In most universities, the majority of academic and professional or general staff are covered by an enterprise agreement. Recently however there has been an increase in the number of Fair Work Commission disputes raised (by employees and unions) over the interpretation of clauses in those enterprise agreements.

The risks for universities where clauses are misinterpreted or incorrectly applied, eg on the payment of overtime or penalty rates - are obvious. So when one of these contested clauses lands on your desk, how do you get to the bottom of what it actually means?

First principles

First look closely at the actual words of the clause and work out their ordinary meaning.

If the meaning is not clear on the face of the words (and that is usually why you've been contacted in the first place) look at the circumstances surrounding the use of the words to determine the context and purpose of the clause.

Rules of interpretation

The legal rules for interpreting an enterprise agreement are similar to those for legislative interpretation – with a twist.

There is a long tradition of generous construction over a strictly literal approach to interpreting industrial awards and agreements. The courts acknowledge that these types of instruments cannot be interpreted in a vacuum without regard to industrial realities.

The basic rules are:

  • The Acts Interpretation Act does not apply to the construction of an enterprise agreement.
  • If the agreement has a plain meaning, evidence of the surrounding circumstances will not contradict the plain language.
  • However, if the language is ambiguous or susceptible to more than one meaning - evidence of surrounding circumstances (ie context and purpose) can aid interpretation.

The context and purpose might appear from:

  • Prior negotiations to the extent that they establish an objective intention that was known to the negotiating parties.
  • Notorious facts of which the parties' knowledge can be presumed.
  • Matters that were contemplated by the parties in negotiation and amounted to a common assumption.
  • The text of the agreement viewed as a whole.
  • The placement of the relevant clause within the agreement.
  • The legislative context in which the agreement was made and in which it operates.

Interpreting an enterprise agreement should not involve rewriting the agreement to achieve what is considered to be a fair outcome. Rather, the task will involve interpreting the true meaning of the agreement that has been produced by the negotiating parties.

What do Universities need to do? 

Interpretation issues are generally complex and fraught with legal grey areas so independent advice is generally recommended.

Disputes raised under the dispute settlement procedure in your enterprise agreement carry a requirement to show that attempts have been made to settle the matter internally before it can be escalated to the Fair Work Commission.

Independent legal advice can help the University understand its prospects should the agreement ultimately be tested in the Commission.

If a dispute proceeds to the Commission an initial attempt will be made to resolve it through conciliation. If that fails the Commission has wide powers to deal with a dispute. This may be through arbitration (a hearing where the Commission makes a binding decision) or less formal means, such as a determinative conference (where the Commissioner takes on a 'fact finding' role, including conferencing with relevant parties, and then hands down a binding decision).