Mistake not sufficient reason to vary agreement

Cases

Mistake not sufficient reason to vary agreement

In dismissing an application to vary an agreement provision, the Fair Work Commission pointed out that agreement terms that are unambiguous in their terms cannot be varied simply because the parties claim that the clause is not operating as intended.

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In dismissing an application to vary an agreement provision, the Fair Work Commission pointed out that agreement terms that are unambiguous in their terms cannot be varied simply because the parties claim that the clause is not operating as intended.

[Full text of this case: Core Toughened P/L v Construction, Forestry, Mining and Energy Union [2015] FWC 7131 (19 October 2015)]

Commissioner Ryan noted that s603 of the Fair Work Act 2009 makes it very clear that the Commission does not have a general power to vary or revoke a decision to approve an enterprise agreement.

Powers to vary or terminate an enterprise agreement are specifically provided for in the Act and are limited to the circumstances provided in those specific provisions.

Application here


The application here sought to vary a clause in relation to meal breaks. The applicant-employer contended that the mutual intention of the parties to the agreement was that the meal breaks clause gave effect to the current break practice, but the union contended that the application was misconceived.

Clause not ambiguous


Commissioner Ryan said the clause was perfectly clear, and capable of only one meaning and accordingly there was no ambiguity or uncertainty. The Commission went on to say agreements cannot be varied for mistakes, even mistakes shared by multiple parties, where resulting text is clear. The plain meaning could be discerned without having to struggle to identify meaning so the application was dismissed.

“The elephant in the room”


Commissioner Ryan made an observation in relation to evidence from both the employer and union that the agreement was never properly explained to employees, therefore it had never been validly made and approval of the agreement by the Commission should be declared a nullity.

The Commissioner went to point out how parties should approach the issue of varying an agreement:

“In the present circumstances where both parties ignored the elephant in the room the Commission had no power or authority to do otherwise than to continue to hear the application. Section 603 makes it very clear that the Commission does not have a general power to vary or revoke a decision to approve an enterprise agreement ...

An application to vary an enterprise agreement to remove ambiguity or uncertainty is one such specific provision. It is also relevant to note that apart from s.603 there are no specific provisions within Part 2-4 of the Act which provides a specific power to revoke a decision to approve an enterprise agreement.

… [there are] at least two very clear ways in which the decision to approve the Agreement could be undone. Firstly, if either party appealed the approval decision and if a Full Bench permitted the appeal to proceed, it was open to the Full Bench to find that the statutory requirements for making an enterprise agreement had not been met and the Full Bench could overturn the original approval decision … Secondly, if either party or any employee sought to enforce the Agreement through the Federal Circuit Court or the Federal Court then the court could determine that the Agreement had not been validly made and the court could effectively set aside the approval decision …”

The bottom line: Parties making enterprise agreements are expected to apply themselves to clear language that accurately reflects their understanding of the agreement terms.

Core Toughened P/L v Construction, Forestry, Mining and Energy Union [2015] FWC 7131 (19 October 2015) 

See also: Variation of ongoing agreement permitted 

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