Model Clause and EBA do not co-exist

Model Clause and EBA do not co-exist

Appeal against a decision of the Full Bench who approved Teekay Shipping’s  (Teekay) EBA containing consultation clauses that were not consistent with the requirements detailed under s205 of the Fair Work Act (the Act).

The question arose whether the Modern Consultation Term (MCT) prescribed in the Act should be deemed to be part of the EBA and, if so, what effect was there if there were inconsistencies between the Act provisions and the terms of the EBA.

The original case concerned the consultation process undertaken by Teekay when making 22 employees redundant.

The Full Bench determined that both the MCT and the EBA clauses could co-exist and should be read in conjunction.

The Appeal Judges noted:

  • The EBA required Teekay to consult before it made any definite decision to implement a change. A change could only be made after consultation occurred, and if the Union disagreed with the proposed changes, they could refer the matter to FWC for arbitration.

  • In contrast, both the MCT and the Award required Teekay to consult only when they had made a definite decision to make a change.

Further, they identified two (2) deficiencies between the EBA clauses compared to the MCT.

Firstly, the EBA only allowed the Union to be the employees’ representatives during Consultation.

Secondly, the EBA clauses didn’t make provision for roster changes as required by clause 205(1A) of the Act.

The Appeal Judges rejected the Full Bench’s argument that both the non-compliant provisions of an agreement dealing with consultation could co-exist with the MCT. As noted by Justices’ Rares and Logan,

“In our opinion, the Full Bench’s reasoning overlooked the significance of the Parliament mandating that, if an enterprise agreement did not contain a term (or more than one when read together) that complied with the definition of a consultation term in s 205(1) and (1A), the MCT became a part of the agreement so as to achieve what the Parliament intended… The terms of the MCT as a statutorily imposed term cannot be read down in the process of construing it as part of an enterprise agreement”.

Further,

“Hence, by force of law, if an enterprise agreement fails to contain a consultation term that complies in all respects with s 205(1) and (1A), s205 (2) deems the MCT to be a part of the agreement so that consultation must occur only in accordance with the statutorily prescribed mechanism”.  

Consequently, they determined that the MCT was a term of the EBA (by force of s205) and that the terms of the MCT applied to the exclusion of any rights or obligations conferred by the EBA or the Award.

Similarly, Justice Wigney commented,

“The Full Bench should have concluded that, once the model consultation term is taken to be part of the Enterprise Agreement, it effectively supplanted or displaced the otherwise deficient or defective clauses or clause that provided for consultation”.

Teekay Shipping (Australia) Pty Ltd v Auld [2020] FCAFC 206 (27 November 2020)

For queries about EBAs or other employment questions, please contact Dean Cameron at Workforce Advisory Lawyers – We Know Employment Law on 0417 622 178, 1300 WAL LAW or via email to dean.cameron@workforceadvisory.com.au

Disclaimer: This information is provided as general advice on workplace relations and employment law. It does not constitute legal advice, and it is always advisable to seek further information regarding specific workplace issues. Liability limited by a scheme approved under professional standards legislation.

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