Sec 186(6) of the Fair Work Act requires that enterprise agreements must contain a dispute settlement procedure which provides a procedure which requires or allows the Fair Work Commission or another person who is independent of the employers, employees or employee organizations covered by the proposed agreement to settle disputes about any matters arising under the agreement and in relation to the NES. Quite why this requirement is not contained in Chapter 2, Part 2-4 Div 5 which deals with “Mandatory terms of enterprise agreements” is a drafting mystery though.
The Fair Work Regulations contain a model or default if you like dispute settlement procedure, often used.
All modern awards also contain a similar procedure.
Power to deal with a dispute by conciliation, mediation or by expressing a non-binding recommendation or opinion, and this assistance is also available in most circumstances at the general discretion of the Commission where there is provision for dispute resolution assistance in contracts of employment or other written agreement.
The Commission does not have the power to determine the dispute by a binding decision, called arbitration, unless the parties agree to this. All valid enterprise agreements thus contain a dispute settlement procedure along these lines and either allow for the parties to agree to arbitration after the non-binding process has been exhausted or sometimes by a right of appeal from a non-binging declaration. Some practitioners regard this latter right as offending the Fair Work Act, and in all cases the Commission is very cautious not to arbitrate a dispute unless the parties agree one way or the other. This is because the objective of the Act and the enterprise bargaining regime is to preclude arbitrated disputes during the term of an enterprise agreement wherever possible, but without choking the system when there is a dispute.