No Backdating Agreement Cancellation

A major fast food franchisor breathed a sigh of relief when the Fair Work Commission declined to cancel an expired agreement with retrospective effect, despite an employee urging it to do so. The employee had argued that since the agreement had expired two and half years previously, the cancellation should operate from the day after the agreement expired.

This would have presented the employer with a serious problem, because the award had ‘caught up’ with the agreement in some areas, so there would be a great deal of effort needed to ensure the 109,000 employees had been paid properly. The administrative effort required would have been substantial.

The FWC also examined the retrospective claim from a legal perspective and made the finding that it is only in exceptional circumstances that the rights and responsibilities of the parties should be altered retrospectively. It noted that the Fair Work Act specifically provides that no penalty can be ordered against a person for conduct that occurred before a retrospective determination is made, if that conduct did not breach the minimum award rates (a separate normal obligation anyway).

This, the FWC reasoned, was further proof of the intention of parliament to ensure that retrospectivity remained a rare occurrence. The decision lists six substantial factors weighing against the backdating argument. Ultimately, the FWC indicated that it would take something truly extraordinary, truly exceptional, to backdate a decision of this kind. In the absence of that, and the fact that the employee made no effort to have the agreement cancelled until nearly two years had elapsed, the FWC declined to do so.

Xzavier Kelly [2019] FWCA 8563 (19 December 2019)