Monday, 28 August 2017

Clear as Mud: Guidance for Interpreting Confusing or Unclear Clauses in Enterprise Agreements

Enterprise agreements are supposed to help employees understand their wages and conditions but are often lengthy documents that contain complex legal language. This can be difficult for employees and employers to understand.

Enterprise agreements can also be riddled with legacy clauses that have been present and unchanged over the years. Where agreements have been rolled over through several different legislative contexts it is not uncommon for these legacy clauses to exist.

Often legacy issues will float under the surface until an employee or a union raises a query. If this occurs the interpretation of enterprise agreement clauses is crucial. However, this is often difficult as the presence or absences of certain clauses or the poor drafting of a clause may have originated through negotiations many years earlier with unrecorded reasoning.

A recent decision by the Fair Work Commission gives some guidance as to how unclear clauses can be interpreted and what contextual information is relevant.

Enterprise Agreement Case Study: AMWU v Berri Pty Limited

The Context

Berri’s enterprise agreement from 2014 contained an attachment which set out the amount to be paid with respect of 10 allowances, including a ‘Laundry Allowance’.  The AMWU brought an application in the Fair Work Commission to determine whether the laundry allowance was payable to employees.

Berri argued that the laundry allowance was not payable as while there was a dollar amount for the laundry allowance in the attachment, there were no substantive clauses dealing with the laundry allowance anywhere else in the agreement. This meant there was no clause which indicated who was paid the allowance, the circumstances in which the allowance was payable or the period over which the allowance was to be paid (i.e. hourly, weekly or monthly).

Berri argued that the inclusion in the attachment was ‘an inadvertent error’ as the allowance was not discussed during the negotiations for the 2014 agreement. Rather, the Laundry Allowance had been negotiated out of Berri’s 1999 EA.

The Decision

The initial decision was appealed by the union to the Full Bench, who after reviewing the appeal, remitted the matter back to further hearing.

The Full Bench also recommended the parties fix the issue when renegotiating the new Agreement.

The facts of this matter really aren’t so important as it is hard to get excited by ‘laundry’. However, the decision is important in setting out rules for the construction of enterprise agreements.

Implications for Your Enterprise Agreements and Industrial Relations

Legacy clauses and other provisions in enterprise agreements can be difficult to interpret and can give rise to expensive and protracted disputes between employers and employees or their representatives.

The real lesson from this case is that when renegotiating enterprise agreements, don’t just roll them over. Make sure they are reviewed with fresh eyes to prevent unnecessary disputes.

If you would like assistance with interpreting confusing enterprise agreement clauses or, better yet, drafting clear ones, please contact us.


This article was produced by HR Legal. It is intended to provide general information only in summary format on legal issues. It does not constitute legal advice, and should not be relied on as such.

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