Agreement’s Provisions Trump ‘Custom and Practice’

Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union v ALS Industrial Australia Pty Ltd [2015] FCAFC 123 (28 July 2015)

When a company moved to exercise a right enshrined in its enterprise agreement, little did it know it was in for major fight requiring two Fair Work Commission cases and a Federal Court appeal, and a lot of money along the way. But it got its way in the end.

The trouble started when the company, as part of a cost-cutting exercise, changed some of its employee’s home base location so as to negate the need to pay overtime and excess travel penalties. These penalties applied, courtesy of the enterprise agreement, for so long as the employees’ base of operations was nominated at the particular location.

Axiomatically, once the base was redefined, the excess travel time and payments were not payable. In parallel, the decision to change the home base of the employees, would reduce extra travelling time and inconvenience for employees.

The union argued in the FWC that the clause in the agreement did not allow the company to nominate a site other than its headquarters. And it argued that since the set-up had continued unchanged for years, that by ‘custom and practice’, the penalties should continue.

The original FWC decision was in favour of the union’s position. However, on appeal, a FWC full bench accepted the company’s argument that it had a right, in accordance with its agreement, to nominate actual work locations at its discretion. It also said that the agreement did not create an entitlement to travel payments.

The union went on appeal to the full court of the Federal Court which upheld the Commission full bench decision. The court was particularly unimpressed with the union’s custom and practice argument.

This case demonstrates the value in carefully and clearly wording employer rights in agreements. This attention to detail means that the employer is then in the position to argue, as in this case, that all provisions of an enterprise agreement are equally enforceable. It should not matter if the right has not been exercised for years. That is not the point. The same argument would never hold if were an employee right that merely had not been accessed for years.