Disputes and enterprise agreements

This section from a decision of the Fair Work Commission in an appeal deals with the legal issues which are involved when the Commission is asked to deal with a dispute which arises under a dispute settlement procedure provided for by a modern award or enterprise agreement.

“[114] Section 595 of the Act states:

“(1) The FWC may deal with a dispute only if the FWC is expressly authorised to do so under or in

accordance with another provision of this Act.

(2) The FWC may deal with a dispute (other than by arbitration) as it considers appropriate,

including in the following ways:

(a) by mediation or conciliation;

(b) by making a recommendation or expressing an opinion.

(3) The FWC may deal with a dispute by arbitration (including by making any orders it considers

appropriate) only if the FWC is expressly authorised to do so under or in accordance with another

provision of this Act.

Example: Parties may consent to the FWC arbitrating a bargaining dispute (see subsection

240(4)).

(4) In dealing with a dispute, the FWC may exercise any powers it has under this Subdivision.

Example: The FWC could direct a person to attend a conference under section 592.

(5) To avoid doubt, the FWC must not exercise the power referred to in subsection (3) in relation to

a matter before the FWC except as authorised by this section.”

[115] Further, s.738 of the Act states:

“This Division applies if:

(b) an enterprise agreement includes a term that provides a procedure for dealing with disputes …”

[116] Section 739 states:

“(1) This section applies if a term referred to in section 738 requires or allows the FWC to deal with

a dispute.

(3) In dealing with a dispute, the FWC must not exercise any powers limited by the term.

(4) If, in accordance with the term, the parties have agreed that the FWC may arbitrate (however

described) the dispute, the FWC may do so.

Note: The FWC may also deal with a dispute by mediation or conciliation, or by making

a recommendation or expressing an opinion (see subsection 595(2)).

(5) Despite subsection (4), the FWC must not make a decision that is inconsistent with this Act, or

a fair work instrument that applies to the parties.

(6) The FWC may deal with a dispute only on application by a party to the dispute.”

[117] In effect, clause 15.5 of the 2017 Agreement expressly authorises the FWC to arbitrate

a relevant dispute if conciliation has failed to resolve it.181 A conciliation was conducted by the

Commission which did not resolve the dispute. Accordingly, clause 15.5 provided the

Commission with the jurisdiction to arbitrate the matter.

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[118] In his written submissions, the Appellant referred to Scott Nigel Tracey v BP Refinery

(Kwinana) Pty Ltd182 (Kwinana). In that decision, the Full Bench observed that it was open to

the Commission to make an order for compensation for, in effect, the underpayment of

wages.183 That case concerned an appeal about matters that included the scope of the arbitration

under s.739 and related provisions of the Act. The Full Bench in that case stated:

“[40] As to the Deputy President’s characterisation of the dispute as a claim for recovery of

underpayments and therefore beyond jurisdiction, the Deputy President was correct in so far as any

underpayment arises from the operation of the 2014 Agreement because the dispute is raised under the

Determination about a dispute or grievance in relation to the Determination. But she was in error to so

characterise the dispute in respect of any contended underpayment under the Determination. As we have

already explained, as a private arbitrator, acting under clause 16 of the Determination, the Deputy

President is authorised to make decisions as to the legal rights and liabilities of the parties to the dispute.

That involves deciding all questions both of law and of fact that arise in the dispute, subject to any

limitation on power in the dispute settlement clause, and a requirement not to make a decision that is

inconsistent with the Act or a fair work instrument that applies to the parties. Thus, the Deputy President

was authorised to determine the appropriate classification to which the appellant is entitled under the

Determination, the appropriate pay rate that thereby attaches, whether the appellant had been underpaid

and, if so, by what amount. Orders compensating the appellant for any underpayment could also have

been made. Though this may be akin to the exercise of judicial power, such power is not being exercised

because the parties have agreed to permit the Commission to determine their dispute by private arbitration.

The Deputy President mischaracterised the dispute in this regard and was in error to dismiss the dispute

on this basis.”

[119] However, the circumstances of Kwinana differ from those of the present proceedings.

The notion of “compensation” being awarded by the Commission was to give effect to a

decision about how the industrial instrument in that matter was to be applied and was entirely

consistent with the terms of that instrument and the effect of that decision. That is, there was an

“underpayment” of the entitlements expressed by the instrument and an order dealing with the

consequences of that finding could be made. This is the context in which those remarks should

be considered.

[120] The Appellant also referred to a number of authorities where an award for compensation

was made in matters arbitrated by the Commission.184 To the extent that these relied upon

matters determined under the General Protections provisions of the Act,185 these do not assist.

There is an express power186 to award compensation under the terms of the Act in such matters

where the Commission is dealing with that dispute by arbitration. Relevant to the present

proceedings, s.595(3), and the other powers set out in Part 5-1 of the Act, do not provide such

express authority given the terms of the 2017 Agreement.

[121] In FreshFood Management Services Pty Ltd v “Automotive, Food, Metals, Engineering,

Printing and Kindred Industries Union” known as the Australian Manufacturing Workers’

Union (AMWU) and another187 (FreshFood), the Full Bench reviewed the basis of the power

for the Commission to arbitrate disputes of this general kind and observed:

“[118] In assessing the scope of the arbitration authorised by the Agreement, we consider that the

following non-exhaustive summary of the approach to such an exercise as provided by Saunders DP in

Davis and others v The University of Newcastle188 is apt:

“[12] The scope of a dispute resolution clause in an enterprise agreement should not be narrowly

construed; “to do so would be contrary to the notion that certified agreements are intended to

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facilitate the harmonious working relationship of the parties during the operation of the

agreement.”

189

[13] In characterising the nature of a dispute the Commission is not confined to the application

filed to deal with the dispute.190 The entire factual background is relevant, and may be ascertained

from the submissions advanced by the parties on the question of jurisdiction.191 Further, a dispute

may evolve during proceedings in the Commission. It may therefore be necessary in some cases

when ascertaining the character of a dispute to have regard to both the nature of the dispute

alleged in an originating application and the factual circumstances as they evolve.192

[14] It is also important to note that the character of the dispute is distinguishable from any relief

which may be sought, or granted, following an arbitration of the dispute.193 However, the relief

sought may cast light on the true nature of the dispute in some cases.194

[15] If the Commission has jurisdiction to deal with the dispute, the nature of the relief that the

Commission may grant in such circumstances will depend on the agreement of the parties as

recorded in their enterprise agreement, provided that such relief is reasonably incidental to the

application of the Enterprise Agreement to which the dispute relates.”

195

[122] Although this decision was largely about the power and scope to arbitrate disputes, it is

of assistance when examining the approach to be adopted to remedies in that context.

[123] In determining whether the Deputy President had the jurisdiction to make an award for

compensation in the context of this dispute, we must examine whether the terms of the 2017

Agreement provide a foundation for an award of compensation in the context of a dispute about

the prior consultation required for the implementation of what the parties have agreed was major

change.

[124] Relevantly, clause 15.5(b) states that “the parties to the dispute will implement any

arbitrated decision of the FWC”. However, there is no express provision within clause 15.5,

clause 12 or the Agreement more generally, that empowers the Commission to make an order

for compensation in the present context.

[125] Further, there is nothing in the language of clause 15.5 which implies that an award of

compensation could be ordered by the Commission in respect of a dispute of the kind before

the Deputy President. The language of clause 15.5, and the Agreement more generally, does

not suggest that it was intended for the Commission to be given such powers as to make an

order for compensation. Further, the concept of compensation being awarded for, in effect, the

consequence of the dismissal, is not reasonably incidental to the dispute about the proper

application of clause 12 of the 2017 Agreement and whether the associated direction was lawful

and reasonable, or with the application of that agreement more generally, as contemplated in

FreshFood and Kwinana. In both of those cases, the notion of compensation was directly

incidental to the subject matter of the disputes which concerned entitlements of employees

under the relevant agreements, to the amounts claimed in compensation.

[126] The proposed compensation would also create a new obligation not consistent with the

terms of the 2017 Agreement. In the absence of a foundation whereby it could be said that the

parties had agreed to empower the Commission to do so, this would also not be consistent with

the scheme of the Act.

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[127] Accordingly, we consider that the Deputy President was correct in finding that he had

no jurisdiction to make an award for compensation in the context of the dispute that was before

the Commission and the terms of the agreement under which the dispute was brought and to

which it related. Given that compensation was the purpose of the arbitration as it unfolded

before the Deputy President, and the outcome sought by the Appellant, we consider that there

is no utility in this appeal.

[128] In light of this finding, it is not necessary for us to deal with the appeal grounds

concerning the approach to compensation adopted by the Deputy President.

Order

[129] We order that the appeal be dismissed.”

 

Mitchell v University of Tasmania [2023] FWCFB 160 delivered 4 October 2023 per Asbury VP, Hampton DP and Plat