The FWC's powers of arbitration under enterprise agreements - an underestimated power

09 Mar 2018

The FWC’s powers of arbitration under enterprise agreements—an underestimated power* 

Oshie Fagir, Barrister, Greenway Chambers

*This paper was prepared to accompany a presentation delivered as part of the Greenway Chambers CPD series. It is intended to identify some of the relevant issues for the purposes of discussion and does not purport to be a comprehensive treatment of the topic. The author may be contacted at oshie.fagir@greenway.com.au and welcomes any comments, corrections or criticisms.

 

Contents

A. Introduction ................................................................................................................................. 1

B. The varieties of arbitration .......................................................................................................... 2

C. Arbitration of disputes under enterprise agreements .................................................................. 7

D. The nature of EA arbitration and the implications for judicial review ..................................... 10

E. Establishment of new conditions through EA arbitration ......................................................... 17

F. Conclusions ............................................................................................................................... 18

 

A. Introduction

1. The word “arbitration” competes with “permission to appear” and “penalty rates” for the title of term most commonly used by industrial lawyers. It is surprising that a word so commonly used is, in some respects, so poorly understood.

2. Most industrial lawyers, if asked, will say that arbitration is a process whereby future rights are created, as distinct from judicial determination which is a process whereby past rights are determined and conclusively pronounced upon. They might go on to explain that the past/future distinction marks out the boundary of the power of federal industrial tribunals because Chapter III of the Constitution reserves the judicial function of determining existing rights to the courts. They might even identify R v Kirby; Ex Parte Boilermakers1 as authority for the latter proposition.

3. That common understanding of arbitration is not wrong, but it is incomplete, and as the cliché goes, a little knowledge is a dangerous thing. In what follows I will try to complete the picture. I propose to do that by identifying some of the fundamental characteristics of arbitration, and attempt to locate arbitration under enterprise agreements at the appropriate point on the spectrum between traditional industrial arbitration on the one hand and commercial arbitration on the other.

4. In so doing, I hope to address some common misconceptions about the power of the Fair Work Commission (FWC), particularly in the area of dispute resolution under enterprise agreements. In particular I will suggest that the power of the FWC when determining disputes under enterprise agreements is potentially—depending on the terms of the dispute procedure—broader than commonly assumed. Most notably, I suggest that: (a) The Boilermakers prohibition on determination and declaration of the parties’ existing rights does not apply. There is no general prohibition, for example, on the FWC determining a claim that an employee had been underpaid.

(b) The FWC is empowered to decide finally all questions of fact and law arising in the relevant dispute. As a corollary, the decision of the FWC cannot be set aside by a court on the basis that it had made an error of fact or law. That remains true no matter how large the dispute or how serious the consequences of the FWC’s decision.

(c) There is no reason in principle why the FWC could not create new rights in an arbitration. For example, there is no apparent jurisdictional impediment to the FWC resolve a dispute about an allowance by determining that an allowance should be increased or decreased or abolished.

5. This analysis, if correct, has at least two practical implications. The first is that the content of dispute procedures in enterprise agreements deserves closer attention than what is usually given. The second is that industrial parties (and particularly employees and their representatives) can (and perhaps should be) more imaginative and more ambitious in their deployment of dispute procedures.

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