See Fair Work Act 2009 s.186(6)
An enterprise agreement must contain a term that provides a procedure for settling disputes about matters arising under the enterprise agreement and in relation to the National Employment Standards (NES).
Requirements of a term for settling disputes
The term must provide a procedure to settle disputes about:
- any matters arising under the enterprise agreement, and
- in relation to the NES.
It is permissible, but not necessary, for the term to provide for the settlement of disputes about other matters in addition.
The term must require or allow the Fair Work Commission, or a person independent of the employer(s), employees and union(s) covered by the enterprise agreement, to settle disputes.
An example is provided in the Explanatory Memorandum:
A disputes procedure could not, for example, provide for disputes to be resolved by:
- the managing director of the employer; or
- a disputes board made up of officials of a union covered by the agreement.
The term must allow for employees to be represented when dealing with a dispute under the dispute settlement procedure.
Exclusion – Reasonable business grounds
The Commission (or another person required or allowed to settle disputes) cannot deal with disputes about whether an employer had reasonable business grounds under sections 65(5) or 76(4) of the Fair Work Act to:
- refuse a request for flexible working arrangements, or
- refuse to extend a period of unpaid parental leave;
unless the parties have agreed in the enterprise agreement (or a contract of employment or other written agreement) that the Commission (or other person) can deal with those disputes.
No dispute settlement term or incorrect dispute settlement term
Where no dispute settlement term is included in the enterprise agreement, or one is included but it does not meet all the requirements in the Fair Work Act, the Commission may either:
- refuse to approve the enterprise agreement, or
- approve the enterprise agreement if a satisfactory undertaking is given.
Model term for dealing with disputes for enterprise agreements – Schedule 6.1
- If a dispute relates to:
- a matter arising under the agreement; or
- the National Employment Standards;
this term sets out procedures to settle the dispute.
- An employee who is a party to the dispute may appoint a representative for the purposes of the procedures in this term.
- In the first instance, the parties to the dispute must try to resolve the dispute at the workplace level, by discussions between the employee or employees and relevant supervisors and/or management.
- If discussions at the workplace level do not resolve the dispute, a party to the dispute may refer the matter to Fair Work Commission.
- The Fair Work Commission may deal with the dispute in 2 stages:
- the Fair Work Commission will first attempt to resolve the dispute as it considers appropriate, including by mediation, conciliation, expressing an opinion or making a recommendation; and
- if the Fair Work Commission is unable to resolve the dispute at the first stage, the Fair Work Commission may then:
- arbitrate the dispute; and
- make a determination that is binding on the parties.
Note: If Fair Work Commission arbitrates the dispute, it may also use the powers that are available to it under the Act.
A decision that Fair Work Commission makes when arbitrating a dispute is a decision for the purpose of Div 3 of Part 5.1 of the Act. Therefore, an appeal may be made against the decision.
- While the parties are trying to resolve the dispute using the procedures in this term:
- an employee must continue to perform his or her work as he or she would normally unless he or she has a reasonable concern about an imminent risk to his or her health or safety; and
- an employee must comply with a direction given by the employer to perform other available work at the same workplace, or at another workplace, unless:
- the work is not safe; or
- applicable occupational health and safety legislation would not permit the work to be performed; or
- the work is not appropriate for the employee to perform; or
- there are other reasonable grounds for the employee to refuse to comply with the direction.
- The parties to the dispute agree to be bound by a decision made by Fair Work Commission in accordance with this term.
 Explanatory Memorandum to Fair Work Bill 2008 at para. 783.
 Fair Work Act ss.739(2) and 740(2).
 Fair Work Act s.190(2).