FWC Terminates Rail Industry Agreements

In a recent decision Aurizon Operations Limited and others [2015] FWCFB 540 (Aurizon), the Fair Work Commission (FWC) agreed to terminate 12 Enterprise Agreements that covered rail industry Employer, Aurizon. The Union and Employees opposed the Application to terminate the Agreements.

Subject to undertakings from Aurizon to maintain wages, allowances and other benefits “as defined”, the Employees now derive their minimum entitlements from the applicable Award and the National Employment Standards.

The Context

Agreements have a Nominal Expiry Date (NED) but still operate until the Agreements are replaced, varied or terminated. The FWC may terminate an Agreement if it is not contrary to the public interest to do so and after taking into account all circumstances of the likely effects on all parties of the termination, if it is appropriate to do so.

In Aurizon the Agreements had reached their NED and prior to the application to FWC to terminate them, there was no replacement or variation. Although bargaining for a new Agreement had commenced, the process was stalled. As such, the Agreements and conditions within would continue to apply.

Aurizon sought to terminate the Agreements because of the “legacy conditions” they contained including “no forced redundancy” and other impositions concerning rostering, relocations and dispute settling provisions. These conditions were due to the previous public-sector owners and Aurizon did not believe they could wait any longer to restart the previously stalled bargaining for replacement Agreements.

The Decision

A key factor in the decision to terminate the Agreements was due to the rail freight industry facing a “dynamic state of transition”. Due to this transition, Employers in the industry are required to look for improvements and efficiencies in order to enhance their competitive position. Of equal importance for Employers in the industry, is to maintain their market share which requires them to compete more effectively in order to secure new opportunities.

In consideration of all the circumstances, including the above, the FWC concluded that it was not contrary to the public interest to terminate the Agreements and made an order that they be terminated effective 18 May 2015.

The Impact of the Decision

It is likely that the impact of the decision to terminate the agreements will:

  • Place Aurizon in a better bargaining position in negotiating new Agreements;
  • Provide Aurizon the flexibility to make changes to the productivity before the new agreement is made;
  • Encourage Employees to negotiate flexible work arrangements;
  • Create the opportunity for Employees to offer KPI measures based on productivity improvement in order to receive an increase in wages; and
  • Allow the Aurizon to make necessary and immediate redundancies of approximately 69 Employees.

The decision in Aurizon is likely to be appealed given the opposition of the Union and Employee’s.

NB Lawyers are offering a legal consultation to all Employers.

For further information please contact Jonathan Mamaril, Principal on 07 3876 5111 or email [email protected].

Written by
Jonathan Mamaril
Principal & Director, NB Lawyers – the Lawyers for Employers
07 3876 5111
[email protected]