Bringing an end to a bad bargain

Bringing an end to a bad bargain

ARE you stuck with an unsatisfactory Federal industrial agreement?

While there are ways to remedy this, the right to do so is very limited during the nominal life of the agreement.

Even after the nominal expiry date has passed, ease of termination depends on how the termination clauses in the Australian Workplace Agreement or certified agreement were drafted.

Prior to their nominal expiry date, AWAs and certified agreements can be terminated only if both parties agree.

Either the Office of the Employment Advocate or the Commission, as the case may by, must also approve the termination.

After their nominal expiry date, AWAs and certified agreements may be terminated on the application of one of the parties.

It is at this point that the termination provisions in the agreement become extremely relevant.

If there are no provisions in the agreement allowing a party to effectively ‘retire’ from the agreement then a public interest test will be applied before the OEA or commission will approve termination.

In the case of a certified agreement, there is an additional requirement that the commission takes into account the views of both parties. Although the ‘public interest’ and the ‘parties’ interest’ are separate issues, in practice there is usually substantial overlap between the two.

The commission will carefully consider the impact on employees of varying their employment terms and conditions and will also ask the employer to resolve any uncertainty relating to accrued entitlements.

Importantly for employers, it has not been considered contrary to public interest for employees to revert back to the applicable ‘safety net’ award upon termination of a certified agreement, even where the result is a reduction in wages.

Employers should ensure that their AWAs or certified agreements contain conditions enabling termination after the nominal expiry date. Such termination clauses require careful drafting to ensure that the agreement will come to an end upon the happening of certain clearly defined conditions.

Employers should be reluctant to consent to clauses that compel them to negotiate a new agreement. In some cases parties who are not willing to simply terminate an agreement may instead be willing to negotiate either a variation to the agreement or a new agreement to overcome perceived shortcomings.

Kathy Reid, associate - 9429 7695


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