Motherhood Statements Best Left Out of Agreements

National Tertiary Education Union v La Trobe University [2015] FCAFC 142 (8 October 2015)

When a university agreed to include a warm and fuzzy clause about avoiding redundancies and seeing them as a “last resort”, it probably didn’t think a majority federal court full bench would hold them rigidly to it.

The university had exercised what it considered to be its right, which is explicitly written into the agreement, to make some employees redundant. These included compulsory redundancies. The university was of the view that the words in the agreement expressed an intention rather than requirement, to exhaust all other avenues before making anyone redundant.

The union took the university to court claiming it was in breach of the agreement because it hadn’t taken every possible step to avoid the redundancies. The trial judge agreed with the university that the words in the agreement were not obligatory, but rather aspirational.

The union appealed to the full bench of the federal court and in a two to one majority, the full bench agreed with the union. While it was not made particularly clear what else it was that the university should have done, save for calling for volunteers rather than selecting those to be redundant on other bases, the judges sent it back to the first judge for a rehearing.

The majority said that despite the passively-worded phrases, the agreement imposed obligations on the employer. This means that so far two out of four judges have one view, and the other two judges, the opposite view.

What this demonstrates is the danger of these kind of statements of intent in agreements. It also demonstrates the folly of not paying close attention to the expressions used in enterprise agreements. Careless drafting can cost, as in this case. But worse than that, is where an employer, rather than being firm in negotiations, thinks they can avoid a confrontation by agreeing to softly-worded pap and not having to worry about it again.

This university has found out to its cost that ‘being nice’ just doesn’t pay. Agreements should be just that, agreements, and if something isn’t truly agreed to, it has no place in the document.