Are confidential wage rates in enterprise agreements a thing of the past?

In this Full Bench decision, it was found that the Commission lacked the necessary power to redact the wages rates in the published version of an enterprise agreement. This is the first Full Bench decision to consider the proper construction of sections 601(4)(b) and 594(1) of the Fair Work Act 2009 (Cth) (FW Act).

This decision is particularly important for those organisations who currently have confidential wages rates in their agreements and those looking to have an agreement approved with confidential wage rates. Consideration will now have to be given to the effect of an enterprise agreement being published in full.

How may a competitor’s knowledge of your wage rates impact your workplace? There will be a number of factors to consider including:

  • employee retention – do you pay higher wages to attract and retain the best people?;
  • price competition – will it impact on the way you win work?; and
  • union negotiation– will they use your wage rates against you?

Background

When seeking approval of the agreement, the employer requested redaction of the wage rates on the basis of the highly competitive nature of the employer’s industry.

On appeal, the AWU argued that there was nothing in FW Act to suggest that the requirement to publish an enterprise agreement means anything other than the agreement must be published in full.

In response, the employer argued that the requirement to publish an enterprise agreement has to be read subject to the Commission’s power to make an order “prohibiting or restricting” the publication of “matters contained in documents lodged with the FWC”. Also, it was submitted that the agreement had been “published” despite the redaction of the wages rates.

“Must publish”

Section 601(4)(b) requires that the FWC must publish on its website (or any other means it considers appropriate) an enterprise agreement that has been approved by the Commission.

The Full Bench held that this expression is language in a mandatory form. This means publishing the whole enterprise agreement. The Commission does not approve a redacted agreement, it approves the enterprise agreement “as made”.

Was the agreement “published”?

In the Full Bench’s view, the redacted wage rates were a central component of the agreement and important to the employees covered. The redaction of the wage rates also makes it impossible for any interested party to form their own view of whether the agreement met the “better off overall test”.

In its view, the word “publish” should be given its ordinary, everyday meaning and therefore the Commission is required to publish in full an enterprise agreement that has been approved by the FWC.

Prohibition or restriction of the publication

Under section 594 of the FW Act, the FWC may make an order prohibiting or restricting the publication of matters contained in documents lodged with it. The employer argued that the publication of an enterprise agreement should be read subject to this power.

The Full Bench said that the absence of any express qualification or exception to the requirement in s.601(4)(b) to “publish” an enterprise agreement that has been approved goes against the employer’s argument.

The Full Bench further noted a number of general considerations that weigh against the redaction of wage rates from an approved enterprise agreement, those being:

  • the absence of a publicly available document setting out the wages to which employees employed under an enterprise agreement are entitled creates a barrier to the enforcement of the agreement;
  • the redaction of wage rates from a published enterprise agreement makes it impossible for any interested party to form their own view as to whether the agreement met the “better off overall test”; and
  • the Commission must perform its functions and exercise its powers in a manner that is “open and transparent”.

Ultimately, it was not open to the Commission to make an order under s.594(1)(c) prohibiting or restricting publication of any material (including wage rates) that forms part of an approved enterprise agreement.