Unlawful terms

See Fair Work Act 2009 s.194

A term of an enterprise agreement is an unlawful term if it is:

• a discriminatory term
• an objectionable term
• an objectionable emergency management term
• a term that would allow an employee or employer to opt-out of coverage of the agreement
• a term, where an employee would be protected from unfair dismissal after completing the minimum employment period, that confers an entitlement or remedy in relation to unfair termination of the employee’s employment before the employee has completed that period
• a term that excludes the application of the unfair dismissal provisions in Part 3-2 of the Fair Work Act to a person, or modifies the application of these provisions in a way that is detrimental to, or in relation to, a person
• a term that is inconsistent with a provision of Part 3-3 of the Fair Work Act (which deals with industrial action)
• a term that provides for an entitlement to enter premises for certain purposes, which is not in accordance with the right of entry provisions in Part 3-4 of the Fair Work Act
• a term that provides for the exercise of a state or territory OHS right other than in accordance with the right of entry provisions in Part 3-4 of the Fair Work Act, or
• a term that requires or permits superannuation contributions for a default fund employee to be made to a superannuation fund that does not satisfy one of the following:
  • offers a MySuper product
  • is an exempt public sector scheme, or
  • is a fund of which a relevant employee is a defined benefit member.

Related information

• Unlawful terms – common defects & issues

A discriminatory term is a term that discriminates against an employee covered by the enterprise agreement because of, or for reasons including race, colour, sex, sexual orientation, age, physical or mental disability, marital status, pregnancy, religion, family or carer’s responsibilities, pregnancy, religion or political opinion, national extraction or social origin.[1]

A discriminatory term must discriminate against an employee because of, or for reasons including, one or more of the specified characteristics or attributes. It is not enough that the term be capable of indirectly discriminating, a term must actually do so.[2]

A term of an enterprise agreement does not discriminate against an employee:

• if the reason for the discrimination is the inherent requirements of the particular position concerned, or
• merely because it discriminates, in relation to employment of the employee as a member of the staff of an institution that is conducted in accordance with the doctrines, tenets, beliefs or teachings of a particular religion or creed:
  • in good faith, and
  • to avoid injury to the religious susceptibilities of adherents of that religion or creed.

A term of an enterprise agreement does not discriminate against an employee merely because it provides for wages for:

• all junior employees, or a class of junior employees, or
• all employees with a disability, or a class of employees with a disability, or
• all employees to whom training arrangements apply, or a class of employees to whom training arrangements apply.

As noted above, an objectionable term is also an unlawful term.

An objectionable term is a term that requires or permits a contravention of the Fair Work Act's general protections provisions or the payment of a bargaining services fee.[4]

For a term to be objectionable, the term must require or permit (in the sense of authorise) etc taking adverse action for a proscribed reason in contravention of the general protections provisions.[5] A term of an agreement could be objectionable on the basis of indirect discrimination.[6]

It is not adverse action for a union to discriminate in favour of its own members and against non-members.[7]

A bargaining services fee is any fee payable to an industrial association, or to someone in lieu of an industrial association, for the provision of bargaining services. This does not include membership fees.[8] Industrial associations can offer bargaining services on a fee for service basis where an individual voluntarily enters into a contract.[9]

As set out above, a objectionable emergency management term is also an unlawful term. Employee claim action must not be in support of or seek to advance claims to include unlawful terms in an enterprise agreement.

A term of an enterprise agreement is an objectionable emergency management term if an employer covered by the agreement is a designated emergency management body and the term has, or is likely to have, the effect of:

• restricting or limiting the body's ability to do any of the following:
  • engage or deploy its volunteers
  • provide support or equipment to those volunteers
  • manage its relationship with, or work with, any recognised emergency management body in relation to those volunteers
  • otherwise manage its operations in relation to those volunteers, or
• requiring the body to consult, or reach agreement with, any other person or body before taking any action for the purposes of doing anything mentioned in s.195A(1)(a), or
• restricting or limiting the body's ability to recognise, value, respect or promote the contribution of its volunteers to the well-being and safety of the community, or
• requiring or permitting the body to act other than in accordance with a law of a state or territory, so far as the law confers or imposes on the body a power, function or duty that affects or could affect its volunteers.[10]

However, a term of an enterprise agreement is not an objectionable emergency management term if:

• both of the following apply:
  • the term provides for the matters required by s.205(1)–(1A) (which deal with terms about consultation in enterprise agreements)
  • the term does not provide for any other matter that has, or is likely to have, the effect referred to in s.195A(1), or
• the term is the model consultation term.

Sections 195A(1)(a), (b), (c) and (d) do not limit each other.

Meaning of 'designated emergency management body'

A body is a designated emergency management body if:

• either:
  • the body is, or is a part of, a fire-fighting body or a State Emergency Service of a state or territory, or
  • the body is a recognised emergency management body that is prescribed by the regulations[11] for the purposes of s.195A(4), and
• the body is, or is a part of a body that is, established for a public purpose by or under a law of the Commonwealth, a state or a territory.

However, a body is not a designated emergency management body if the body is, or is a part of a body that is, prescribed by the regulations[12] for the purposes of this subsection.

Meaning of 'volunteer of a designated emergency management body'

A person is a volunteer of a designated emergency management body if:

• the person engages in activities with the body on a voluntary basis (whether or not the person directly or indirectly takes or agrees to take an honorarium, gratuity or similar payment wholly or partly for engaging in the activity), and
• the person is a member of, or has a member-like association with, the body.

Limited application of objectionable emergency management term for certain terms

If:

• a term of an enterprise agreement deals to any extent with the following matters relating to provision of essential services or to situations of emergency:
  • directions to perform work (including to perform work at a particular time or place, or in a particular way)
  • directions not to perform work (including not to perform work at a particular time or place, or in a particular way), and
• the application of s.195A(1) in relation to the term would (apart from this subsection) be beyond the Commonwealth’s legislative power to the extent that the term deals with those matters;

then s.195A(1) does not apply in relation to the term to that extent.

Note:  See paragraph (l) of the definition of excluded subject matter in s.30A(1) and s.30K(1).

NO unlawful terms included

Discriminatory term

Re The University of Melbourne [2014] FWCA 1133 (Bissett C, 13 February 2014).

An application was made for the approval of an enterprise agreement known as the University of Melbourne Enterprise Agreement 2013. The NTEU, CEPU, CPSU, CFMEU and United Voice were all bargaining representatives.

The unions argued that the parental leave clause was discriminatory against birth fathers who take partner leave, when compared to male carers of an adopted child or, males who take permanent care leave. This was because only birth fathers were not entitled to the return to work bonus.

The Commission found that, in accordance with the Sex Discrimination legislation, it was incorrect to compare birth fathers with men who take adoption and permanent care leave. Correctly, these employees should be compared with a person without family responsibilities. In this case, no person taking partner leave, regardless of gender, is entitled to the bonus. Therefore, the Commission found that term was not discriminatory and the agreement was approved.

Unlawful term included

Right of entry

Re Australian Industry Group [2010] FWAFB 4337 (Giudice J, Watson SDP, Blair C, 11 June 2010), [(2010) 196 IR 125].

Pacific Brands Limited t/a Dunlop Foams sought approval of an agreement that contained a clause dealing with right of entry. The clause entitled an authorised representative of the union to enter the employer's premises at all reasonable times to interview employees but not so as to interfere unreasonably with the employer's business.

At first instance, the agreement was approved. However, AIG appealed the decision on basis that the Commission should not have approved the agreement because it contained an unlawful right of entry term. To be unlawful, the agreement term must have three elements: it must provide for an entitlement; the entitlement must be to enter premises for a purpose referred to in s.481 (investigation of suspected contraventions) or to hold discussions of a kind in s.484, and the term must purport to permit entry other than in accordance with Part 3–4.

The Full Bench found that the right of entry clause provided for an entitlement, that entitlement related to entering premises and holding discussions and had been drafted so as to apply in a manner clearly inconsistent with the Part 3–4. The Full Bench found that the right of entry clause was unlawful and quashed the approval of the agreement.