'But we never agreed to that!' – how to draft EAs properly

Article written by: Julian Arndt 

Enterprise bargaining inevitably shows the true colours of a relationship between an employer and its workforce. Not only does the process reveal workplace culture, but it also creates it.

For that reason, in most cases, employers (aided by expert strategic advice) are better off directly negotiating with employees and their representatives around the ‘bargaining table’ rather than outsourcing bargaining to third parties. Of course getting the deal done means getting it ‘on paper’, and that is where things can get tricky.

As with any legal document, ‘the devil is in the detail’ of an enterprise agreement.

When an agreement is poorly drafted or left ambiguous, reasonable minds will differ on what a specific clause means (despite what may or may not have been said at the bargaining table).

Differences in interpretation can lead to employee dissatisfaction which in turn can lead to costly and time consuming disputes in the Fair Work Commission. Those disputes can take a serious toll on workplace culture and productivity, and in the worse cases will fuel a toxic and adversarial atmosphere of ‘workforce vs. management’.

While having a clearly drafted enterprise agreement is not a panacea for effective employee/employer relations, it is an important place to begin.

How will an enterprise agreement be interpreted, and therefore how should it be drafted?

A number of principles of interpretation should be kept in front of mind when drafting an agreement:

1. Interpreting an enterprise agreement, like a statute or contract, begins with a consideration of the ordinary meaning of the relevant words, along with their context and purpose.
2. The task of interpreting an agreement does not involve rewriting the agreement to achieve what might be regarded as a fair or just outcome. What matters is the agreement between the parties.
3. The ‘deal’ struck in an enterprise agreement should be understood as an agreement between an employer and its employees, not between bargaining representatives. This means that the drafting of the agreement and any materials provided to employees will be of paramount importance.
4. In construing an enterprise agreement it is first necessary to determine whether it has a plain meaning or whether it is susceptible to more than one meaning.
5. If the agreement has a plain meaning, evidence of the surrounding circumstances of negotiations are irrelevant.
6. Material which is not included in the agreement cannot be used to supersede an express provision in the agreement so as to give effect to the parties’ subjective intentions.

How to draft an enterprise agreement

More than anything, the above principles stress the absolute importance of getting the text of an enterprise agreement correct.

Recent decisions in the Fair Work Commission including AMWU v Berri Pty Ltd [2017] FWCFB 3005 and Kentz Pty Ltd v Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia [2017] FWCFB 2600 have highlighted the importance of getting down on paper, clearly and unambiguously, the bargain struck.

In the former case, the very existence of a particular allowance was not clear on the face of the enterprise agreement and a dispute inevitably arose.

The ability to effectively and precisely draft an enterprise agreement is a very specific skill set. Enlisting the help of a practitioner skilled in legal drafting to prepare, update or review an agreement before it is put to vote is the best way to ensure that any disagreements over entitlements or obligations are settled before an enterprise agreement is made.

The focus of an external and forensic review will often uncover vagueness or ambiguity which has been overlooked by bargaining representatives who may have made ‘assumptions’ as to the meaning of clauses or otherwise may not be experienced in legal drafting. A ‘fresh set of eyes’ on an established agreement can also be of considerable benefit.

Once a clear and unambiguous enterprise agreement is drafted and approved, both employees and management will be able to focus on productive activities as opposed to engaging in unnecessary, costly and ultimately wasteful disputes.