In this recent submission to Fair Work Australia (FWA) in the matter Woolworths Ltd t/as Produce and Recycling Distribution Centres  the Australian Institute of Employment Rights (AIER) argues that dispute resolution procedures in collective agreements are required to contain a dispute settlement term that provides for final settlement by an independent third party.
Woolworths Ltd had applied to the FWA for approval of an enterprise agreement made between it and the Shop Distributive and Allied Employees Association (SDA). The dispute resolution clause of the agreement provided that if a dispute about matters arising under the agreement, or the NES arose, FWA could only arbitrate if it is permitted to do so by all parties concerned.
In the decision at first instance, Commissioner Smith of the FWA tribunal refused to approve the enterprise agreement because it did not contain a compulsory arbitration procedure to settle disputes. The tribunal held that access to arbitration is a prerequisite of a dispute settlement term under the Fair Work Act 2009, that the Fair Work Act empowers the FWA to arbitrate disputes, that arbitration was an “essential ingredient” of the required dispute resolution clause, and finally that dispute resolution procedures should contain the capacity for an independent person to issue a decision binding on the parties.
Woolworths successfully appealed the decision to a Full Bench of FWA. AIER made its first appearance in the tribunal seeking to be heard in the public interest about the operation and construction of the Fair Work Act. AIER was given the opportunity to be heard by Full Bench. Our submission was presented by AIER Executive member and barrister Mark Irving and Victorian barrister Malcolm Harding.
AIER Submission Summary
The AIER submission argues that the Woolworths Enterprise Agreement does not meet the requirements of section 186 (6) of the Fair Work Act 2009 (Cth) (“the Act”), and that therefore the order of Commissioner Smith was correct.
Specifically, AIER posits that Section 186 (6) of the Act provides that under ‘Requirement for a term about settling disputes’ the FWA must be satisfied that the agreement “provides a procedure that requires or allows FWA, or another person who is independent of the employers, employees or employee organisations covered by the agreement, to settle disputes”.
Secondly, Part 2-4 of the Act, which is concerned with establishing terms and conditions of employment for federal system employees by means of enterprise agreements, subjects such agreements to a regime that includes an approval process and that agreements proposed for approval must comply with specified requirements. Importantly, it rules that although parties are free to make an agreement that does not comply with the requirements in the Act, if the parties seek to gain the advantages of the approval of the agreement, then they must comply with the mandatory requirements.
To meet the requirements of subsection 186 (6) the term must “provide a procedure that requires or allows FWA (or another dispute settler) … to settle disputes”. The phrase “to settle” has been carefully chosen by the legislature, and is defined by the Shorter Oxford Dictionary as follows: “decide, come to a fixed conclusion on (a question, a matter of doubt or discussion); to bring to an end (a dispute) by agreement or intervention; put beyond dispute, establish (a principle or fact).” AIER argues that a key notion at the heart of settling a dispute is its finality and resolution, and that the alternative interpretation of the phrase “to settle” sought by Woolworths – “to deal with” – is untenable, as it lacks the essential elements of finality and resolution as outlined above.
The submission notes that Section 3 of the Act provides that “The object of this Act is to provide a balanced framework for cooperative and productive workplace relations that promotes national economic prosperity and social inclusion for all Australians…”. The resolution of disputes between industrial parties is in the public interest. The economy cannot afford long, protracted unresolved disputes, especially given their potential to spill over into the political and social sphere, creating division and disharmony. This destructive potential has been etched on the Australian workplace psyche for over a century. Disputes cause instability and loss and take their toll on the health and wellbeing of participants. Adopting the position advanced by Woolworths permits disputes to remain unresolved and has the potential to reek harm.
Finally, subsection 186(6) states there must be a dispute settler, either the FWA or an independent third party. There may be conditions upon the exercise of the dispute settling functions by the FWA. Those conditions may be imposed by the parties. However the conditions cannot be formulated in a way so as to defeat the purpose of the necessary term. As noted above, the purpose of the s186(6) term is to settle disputes. The parties cannot formulate conditions to the exercise of the FWA functions that subvert that purpose.