The Australian Institute of Marine & Power Engineers v Inco Ships Pty Ltd

FWA Full Bench does not allow the buying out (annualising) of LSL as part of an enterprise agreement.

The Inco agreement included a clause that incorporated into salaries an amount in respect of long service leave and extinguishing entitlement to long service leave or long service leave payments on termination.

Intervening unions argued this was in contravention of section 55 of the Act as the clause is “detrimental” to employees’ rights pursuant to the National Employment Standards.

The Full Bench were of the view that buying out an NES entitlement has the effect of excluding an employee from it.  Further the buying out meant the agreement clause did not have the same, or substantially the same, effect as provisions of the NES.

On this basis, and as the Full Bench did not believe undertakings were appropriate to remedy the breach, the decision to approve the agreement was quashed.