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Federal Court Clarifies Allowable Terms

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Federal Court clarifies allowable terms in Enterprise Agreements. Under the Fair Work Act 2009 (Cth) (FW Act) certain terms are not permitted in enterprise agreements. The Full Court of the Federal Court (Full Court) recently examined such terms in the recent decision of Australian Industry Group v Fair Work Australia [2012] FCAFC 108 (AIG Case). Background to case The AIG Case was an appeal by the Australian Industry Group (AIG) against a decision of Fair Work Australia (FWA) approving the Enterprise Agreement (Agreement) of ADJ Contracting (ADJ). AIG argued that the Agreement contained the following ‘unlawful’ terms: • a job security clause and ADJ’s requirements when engaging contractors; • the right of the union beyond that permitted …show more content…

The Full Court also rejected AIG’s argument that the clause ‘permitted’ adverse action. In interpreting the term ‘permitted’ to mean ‘authorise’ the Full Court found the clause operated passively and therefore did not meet the threshold of ‘authorise’ which would require a positive operation of the clause . AIG also argued that the clause breached the Competition and Consumer Act 2010 (Cth) (CC Act) as the Agreement was an arrangement or understanding between ADJ and the union to stop ADJ from contracting unless certain conditions were met. The Full Court dismissing the argument said that an enterprise agreement could not be an ‘agreement or understanding’ as defined under the CC Act and therefore the CC Act did not apply. Extending the right of the union beyond that permitted in the FW Act AIG argued the right of entry clause was unlawful as it allowed entry to the workplace other that in accordance with Part 3-4 of the FW Act. The right of entry clause states, “An Employee Representative or an official … shall be allowed to enter the workplace … to assist with representing an employee(s)

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