A recent Decision of the Fair Work Commission has highlighted the importance of careful drafting in enterprise agreements.

In the matter of AWU v Visy Glass Operations (Australia) Pty Ltd T/A Visy Glass [2023] FWC 1379, employees were to receive a pay increase in accordance with their enterprise agreement of 2.5 per cent or CPI, whichever was the greater.

The employer applied the National CPI figure of 7.8 per cent.

However, the AWU argued that the employer should instead have used South Australia’s CPI figure of 8.6 per cent.

The reference to CPI in the clause was the issue in dispute.

Was it the CPI of the eight weighted capital cities or the figure for South Australia — and for what period?

All could have very different results regarding the pay increase to be provided.

The Fair Work Commission agreed the language of the clause in the enterprise agreement concerning the pay increase was ambiguous and ultimately found the AWU’s interpretation of the clause to be correct.

Deputy President Anderson, who determined the matter, observed: “It serves as a reminder to industrial parties generally to specify in industrial instruments what they mean by CPI when making enterprise agreements.”

Ai Group Workplace Lawyers’ Special Counsel Stewart Rinkevich agreed, adding that careful drafting applies equally to all terms of an enterprise agreement.

“An enterprise agreement is one of the most significant documents for an employer,” Mr Rinkevich said.

“It sets out the employer’s labour costs for a defined period.

“Careful drafting of the enterprise agreement’s terms is essential to avoid unintended financial outcomes in respect of an employer’s budgeted labour costs but also to avoid time-intensive and expensive interpretational disputes in the Fair Work Commission.”

Ai Group Workplace Lawyers can assist employers with all facets of enterprise agreements, including drafting.