Disputes about enterprise agreements are relatively common and often come from a difference in opinion on what a particular term means (or was intended to mean). This EMA Note looks at a recent case dealing with an error in an enterprise agreement and provides some tips and tricks to making sure your agreement is well drafted to minimise the risk of potential disputes.
The Fair Work Commission revealed in its 2023-24 annual report that over 1,200 disputes had been lodged, which would have predominantly been disputes arising under awards and enterprise agreements. Disputes about enterprise agreement interpretation are common but are often resolved in some way before being lodged with the Commission. When they do reach the Commission, it usually involves a significant time and cost investment to see an outcome, and there is always a risk that the outcome won’t go your way. Given this, it is important to ensure that enterprise agreements are clearly worded and accurately reflect what the employer and employees bargained for.
An Obvious Error?
A recent case unravelling an ambiguity in an enterprise agreement is Cacciola v Serco Australia Pty Ltd [2025] FCA 361. This was an underpayment claim.
The Serco CPSU Acacia Prison General Enterprise Agreement 2017 included three different schedules: one for ‘Custodial Salaries (Annualised)’, one for ‘Casual Custodial Officer (Hourly Rate)’, and one for ‘Non-Custodial Salaries/Wages’. In relation to casual employees, the agreement stated that a casual employee would be ‘employed by the hour and paid the hourly rate of pay in the attached relevant Schedule 2.’
The employee, Robert Cacciola, was employed—at the relevant time—as a ‘trainee custodial officer (induction)’. The rate for this classification was set out in schedule 1. The issue for determination, then, was whether the correct rate of pay was that found in schedule 1 (which had a rate for the specific classification) or schedule 2 (which was expressly referred to in the clause).
Justice Vandongen found that the reference to schedule 2 was a typo, based both on the contradicting words in the relevant clause itself (ie referring to a ‘relevant’ schedule, but also referring to only one specific schedule) and the contents of the schedules. His Honour determined that the intended meaning of the clause was that a casual employee would be paid the hourly rate ‘in the attached relevant schedule’ plus a casual loading.
How to Minimise Future Disputes
To minimise disputes about enterprise agreement interpretation, it is crucial that the agreement is clearly worded, and that its terms are an accurate reflection of what the employer and employees bargained for and agreed on. There are several tips and tricks that can help minimise ambiguity—the foremost one being a fresh pair of eyes. Having someone (preferably with some skill in drafting) who has not been involved in the negotiations read over an enterprise agreement before it is signed and sent out to employees for a vote will often result in some errors being picked up. Resolving these before the agreement is finalised will help you and your employees understand everyone’s entitlements and obligations and will minimise the likelihood of dispute down the line.
Other things that can help minimise the risks of a dispute include:
- sending a list of bargained outcomes to a third party to draft an enterprise agreement based on those terms;
- engaging a third party as a bargaining representative to help craft the terms of the agreement throughout;
- making sure that when you are drafting clauses, you are focusing on using plain language;
- avoid, wherever you reasonably can, adding any provisions that are unnecessary (eg provisions that do not create a clear entitlement or obligation); and
- keeping records of the intention behind certain provisions—and saving those where other relevant people in your organisation can access them—so if there is a dispute about a provision in the future it is easy to figure out what its purpose was.
EMA can assist you throughout your entire enterprise agreement bargaining, drafting, and application process.
Examples of Things to Look Out For
Some examples that you can look for in your enterprise agreement while drafting it include:
- Have a ‘NES precedent clause’. This is a clause that states that where the agreement is inconsistent with the National Employment Standards to an employee’s detriment, the NES will apply. Including this clause in your agreement will often reduce the number of undertakings that the Fair Work Commission may ask for when it’s reviewing your approval application.
- Make sure terms are consistent with each other. If you add are adding a new entitlement or amending a previous entitlement, review the agreement for any other provisions relating to that entitlement to make sure they are consistent.
- Check cross references. Your agreement likely includes lots of references to other provisions by their clause number, but if you add or remove provisions in different parts of the agreement, these numbers will need to be updated.
- Ensure that the terms of your agreement accurately reflect what happens in practice. Sometimes parties can change the way they do things over time without even realising that there is a relevant clause in an enterprise agreement. If this has happened, you should seek advice to ensure you haven’t inadvertently breached any parts of your existing agreement.
- Remove ‘boilerplate’ contract clauses. We see lots of enterprise agreements that include standard terms that you might see in a contract but have no relevance to an enterprise agreement—for example, clauses which say that if one term of the enterprise agreement is found to be invalid, the term will be severed, and the rest of the agreement will still have effect. This clause is unnecessary, as the validity or invalidity of an enterprise agreement is dictated by the Fair Work Act regardless of what the agreement itself says.
- Avoid aspirational clauses wherever reasonably possible. Provisions that include broad statements around parties’ intentions (or similar) but do not create a clear entitlement or obligation can often lead to dispute.
- Where possible, simply refer to the Fair Work Act. If your agreement includes a copy and paste of certain parts of the Fair Work Act, it could create confusion or dispute if Parliament changes the Fair Work Act in the future. Where possible, if you want to draw attention to a Fair Work Act entitlement, you can simply refer to it rather than repeat it. So, for example: ‘Family and domestic violence leave entitlements are set out in the NES.’
Require further information/assistance?
This EMA Note is not comprehensive advice about your situation and does not cover all your obligations. If you require further information or advice, please contact your consultant.
