes of calculating their superannuation contributions is to the "wages specified in this [Certified] Agreement."
 
'Then there is the fact that part-time employees are to receive the new rates for reduced hours of work. It would, to say the least, be incongruous if the new rates are payable to both full-time employees and part-time employees but not to casuals who are likely to work the equivalent of a full-time week....
 
'If it be necessary to imply a term, it is justified by the principles established in BP Refinery (Westernport) Pty Limited v President, Councillors and Ratepayers of the Shire of Hastings (1977) 180 CLR 266, 283. …
Justice Finkelstein concluded that on the basis of these cases, a term may be implied if it is necessary for the reasonable or effective operation of a contract in the circumstances of the case. 'In my opinion, that test is satisfied in this case.'
 
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