How to terminate an ‘old’ enterprise agreement

Q&A

How to terminate an ‘old’ enterprise agreement

Can an employer terminate an enterprise agreement which is past its expiry date without an employee vote? The Fair Work Act puts a number of restrictions on the unilateral termination of expired agreements.

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Can an employer terminate an enterprise agreement which is past its expiry date without an employee vote? The Fair Work Act puts a number of restrictions on the unilateral termination of expired agreements.

Q Several years ago, our company purchased another company and inherited their collective enterprise agreement. This agreement expired in 2009 and was approved under the previous Workplace Relations Act. We wish to terminate the agreement but are uncertain whether this issue needs to be put to a vote of employees who are covered by the agreement. As the agreement was made (and expired) prior to the introduction of the Fair Work Act, does this mean the current provisions regarding terminating an agreement do not apply?

A The Fair Work Act FWAct provides that agreements continue to operate after their nominal expiry date until they are replaced or terminated by application to the Fair Work Commission (FWC). Under the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009, agreements made under previous legislation continue to have effect as ‘agreement-based transitional instruments’.

If an agreement-based transitional instrument has passed its nominal expiry date, an application must be made to the FWC to terminate the agreement. Section 225 of the FWAct states that any of the parties to the agreement (employer, employees, or employee organisation) may apply to the FWC for the termination of the agreement.

The FWC must terminate the agreement if:
    • it is satisfied it is not contrary to the public interest to do so, and
    • it considers it is appropriate to terminate the agreement taking into account all the circumstances, including the views of the employees, the employer, and each employee organisation (if any) covered by the agreement, and the circumstances of those employees, employer(s) and organisations including the likely effect that the termination will have on each of them. (s226)
No unilateral termination
 
The unilateral termination of an agreement therefore is restricted. This is because the termination of an agreement can in many cases result in a significant shift in the balance of forces in bargaining. In most cases collective agreements remain in place until a new agreement is negotiated to replace it. See SDV (Australia) Pty Ltd re SDV (Australia) Pty Ltd — Warehouse Collective Agreement 2008 — NSW [2013] FWC 5385.
 
It may be possible an agreement is terminated by the FWC where the parties mutually agree to do so, however, the FWC would need to be convinced (through production of satisfactory evidence) that the employees are aware of the effect (if any) that terminating the agreement will have on the status quo. In addition to the public interest test, the FWC must also consider whether it is ‘appropriate’ to terminate the agreement, and also to consider the views of the parties to the agreement.

If an agreement is terminated by the FWC, the termination operates from the day specified in the decision to terminate the agreement.
 

 
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