Enterprise Agreement approval requirements

Terms hindering part-time employment– s.195 ‘discriminatory term’ – inapplicable to terms that indirectly discriminate – decision set up for Federal Court review

The decision of  Deputy President Gostencnik in Application by Metropolitan Fire and Emergency Services Board [2019] FWC 106 deals with various contentions made (by leave) by the Commonwealth Minister for Jobs and Industrial Relations, and the Victorian Equal Opportunity and Human Rights Commissioner (VEOHRC) that the Commission should not approve the Metropolitan Fire and Emergency Services Board, United Firefighters Union of Australia, Operational Staff Agreement 2016 (Agreement).

Contention that part time employment terms were discriminatory terms = unlawful terms

A contention made by both the Minister and VEOHRC was that terms in the Agreement that were said to impede part-time employment were unlawful terms because they were a ‘discriminatory term[s]’ within the meaning of s.195, thereby rendering the terms ‘unlawful terms’ to that extent (see s.194(a)) with the consequence that the Commission could not conclude that the approval requirement referred to in s.186(4) was met.

The contention was that those terms indirectly discriminated against employees covered because of reasons of sex and family or carer’s responsibilities or reasons that included those reasons.

In relation to that contention, Gostencnik DP held that in making the assessment of whether enterprise agreement terms were discriminatory terms, he was effectively bound by the Federal Court decision of Tracey J in Shop, Distributive and Allied Employees’ Association v National Retail Association (No 2) [2012] FCA 480 to proceed on the basis that an enterprise agreement term was a discriminatory term only if (and to the extent) the term directly discriminates against employees covered by the enterprise agreement on a ground specified in s.195 – it was not relevant to consider whether the term indirectly discriminated against covered employees on such a ground.

Because the parties opposing approval of the enterprise agreement on the discriminatory term ground did so on the basis that the relevant terms indirectly discriminated against covered employees, not that they directly discriminated on those grounds, their contention that the s.186(4) approval requirement was not met, failed.

The reasoning behind the Deputy President’s conclusion that he was bound to apply s.195 of the FW Act on the basis it is confined to enterprise terms that directly discriminate is found at paragraphs [52] to [124].

However, it is significant that on the basis of a developed course of reasoning, Gostencnik DP went on to say that if he was not bound by the National Retail Association decision, he would conclude that a term was a discriminatory term within the meaning of s.195 if the term indirectly discriminated against employees covered by the enterprise agreement on a ground specified in s.195.

Paragraphs [125]-[174] contain the Deputy President’s detailed reasoning to the conclusion that he would reach if not bound by the National Retail Association decision i.e. that an enterprise agreement term which indirectly discriminates against employees covered is a discriminatory term within the meaning of s.195.

Amongst other things, the Deputy President notes that in the context of the General Protections provisions in the FW Act, the Federal Court has taken the view that the question whether an employer ‘discriminates’ against an employer in the sense that expression is used in Item 1(d) of s.342(1) of the Act, comprehends whether the employer’s action involves indirect discrimination as well as whether it involves direct discrimination: Klein v Metropolitan Fire and Emergency Board [2012] FCA 1402 (Gordon J).

Paragraphs [175]-[240] contain the Deputy President’s detailed reasoning applying this alternative view of the reach of s.195 to the relevant terms of the Agreement as they interact with other terms and in the context of the actual working environment, and his conclusion that in certain respects they are discriminatory terms according to that wider indirect discrimination view.

Some notable aspects of the reasoning in paragraphs [175]-[240] are that:

• The Deputy President at para [176] states that: ‘It is not enough, in my view, that the term be capable of indirectly discriminating for one or more reasons proscribed. A term must actually do so. Put another way, the term must produce the proscribed discriminatory outcome vis-à-vis an employee covered by the Agreement. A term may have both a proscribed and a lawful operation. It is only to the extent a term has a proscribed operation that it will be a discriminatory term.’; and at [177] that ‘Provisions of an agreement which can operate in a permissible way without impermissibly discriminating continue to operate.’

• At para [183] the Deputy President states that ‘I consider that it can now confidently be stated that a complete absence of, or limited access to flexible working arrangements in a workplace will have a disproportionately negative impact upon at least employees who are women, parents of young and early school age children and those with family or carer’s responsibilities.’ going on in para [184] to refer the Family Working Arrangements decision [2018] FWCFB 1692 in that regard.

Discriminatory term question being taken further

It is clear that the question of whether a discriminatory term within the meaning of s.195 of the FW Act extends to terms which indirectly discriminate against employees covered by an enterprise agreement is ripe for consideration by a Full Bench of the Federal Court, and that the decision of the Deputy President is written in such a way as to facilitate that review. 

As a means of bringing that about, the Minister for Jobs and Industrial Relations has sought leave to appeal the decision to a Full Bench of the Commission but at the same time made a written request written to Commission President, Iain Ross, asking to refer a question of law about the proper construction of s.195 of the FW Act to the Federal Court.

Other aspects of the decision

The decision also helpfully surveys and summarises the present state of the law regarding the following matters:

• The test for determining whether an enterprise agreement term is an ‘objectionable term’: see s.186(4) approval requirement read with ss.194(b): paras [249]-[280];

• The test for determining whether a term contravenes s.55 of the FW Act (i.e. the provisions that deal with the interaction between National Employment Standards and enterprise agreement terms): s.186(2)(c): see paras [281]-[301];

With respect to this, the Deputy President did hold that particular terms of the Agreement contravened s.55 of the FW Act in that they imposed unauthorised limits and super-added requirements on the NES rights provided by s.65 with respect to requests for flexible working arrangements, going on to indicate that this non-compliance might be capable of being met by a written undertaking: see paras [281]-[301]; [355]-[356].

• The legal principles/analysis that the Deputy President apprehends are applicable for determining whether an enterprise agreement is about ‘permitted matters’: see s. 172: see paras 302-332;

• The ruling approach with respect to the better off overall test: see paras [333]-[354].

Author: Bryan Mueller, Director of Litigation

Date: 2019