Important Full Bench decision on industrial agreement registration process

Important Full Bench decision on industrial agreement registration process

As reported in our ER Alerts on 26 June 2023 and 29 August 2023 some Local Governments have had challenges in registering agreements in the State industrial relations system. These challenges resulted in questions of law being referred to the Full Bench of the Western Australian Industrial Relations Commission (Commission) in City of Cockburn v WASU and others 2023 WAIRC 00787 concerning the Industrial Relations Act 1979 (WA) (IR Act).  The Full Bench handed down its decision on 3 October 2023 (Decision). You can find the Decision on the Commission website here. The questions of law were answered as follows:

(a)  Would the registration of the Agreement including clause 5 – Operation of the Agreement, in particular cl 5.2, be contrary to the Act? No.

(b) Would the registration of the Agreement including clause 6 – Individual Flexibility Arrangements, be contrary to the Act? Yes.

(c) Would the above clauses in the Agreement, if registered, be invalid and of no effect? As to clause 6, yes.

(d) Can the Commission, before registering the Agreement under s 41(2) of the Act, require the parties to effect a variation for a purpose other than ‘giving clear expression to the true intention of the parties’ under s 41(3) of the Act? No.

Key takeaways

(1) An industrial agreement may contain a clause that the agreement is an exclusive code as to terms and conditions of employment for the employer and employees governed by it, to the exclusion of any relevant awards. The Commission held that when sub-clauses 5(1) and (2) were read together, clause 5 of the City of Cockburn Enterprise Agreement 2022 was not contrary to the IR Act. For convenience we set out clause 5 – Operation of the Agreement below, which is based on a model clause WALGA provided to ER subscribers:

1.  This Agreement excludes the Municipal Employees (Western Australia) Award 2021, the Local Government Officers’ (Western Australia) Award 2021 and any other award made under the Industrial Relations Act 1979 (WA) (Award) that otherwise extends to and binds the Employees and Employer to whom this Agreement applies.

2. Other than statutory entitlements (for instances those contained in the MCE Act) this Agreement is intended to set out all of the Employees’ terms and conditions of employment.  To the extent that an Award provided for an entitlement that is different to or not otherwise referred to in this Agreement (including where this Agreement is silent on a matter provided for in an Award), any such Award entitlement will be inconsistent with this Agreement and this Agreement shall prevail.

(2) Individual flexibility arrangements (IFA) that allow an employee to effectively vary a term of an industrial agreement, are not permitted under the IR Act. The IR Act does not allow for the making or variation of industrial agreements by individual employees, they can only be made or varied by application of the relevant employer or union.. When drafting and negotiating industrial agreements in the future Local Governments will need to carefully consider how it can build flexibility into its agreements outside of an IFA clause.

(3) If an industrial agreement contains a clause allowing for an employer and an employee to enter into an individual flexibility arrangement, which is contrary to the IR Act, the clause is invalid and of no effect. 

(4) The Commission’s role in registering industrial agreements is minimal. If the Commission is satisfied that the IR Act provisions for registration are met, as set out in s. 41(1) and s. 41A, then the Commission must register the industrial agreement. The Commission may still require the parties to vary an agreement to ensure it clearly expresses the true intention of the parties, as set out in s. 41(3) of the IR Act. Although not directly mentioned by the Full Bench, we suggest that s. 48A of the IR Act (which says that an agreement must not be registered unless it contains a dispute resolution clause) and s.48B  of the IR Act (regarding superannuation) must also be satisfied.

(5) If an industrial agreement contains a clause, like an individual flexibility arrangement clause, which is invalid and of no effect, it does not prevent the registration of the agreement. However, the Full Bench indicated that given the Decision, they would expect that such provisions are not put into industrial agreements in the future and noted the potential for those provisions to lead to breaches of s. 114 of the IR Act (which prohibits contracting out of awards or agreements) and enforcement action under the IR Act. 

If you have a current application in the Commission for registration of an industrial agreement

If you are a subscriber to the WALGA Employee Relations service, please contact the WALGA ER team as soon as possible. We will be arranging a joint Teams meeting to discuss the approach to these applications. 

Intervention in applications

When the matter was heard on 16 August 2023, the CFMEUW application to intervene was granted by the Commission. The Decision provides the written reasons as to why the CFMEUW was considered to have a sufficient interest in the matter to be granted intervener status. The fact that the CFMEUW was a party to at least 7 industrial agreements applying to Local Governments, where those industrial agreements also contained individual flexibility arrangement clauses, and where the proceedings before the Bench had implications for the Local Government sector as a whole meant that the CFMEUW had sufficient direct interest in the matter to establish its right to be an intervenor.

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If you have any questions about this alert, please email WALGA Employee Relations or call 1300 366 956.