Australia: Full Bench in Aurizon turns tide on enterprise agreement terminations

In brief

  • A recent decision of the Full Bench of the Fair Work Commission has overturned previous authority and rejected the notion that it will generally be inappropriate to terminate an expired enterprise agreement during bargaining.
  • Rather, the Full Bench held that terminating an agreement may actually promote the objects of the Fair Work Act, particularly where the terms of the agreement are restrictive and do not deliver productivity benefits.
  • In certain circumstances, this may mean that termination of expired agreements is now a viable 'plan-B' for employers who are faced with a bargaining deadlock, particularly when attempting to wind back unsustainable terms and conditions. Termination of the existing agreement in these circumstances incentivises unions and employees to make reasonable compromises.
  • As always, pre-bargaining planning is vital. The decision highlights that employers must be well prepared with strong evidence about the business’ case for change before making such an application. In this case, Aurizon was able to point to the relatively unique historical context of its privatisation in 2010.

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