The Australian Industry Group has welcomed a decision by the full bench of Fair Work Australia to overturn a ruling that found the Rudd Government’s much vaunted individual flexibility arrangements could not be used to vary the terms of an enterprise agreement.
The case, involving TriMas Corporation and the Australian Manufacturing Workers Union, gained prominence after Fair Work Commissioner John Ryan rejected a workplace agreement between the employer and the union because of the inclusion of an individual flexibility arrangement (IFA).
In what was seen as a very technical decision, Ryan said an IFA may not vary the terms of a workplace agreement and could only vary the “effect of the terms of an agreement”.
Had those two words – that is, “the effect” – being inserted, Ryan said the agreement would have been allowed through.
Get daily business news.
The latest stories, funding information, and expert advice. Free to sign up.
However, Ryan does not have the power to insert those words himself and instead can only insert into an agreement the standard (or model) IFA specified by the Fair Work Act.
The decision caused anger among employer groups, particularly the Australian Industry Group, which had worked closely with the Government in developing the IFA provisions.
The AIG and Workplace Minister Julia Gillard appealed to Fair Work Australia to have the decision reversed.
But Ryan’s decision was rejected by the Full Bench of the Fair Work Australia, saying Commissioner Ryan “fell into error” in his decision.
AIG chief executive Heather Ridout applauded the outcome.
“The Full Bench has confirmed that the operation of a term of an enterprise agreement can be varied by an IFA so as to alter the legal rights of the employer and employee parties to the arrangement,” she said in a statement.
“The decision importantly preserves the flexibility for employers and individual employees to reach agreement on arrangements which suit their needs.”