Despite strong union and employee opposition, the Full Bench of the Fair Work Commission (FWC) permitted the termination of 12 enterprise agreements that had passed their nominal expiry date while the parties were bargaining for a new agreement. We discuss the Commission’s decision of Aurizon Operations Limited; Aurizon Network Pty Ltd; Australian Eastern Railroad Pty Ltd [2015] FWCFB 540 and its implications for employers briefly below.

The Facts

Aurizon was formally known as QR National before it was privatised in 2010. Aurizon brought an application before the FWC to terminate 12 enterprise agreements (EAs) after bargaining negotiations reached a deadlock. The EAs had been negotiated prior to the privatisation process and contained a number of generous ‘legacy provisions’ reflective of the government policies at the time.

These clauses included:

  • strict work demarcations that regularly resulted in employees being idle for significant portions of their shift;
  • no forced redundancies;
  • inflexible rostering arrangements;
  • limited means of drug and alcohol testing;
  • free rail travel for employees, dependents and partners;
  • recruitment restrictions with requirements to internally advertise all vacant positions; and
  • a dispute resolution clause that enabled the unions to delay workplace changes.

Aurizon argued that the clauses constrained its ability to operate effectively, productively and competitively. In particular, Aurizon submitted that its EAs were placing it in a position of competitive disadvantage when tendering for work.

Objections from Aurizon employees

A large number of employees and relevant unions opposed the termination of the EAs. In particular, the unions argued that given Aurizon was engaging in bargaining for new EAs, the termination of the existing EAs would diminish any incentive for Aurizon to bargain while it had a cost advantage, and therefore, giving it an unfair advantage in the current bargaining process.

The decision of the Full Bench

The FWC considered extensive evidence from both Aurizon and the unions, including an analysis of its competitor’s EA and economic data on current market conditions. The FWC rejected the union’s argument that the termination would give Aurizon an unfair advantage. It stated that there should be no ‘predisposition’ against terminating an EA and that it cannot be expected that once a nominal expiry date has passed, terms and conditions in an EA should continue in perpetuity.

Implications for employers

There have been numerous cases where members of the FWC have declined to terminate EAs when requested by an employer to do so. However, this decision is a positive development for employers seeking to terminate expired enterprise agreements that are no longer suited to the current economic climate and its operating environment.