Constitutional limitations

The High Court in Re: AEU; ex parte Victoria (1995) and Victoria v The Commonwealth (1996) identified an implied “States’ rights” constitutional limitation, finding that the Commonwealth could not make laws that would impair the States’ capacity to function as governments (implied limitations).

The matters that have been found by the High Court to have infringed the States’ Rights are under the following subject matters:

  • number and identity of persons to be employed;
  • qualifications and eligibility for employment;
  • term of appointment of such persons; and
  • number and identity of persons to be made redundant.

Based upon the findings of the High Court it was thought that these matters could not be included in enterprise agreements approved by the FWC.

These limitations have also been reflected in exclusions from the Victorian Government’s referral of matters to the Commonwealth under the Victorian Government’s Fair Work (Commonwealth Powers) Act 2009 (Referral Act). That is, the FW Act operates in relation to the public sector other than for excluded matters as found by the High Court.

However, in January 2015, the Full Court of the Federal Court in United Firefighters Union v Country Fire Authority (UFU decision) decided that the above limitations do not apply to enterprise agreements that cover State employers that are constitutional corporations where all the parties voluntarily agreed to the terms of an enterprise agreement.

Consequently, there is no legal impediment for public sector employers that are constitutional corporations to bargain over the previously excluded matters. Equally, this does not preclude an agency from arguing on merit why certain provisions should not be included in an enterprise agreement. Discussions regarding these matters are subject to good faith bargaining principles.

It is important to note that the Federal Court’s UFU decision does not apply to public sector employers that are not constitutional corporations. Presently different rules apply to constitutional and non-constitutional employers regarding permissible content in bargaining and enterprise agreements.

Government’s current approach to excluded matters

The Government is committed to honouring all terms collectively bargained for within existing formal agreements. Departments and agencies should not seek to use legal constructs to avoid these obligations. If there are matters in existing enterprise agreements which are arguably excluded matters departments and agencies should not rely upon the Referral Act or the Re: AEU principles to avoid obligations under any such provisions. Departments and agencies should seek advice from the CBU in relation to this matter if they are in any doubt.

Legislative amendments are being considered to meet the Government’s commitment to allow bargaining over currently excluded matters. If passed, these amendments will give the FWC jurisdiction to approve agreements covering employees of non-constitutional corporations that contain previously excluded matter.

In the meantime, departments and agencies should not rely upon the Referral Act or Re: AEU principles as a reason not to bargain over the excluded matters for public sector employees who have been traditionally covered by enterprise agreements. This does not preclude departments and agencies from arguing on merit why certain provisions should not be included in an agreement, or from negotiating alternative claims.

Prior to reaching agreement over excluded matters for employees of non-constitutional corporations, departments and agencies are required to obtain Government approval for inclusion of these matters in enterprise agreement.

Separately, the Government is considering options to formalise and ensure the enforceability of public sector redundancy provisions. Currently, redundancy pay and processes are dealt with in the Government’s Redundancy, Redeployment and Retrenchment Policy (see the chapter called Redundancy and Other Matters). The policy will continue to apply until the Government has introduced the proposed new measures. Unless there is government approval redundancy entitlements provided in the policies cannot be exceeded and should not form part of enterprise agreements. The government’s expectation is that existing consultation obligations should apply to any contemplated redundancies.

For further information, including discussion about specific issues, please contact