Termination of enterprise agreements under the Fair Work Act 2009 (Cth) and final offer arbitration

Abstract

Enterprise agreements made and approved under the Fair Work Act 2009 (Cth) (FW Act) continue in existence until they are replaced by a subsequent agreement or terminated by the Fair Work Commission (FWC). Uncontested or consensual applications to terminate agreements are not uncommon and do not attract controversy. However, contested applications are controversial and have recently been the subject of significant attention in the media and in Parliament. This article examines applications by employers to terminate existing enterprise agreements during contested bargaining for a replacement agreement. Most of these cases arise in the context of highly charged negotiations between parties who have been bargaining for an extended period, commonly involving multiple FWC proceedings and where the dispute appears to be at impasse. The application to terminate the agreement is presented by the employer as an attempt to break the impasse and resolve the dispute. The article considers the extent to which the FW Act agreement termination sections are operating to facilitate a form of compulsory arbitration of industrial disputes. Termination applications can be made unilaterally by one party to the dispute, and agreement termination can occur in the face of vigorous dissent. In particular, the discussion examines the parallels between FWC decisions on termination and last offer arbitration - a form of arbitration where an arbitrator chooses between the final offers made by parties to a dispute at impasse. The discussion concludes that the provisions parallel final offer arbitration but produce results which operate fundamentally to the advantage of employers in contested bargaining.