No need for compulsory arbitration in dispute settlement clauses in enterprise agreements

The Full Bench of Fair Work Australia (FWA) has overturned the decision which held that a dispute resolution term in an enterprise agreement must allow for disputes to be settled by arbitration, whether the parties want to or not.

As foreshadowed in our last Alert, significant interest was generated by the original decision. The employer appealed, and the proceedings were joined by the Minister for Education, Employment and Workplace Relations.

The original decision

In January, Commissioner Smith rejected an enterprise agreement on the sole basis that the agreement did not contain a procedure to settle disputes about matters arising under the agreement and the National Employment Standards, as required by section 186(6) of the Fair Work Act 2009 (Cth). This was because the relevant dispute resolution term allowed a dispute that is not able to be resolved by conciliation or between the parties to proceed to FWA for arbitration only where the parties agreed.