Recovering recruitment costs via enterprise agreement

Q&A

Recovering recruitment costs via enterprise agreement

Is an employer allowed to recover recruitment costs against an employee who resigns ‘early’ by including this as a term in an enterprise agreement?

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Is an employer allowed to recover recruitment costs against an employee who resigns ‘early’ by including this as a term in an enterprise agreement?
 
This question was recently sent to our Ask an Expert service.
 
Q We are currently negotiating an enterprise agreement with our employees. The draft agreement contains terms that will allow the company to make deductions from an employee’s wages for reimbursement of recruitment costs if the employee resigns within an agreed period of time. The agreed period of time is negotiated at the time of recruitment. Recruitment costs would include costs paid to recruitment agencies and relocation costs.
 
The employees’ bargaining representative (a union) has indicated it will object to such a term being included in the enterprise agreement because, in its view, it is in breach of the Fair Work Act. If an employee agrees to such an arrangement, is the term of the agreement still valid?
 
A The Fair Work Act (s172) provides that a permitted matter in an enterprise agreement pertains to the relationship between the employer and the employees to be covered by the agreement. This means that for a term to be enforceable, it must pertain to the employment relationship.
 
A term that allows the employer to recover recruitment costs would be unenforceable, because it does not pertain to the relationship between the employer and the employee. Such a term instead would pertain to the relationship between the employer and the recruitment agency. In these circumstances, the Fair Work Commission (FWC) would not approve the enterprise agreement because such a term would fail the Better Off Overall Test (BOOT). See: Radploy Pty Ltd t/a Lake Imaging [2011] FWA 39.
 
Terms NOT permitted
 
As a general rule, the following proposed terms of an enterprise agreement would NOT be intended to be within the scope of ‘permitted matters’ for the purpose of the Fair Work Act:
  • terms that would contain a general prohibition on the employer engaging labour hire employees or contractors
  • terms that would contain a general prohibition on the employer employing casual employees
  • terms that would require an employer or employee covered by the enterprise agreement to make a donation to a political party or charity
  • terms that would require an employer to source only products from a particular supplier or Australian-made products unless, for example, such a term was directly related to employee’s job security
  • terms that would require an employer to engage or not engage particular clients, customers or suppliers who had agreed to commit to certain employment, environmental or ethical standards unless, for example such a term was directly related to employees’ health and safety, and
  • terms that relate to corporate social responsibility, eg terms requiring an employer to participate in charity events or commit to climate change initiatives.
Permitted terms
 
As a general rule, the following proposed terms of an enterprise agreement would be within the scope of ‘permitted matters’ for the purpose of the Fair Work Act:
  • terms relating to particular staffing levels (subject to any other applicable legislative requirements or limitations) particularly if those terms are aimed at ensuring the health, safety, and well-being of employees
  • terms relating to conditions or requirements about employing casual employees or engaging labour hire or contractors if those terms sufficiently relate to employees’ job security — eg a term which provided that contractors must not be engaged on terms and conditions which would undercut the enterprise agreement
  • terms that would provide that casual employees are converted to permanent employees after a set period of time, and
  • terms that would prevent an employer from seeking a contribution or indemnity from an employee in respect of personal injuries or losses suffered by that person, where such injuries or losses were caused by the employee in the course of the employment.

 
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