Summary

  • A Full Bench of the Fair Work Commission terminated 14 legacy enterprise agreements imposed on Aurizon in its final days of Queensland Government ownership.
  • The Full Bench determined that certain restrictive legacy terms were unduly burdensome on Aurizon and prevented Aurizon from making business changes in a competitive market environment. Instead, it was in the public interest to terminate the enterprise agreements.
  • The Full Bench was unconvinced by the union’s argument that terminating the 14 legacy enterprise agreements would lead to job losses or profit taking by Aurizon.

Implications for employers

The owners of former State owned assets subject to legacy State industrial arrangements should carefully consider this decision to determine whether the terms of their industrial arrangements impose unduly burdensome restrictions on their business. If so, and provided the enterprise agreements have expired and reasonable efforts have been made to remove the conditions through negotiations, there may be an ability to apply to the Fair Work Commission for the agreements to be terminated.

Background

In October 2010 the Queensland Government privatised QR National Limited (who would later change its name to Aurizon) by way of an IPO. As part of the IPO process, the Premier of Queensland issued a statement guaranteeing employees’ terms and conditions in enterprise agreements and provided employment guarantee for two years beyond the date of the IPO. Generous clauses were inserted into the enterprise agreements covering the 6000 employees of Aurizon despite the concerns of Aurizon’s management.

Of concern were legacy terms, including:

  • Crew demarcation – preventing train crews performing ground work, even if train crews were trained to perform such work, and similar restrictions on employees’ duties;
  • Unproductive shift rostering arrangements – where train drivers spend the balance of their rostered shift filling in time unproductively;
  • Generous time off – train crews’ entitlement to 20 days off in any 8 week period;
  • No forced redundancies – resulting in 69 employees having no role to perform at Aurizon but unable to be terminated;
  • Recruitment and selection policies – restricting Aurizon’s ability to source skilled labour externally;
  • QR National legacy passes policy – providing employees and their families free or concessional train travel rates; and
  • Other restrictive provisions – covering dispute resolution, roster cycles, drug and alcohol testing, and complex and inconsistent entitlements across enterprise agreements.

The legacy enterprise agreements nominally expired on 31 December 2013. Formal bargaining commenced in February 2013, where Aurizon proposed 3 enterprise agreements to replace the 14 legacy agreements. Unable to agree on the number of replacement enterprise agreements, Aurizon requested the assistance of the Fair Work Commission in resolving the dispute. Deputy President Ashbury concluded that:

“…the likelihood of reaching agreement is virtually nil. Negotiation requires willingness to move on both sides. …”

Similarly the Full Bench found that there had been little or no progress made on any substantive issues. At issue was the Rail, Train and Bus Union (“Union”) unwillingness to depart from the generous legacy terms in the old enterprise agreements.

Aurizon’s argument before the Full Bench was that the Union was not negotiating in good faith on the substantive legacy terms Aurizon wished to remove. For its part, the Union argued that protracted and difficult enterprise agreement negotiations were not new and were certainly not grounds for terminating enterprise agreements. The Full Bench agreed with Aurizon.

Decision

In order to terminate the legacy enterprise agreements, the Full Bench needed to be satisfied that it would be in the public interest, taking into account the views of Aurizon and the Union, and the likely effect that the termination of the legacy agreements would have on employees, the Union and Aurizon.

The Full Bench determined that it would terminate the legacy enterprise agreements for the following reasons:

  1. Termination was not inconsistent with the Fair Work Act 2009 (Cth) (“FW Act”) objective of encouraging good faith collective bargaining, and while it may disturb the bargaining positions of the parties, the obligations of good faith bargaining would facilitate compromise;
  2. The Union still retains its full arsenal of industrial action options under the FW Act to address any issues of power imbalance;
  3. The Commission’s should not presume that terminating enterprise agreements is necessarily against the public interest;
  4. The Full Bench was not convinced that the termination of agreements would lead to significant loss of employment and profit taking by Aurizon. Rather the Full Bench found that the removal of some of the more restrictive legacy terms may in fact enhance job security for Aurizon’s employees;
  5. The restrictive legacy terms are uncommon in enterprise agreements, and prevent Aurizon from making business changes in a competitive market environment; and
  6. The restrictive legacy terms were imposed on Aurizon by the Queensland Government as a condition of the IPO and were designed to protect employees in the short term, not the long term.