What is a 'relevant award'?

Cases

What is a 'relevant award'?

A recent appeal decision by the Australian Industrial Relations Commission (AIRC) has determined that the 'relevant award' to which the agreement is to be compared when satisfying the no disadvantage test may be one of many.

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A recent appeal decision by the Australian Industrial Relations Commission (AIRC) has determined that the 'relevant award' to which the agreement is to be compared when satisfying the no disadvantage test may be one of many. The criterion for a relevant award is that it regulates more than one term or condition of employment. (Australian Guarantee Corporation Limited v Finance Sector Union, Print S2344, [2000] 26 IRCommA, 3 February 2000).

Background

The Australian Guarantee Corporation Limited (AGC) sought to have an enterprise agreement certified by the AIRC. In order to satisfy the 'no disadvantage' test prescribed by the Workplace Relations Act 1996, an agreement must not disadvantage employees in relation to their terms and conditions of employment when compared to a 'relevant' or 'designated' award (s170LT). AGC proposed that in this case, the relevant award was the Clerks (Finance Companies) Award 1975 (Finance Award). However, this award had not been varied since February 1991. Alternatively, the Finance Sector Union (FSU) sought a determination that the appropriate award to test against the agreement was the Westpac Employees Award 1998 (Westpac Award).

Decision at first instance

At first instance, Commissioner Whelan agreed with the FSU in concluding that the Westpac Award was the relevant award. This conclusion was based on a number of reasons including the fact that the Finance Award had not been maintained as an effective safety net and only applied to 94 of the 2524 employees covered by the agreement. The Commissioner found that the no disadvantage test:

could not be applied if an award which appears to be a relevant award within the statutory definition nevertheless does not deal comprehensively with the terms and conditions of employment of the employees to be covered by the agreement.

Despite the Finance Award coming within the definition of a relevant award, the Commissioner held that it would be 'absurd' for it to be used as a benchmark. 

Appeal Decision

AGC appealed the first instance decision. The Full Bench of the AIRC found that there were 'significant problems with the approach which the Commissioner adopted'. The critical issue raised in the appeal was the proper construction of the terms 'relevant award'.

The Full Bench disagreed with the earlier construction of the no disadvantage test as it added;

an extra element to the definition, one not expressly included by the legislature and which could only arise by implication - namely, that all but for up-to-date safety net awards are excluded from the definition.

The Full Bench found that a Commissioner may only make a determination of a 'relevant award' where there is no relevant award (s170XF). In this case, the Full Bench was in 'no doubt' that the Finance Award was a relevant award in relation to at least some of the persons to be covered by the agreement. Consequently, the Commission did not have the power to make the determination that the Westpac Award was the relevant award.

As to the no disadvantage test, the Full Bench stated that:

The implication of the no disadvantage test requires the Commission to have regard to all relevant awards. Since it is not necessary that an award regulate more than one term or condition of employment in order to be a relevant award, there may be circumstances in which the Commission is required to have regard to a number of awards, both state and federal, as well as a number of state and federal statutes.

The Full Bench acknowledged the complexity of the legal questions, which may arise when dealing with these issues

Conclusion

The Full Bench quashed the Commissioner's decision and directed her to deal with the FSU's application in accordance with the construction of the term 'relevant award' that it outlined.

 
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