In a first for the university sector, Murdoch University has successfully applied to terminate the Murdoch University Enterprise Agreement 2014 (Agreement) under the Fair Work Act.
Like many institutions, Murdoch suffered from the constraints of an agreement that contained prescriptive and problematic clauses which limited its ability to manage its 3,500 staff, to effect organisational change, to control its workforce numbers, and to operate efficiently.
Bargaining with the National Tertiary Education Union (NTEU) for a new enterprise agreement had commenced in April 2016 and reached a stalemate a year later. In order to alleviate the deadlock, and bring about real change, Murdoch took the uncommon step of applying to terminate the Agreement.
In a key decision handed down in August this year, the Fair Work Commission held that terminating the Agreement was not contrary to the public interest and was appropriate in the circumstances. In terminating the Agreement, Commissioner Williams noted:
- There was a financial imperative for Murdoch to make changes in its operations.
- If the Agreement was terminated, Murdoch would have fewer constraints on how it managed its employees and its operations.
- The parties were far apart on multiple matters that were fundamental issues. The context for bargaining had not been neutral and had favoured the NTEU because it was unwilling to agree to changes to the problematic incumbent clauses. Terminating the Agreement would shift the balance in Murdoch’s favour, but would also mean bargaining could continue. There was a greater likelihood that the parties could then successfully complete negotiations for a new agreement.
- Murdoch had given an undertaking to preserve the beneficial monetary clauses for employees for 6 months.
This decision highlights a strategic option for universities where negotiations have reached a deadlock and institutions wish to move away from the overly prescriptive and inefficient clauses that have found their way into enterprise agreements over the years.
Following Commissioner Williams’ decision, and following a number of employers from other industries successfully obtaining orders terminating expired enterprise agreements, this approach has become a politically-sensitive issue. In the recent Senate Inquiry into corporate avoidance of the Fair Work Act, particular consideration was given to the termination of agreements. The majority report of the Senate Education and Employment References Committee has recommended amending the Fair Work Act to prevent the Fair Work Commission from terminating an agreement where workers would be worse off as a result of the termination.
We expect this issue to receive even more focus as we enter 2018. Stay tuned for more developments in this space.