Agreement termination should not be a 'matter for discretion'

Cases

Agreement termination should not be a 'matter for discretion'

The AIRC has told a construction company and the CFMEU to revise provisions in a certified agreement that allowed for its termination at the initiative of either party.

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The AIRC has told a construction company and the CFMEU to revise provisions in a certified agreement that allowed for its termination at the initiative of either party.

Despite a similar provision having been included in the company's enterprise agreement since 1996, Senior Deputy President O'Callaghan said he could not certify the agreement as it stood. The agreement stipulated that it would stay in force until December 31, 2005, unless either party felt it had exhausted the agreement's dispute settlement procedure and opted to revoke the agreement.

He asked the parties to provide an alternative termination provision and said employees could then choose to endorse the agreement in a form which made it clear that termination was not a matter for the discretion of the parties nor was it related to either industrial action, or non-compliance with it, by the parties.

Background

Construction company Hansen Yuncken Pty Ltd and the Construction Forestry Mining and Energy Union applied for the certification of the Hansen Yuncken Pty Ltd Enterprise Agreement No. 5 2003 pursuant to section 170LJ of the Workplace Relations Act 1996.

Senior Deputy President O'Callaghan said the only potential impediment to certification related to provisions governing the termination of the agreement. The agreement stipulated that it would stay in force until December 31, 2005, unless either party felt it had exhausted the agreement's dispute settlement procedure and opted to revoke the agreement.

Senior Deputy President O'Callaghan asked the parties to comment on the extent to which the agreement purported to enable it to be terminated without formal approval of the Commission. He also asked for advice on the extent to which the employees who voted for the agreement may have done so on the understanding that the agreement could be terminated.

The company said this was the fifth agreement containing this particular provision and that the parties understood the agreement could only be terminated in accordance with section 170MG of the Act. It argued that the expression 'and will continue in force until October 31, 2005, unless revoked in writing by either party' was simply a shorthand description for the approach set out in greater detail later in the agreement.

Findings

Senior Deputy President O'Callaghan found that the agreement was not consistent with the requirement for a specified nominal expiry date. 'In its current form the agreement envisages termination may occur prior to the nominated expiry date and that this termination may fundamentally be at the initiative of the parties.'

The senior deputy president said the process set out for early termination might have influenced employees' understanding of and approach to the agreement. He also found that the extent to which continuing industrial action was recognised as a step to termination of the agreement might 'establish the quite false impression that the agreement legitimised industrial action, when the reality is that the Act does not allow for it'. Consequently, he was not prepared to certify the agreement as it stood.

He asked the parties to provide an alternative termination provision and said employees could then choose to endorse the agreement in a form which made it clear that termination was not a matter for the discretion of the parties nor was it related to either industrial action, or non compliance with it, by the parties.

See: Hansen Yuncken Pty Ltd and Another, AIRC PR934086, (7 July 2003).

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