What is the difference between managerial prerogative and a condition of employment?
In Australian Municipal, Administrative, Clerical and Services Union v North East Water (2014) FWC 6922 the Fair Work Commission was called upon to determine whether an enterprise agreement, which contained a no extra claims clause, had been breached by an employer when it chose to phase out the application of a policy which gave some employees limited private use of a company vehicle as “a reward for exceptional performance”. The no extra claims provisions, which are very common in contemporary enterprise agreements to give certainty during the length of their tenure, prohibited any claims from being made in relation to ‘salary increases or conditions of employment sought or granted, except for those granted under the terms of this enterprise agreement.
Unsurprisingly, the company’s argument was that its internal management policies constituted managerial prerogative inter alia because its management policies had not formed part of the bargaining process which lead to the making of the enterprise agreement. On its face, this is a compelling argument.
Nevertheless, in an unconvincing judgment, the Commission rejected the argument, holding that the right to limited use of a company vehicle was a “condition of employment” particularly as there was evidence that two employees accepted the use of a vehicle in lieu of a salary increase for promotions to supervisor.