Application by Aurizon Operations Limited & Aurizon Network Pty Ltd and Another - [2015] FWCFB 540

1

Fair Work Act 2009 
s.225 - Application for termination of an enterprise agreement after its nominal expiry date

Aurizon Operations Limited; Aurizon Network Pty Ltd; Australia Eastern 

Railroad Pty Ltd
(AG2014/6009)

Rail industry

VICE PRESIDENT WATSON
DEPUTY PRESIDENT GOSTENCNIK
COMMISSIONER SPENCER

SYDNEY, 22 APRIL 2015

Application for termination of 14 enterprise agreements - Whether agreements which had a 
nominal expiry date of 31 December 2013 should be terminated - Whether termination of the 
agreements is contrary to the public interest - Whether it is appropriate to terminate the 
agreements - Approach to considering whether it is appropriate to terminate agreements -
Notion that it will generally be inappropriate to terminate when negotiations ongoing rejected 
- Fair Work Act 2009 - ss.3, 58, 171, 225, 226.

CONTENTS
                                                                                                                                             Paragraph

1.    Introduction                                                                                                              [1]

2.    Background and Evidence                                                                                           [7]

The Aurizon companies and their businesses                                                          [10]

The privatisation process and the making of the enterprise agreements                   [17]

Aurizon’s concerns about the enterprise agreements                                               [23]

Expert evidence on Aurizon’s market position                                                       [28]

Legacy provisions and the changes sought by Aurizon                                           [35]

“No forced redundancy”                                                                              [44]

QR National Passes policy                                                                           [48]

Recruitment and selection                                                                           [51]

Dispute resolution                                                                                      [52]

Roster cycles                                                                                             [53]

Drug and alcohol testing                                                                            [54]

Complex and inconsistent entitlements across the enterprise agreements [55]

Other restrictive provisions                                                                        [56]

[2015] FWCFB 540 [Note: refer to the Federal Court decision dated 3 
September 2015 [2015] FCAFC 126 for result of appeal.] 

DECISION


E AUSTRALIA FairWork Commission




 

http://www.judgments.fedcourt.gov.au/judgments/Judgments/fca/full/2015/2015fcafc0126


[2015] FWCFB 540

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Impact of changes on employees                                                                           [60]

Bargaining for new agreements                                                                             [72]

Re-opening of matter                                                                                           [84]

Aurizon’s Undertakings                                                                                        [95]

Duration of the Undertakings                                                                      [97]

What is Aurizon undertaking to do?                                                            [100]

Operation of the Undertakings                                                                   [105]

Interaction of the Undertakings and bargaining                                           [112]

3.    The Statutory Test                                                                                                 

Approach to construction of the relevant statutory provisions [115]

Relevant statutory provisions and context                                                            [118]

Proper construction and application of section 226                                             [127]

4.    Is termination of the enterprise agreements contrary to the public interest?                 [153]

5.    Is it appropriate to terminate the enterprise agreements?                                            [167]

6.    Conclusion                                                                                                               [181]

              








[2015] FWCFB 540

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1. Introduction

[1] Aurizon Operations Limited, Aurizon Network Pty Ltd and Australia Eastern Railroad
Pty Ltd (Aurizon) have applied under s. 225 of the Fair Work Act 2009 (the Act) to terminate
14 enterprise agreements that have each passed their nominal expiry date pursuant to s. 226 of 
the Act. 

[2] The Agreements concerned are the Australia Eastern Railroad North Queensland Rail 
Operations Enterprise Agreement 20111, QR National Traincrew Enterprise Agreement 
20102, QR National Corporate Enterprise Agreement 20103, QR National Network Enterprise 
Agreement 20104, QR National Coal and Regional Freight Support Enterprise Agreement 
20105, QR National Coal and Regional Freight Logistics Enterprise Agreement 20106, QR 
National Network Services Trackside Systems Enterprise Agreement 20107, QR National 
Rollingstock and Component Services Enterprise Agreement 20108, QR National Network 
Services Support Enterprise Agreement 20109, QR National Network Services Civil 
Maintenance Enterprise Agreement 201010, QR National Network Services Electric Control 
Operators Enterprise Agreement 201011, QR National Coal and Regional Freight 
Rollingstock Maintenance Enterprise Agreement 201012, QR National Infrastructure Projects 
Enterprise Agreement 201013, QR National Network Services Facilities Enterprise Agreement 
201014, (the enterprise agreements). 

[3] Since the application was made, there has been a material change in circumstances 
relevant to the scope of the application. On 13 October 2014, Aurizon filed in the Fair Work 
Commission an application to approve a new enterprise agreement titled the Aurizon Staff 
Enterprise Agreement 2014 (the Staff EA 2014).  This agreement was made when a majority 
of employees to be covered by that agreement, who cast a valid vote, approved the agreement. 
The agreement was approved by Deputy President Sams on 21 January 2015,15and has now 
come into operation. The Staff EA 2014 agreement applies to all employees who were 
covered by the QR National Coal and Regional Freight Support Enterprise Agreement 2010
and QR National Network Services Support Enterprise Agreement 2010. Pursuant to s. 58 of 
the Act these agreements cease to apply to the employees covered by the later agreements. In 
these circumstances the current application is not pressed in relation to the two agreements 
that have been replaced and no longer operate. 

                                               
1 AE884420
2 AE880759
3 AE880768
4 AE880766
5 AE880769
6 AE880772
7 AE880774
8 AE880775
9 AE880763
10 AE880765
11 AE880761
12 AE880770
13 AE880771
14 AE880773
15 [2015] FWCA 550






http://cmsplus/cmsplus/PublicationAction.do?method=load&index=880773
http://cmsplus/cmsplus/PublicationAction.do?method=load&index=880771
http://cmsplus/cmsplus/PublicationAction.do?method=load&index=880770
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http://cmsplus/cmsplus/PublicationAction.do?method=load&index=880759
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[2015] FWCFB 540

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[4] In addition the Staff EA 2014 also applies to all employees covered by QR National 
Corporate Enterprise Agreement 2010 with the exception of approximately 28 employees 
employed by Aurizon Operations Limited outside the State of Queensland and 26 temporary 
employees participating in Aurizon’s graduate training program.  Accordingly, the application 
in relation to the QR National Corporate Enterprise Agreement 2010 is pressed, although the 
number of employees affected by the application to terminate that agreement has been 
significantly reduced.

[5] At the hearing of the matter on 5-7 November 2014, 10-12 November 2014 and 10 
February 2015, Mr HJ Dixon SC and Mr S Meehan of counsel appeared on behalf of Aurizon. 
Mr W Friend QC represented the Australian Federated Union of Locomotive Employees 
(AFULE), the Queensland Services, Industrial Union of Employees (QSU), the 
Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied 
Services Union of Australia (CEPU), the Automotive, Food Metals, Engineering, Printing and 
Kindred Industries Union (AMWU) and Together Queensland.  Mr R Reitano of counsel 
appeared on behalf of the Australian Rail Tram and Bus Industry Union (RTBU) and Ms M 
Anthony appeared on behalf of the Association of Professional Engineers Scientists and 
Managers Australia (APESMA). We refer to the registered organisations collectively as the 
“Unions”.

[6] We have decided that pursuant to s. 226 of the Act the 12 enterprise agreements,
which remain the subject of the application, must be terminated because the preconditions in 
s. 226 are met—we are satisfied that it is not contrary to the public interest to terminate each 
of the agreements and we consider that it is appropriate in each case to do so. These are our 
reasons for reaching that conclusion.

2. Background and Evidence

[7] The parties led extensive evidence, including expert evidence, about the context of this 
application. The evidence dealt with Aurizon’s business, the market in which it operates, 
changes that have occurred consequent upon its privatisation, the history of the enterprise 
agreements, the changes to the agreements sought by the parties during bargaining, and in 
particular the changes sought by Aurizon, the history of negotiations for new agreements, the 
importance of particular provisions of the agreements to employees, the operation of 
particular provisions in the workplace context and the impact on employees of the removal of 
particular provisions and of the termination of the relevant agreements that apply to the 
employees. Evidence was given by the following witnesses:

 Mr Michael Francis Heenan, Manager Employee Relations at Aurizon16

 Mr Timothy Leslie Conroy, Human Resources Manager for the Maintenance 
division at Aurizon17

 Mr Edward Graham McKeiver, Vice President Service Delivery Coal Markets at 
Aurizon18

 Mr Patrick Maurice O’Donnell, Vice President Rollingstock Maintenance at 
Aurizon19

                                               
16 Exhibit D8, D9 and D10, PN277 - PN632
17 Exhibit D11 and D12, PN633 - PN749
18 Exhibit D13 and D14, PN750 - PN965








[2015] FWCFB 540

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 Mr Christopher John Gregg, Vice President Freight Service Delivery at Aurizon20

 Mr Clayton John McDonald, Vice President Network Operations at Aurizon21

 Mr Andrew MacDonald, Vice President Business Development at Aurizon22

 Mr Adrian Dennis Browne, consultant at Aurizon23

 Mr Euan Morton, Principal at Synergies24

 Mr Shayne Edward Kummerfeld, Branch Organiser with the Queensland Branch of 
the RTBU25

 Mr Peter James Allen, Principal Industrial Officer with the Queensland Branch of 
the RTBU26

 Mr Richard Robinson, Associate Director - Economics at BIS Shrapnel Pty Ltd27

 Mr Bradley Scott Strover Crofts, Director at Eureka Economics Pty Ltd28

 Mr Jason Young, Deputy Secretary and Organiser with the Queensland and 
Northern Territory Divisional Branch of the ETU Division of the CEPU29  

 Ms Melissa Brewer, Industrial Officer of the AFULE30   
 Dr Chris Allen Hale, sole proprietor of Hale Consulting31

 Dr Olav Titus Muurlink, Senior Lecturer at Central Queensland University32

 Mr David Allan Wotton, delegate of the AMWU33

 Mr Stephen Christopher Peacock, delegate of the QSU34

 Mr Stewart Rach, Divisional Councillor for the AFULE35    

[8] Most of the evidence given by employees who are covered by the various agreements 
was not challenged by Aurizon, in the sense that the employees were not required for cross-
examination and statements were simply tendered as evidence in the proceedings. Witness 
statements prepared by or on behalf of the following employees and officials were tendered:

 Mr Mark James O’Dempsey, delegate of the QSU36

 Ms Sandra Ann Bratt, local convenor of the ETU Division of the CEPU37

 Mr Anthony Vernon Brotherton, member of the AFULE38

                                                                                                                                                  
19 Exhibit D16 and D17, PN975 - PN1088
20 Exhibit D19 and D20, PN1092 - PN1387
21 Exhibit D21 and D22, PN1389 - PN1426
22 Exhibit D23, PN1429 - PN1539
23 Exhibit D24 and D25, PN1550 - PN1978
24 Exhibit D28 and D29, PN3387 - PN3609
25 Exhibit R2, PN2474 - PN2548
26 Exhibit R3, PN2553 - PN2606
27 Exhibit R5, PN2945 - PN3291
28Exhibit R7, PN3814 - PN3938
29 Exhibit F9, PN2112 - PN2279
30 Exhibit F10, PN2280 - PN2416
31 Exhibit F11, PN2618 - PN2943
32 Exhibit F12, PN3301 - PN3383
33 Exhibit F16, PN3622 - PN3665
34 Exhibit F17, PN3666 - PN3742
35 Exhibit F18, PN3743 - PN3794
36 Exhibit F2
37 Exhibit F3
38 Exhibit F4








[2015] FWCFB 540

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 Mr Bruce Mark Hodby, member of the AFULE39  
 Mr Michael John Coxon, delegate of the ETU Division of the CEPU40

 Mr Bernard Stephen Misztal, senior delegate of the AMWU41  
 Mr Craig Jeffrey Allen, Branch Organiser with the Queensland Branch of the 

RTBU42

 Mr Bruce Mackie, Branch President of the Queensland Branch of the RTBU43

 Mr Donald Skerman, workplace representative for Professional Engineers at 
APESMA44.   

[9] In addition, a large amount of economic and market information was tendered in 
evidence. We propose to summarise the important aspects of this evidence before turning to 
the task we need to undertake to determine this application. Many aspects of the history of the 
company and its enterprise agreements, including the timing of relevant events, are relevant as 
they relate to the context of the agreements now sought to be terminated. 

The Aurizon companies and their businesses

[10] Aurizon Holdings Limited is a listed company on the Australian Stock Exchange. 
Prior to December 2012 it was known as QR National Limited and wholly owned a number of 
subsidiaries including QR Limited. QR Limited was previously a government owned 
corporation, the shares of which were held by the Queensland Treasurer and the Queensland 
Transport Minister on behalf of the State of Queensland. In 2010 QR National Limited was 
privatised. QR Limited has since been renamed Aurizon Operations Limited. It continues to 
be wholly owned by Aurizon Holdings Limited and is the principal business operator and 
employer in the Aurizon Group. As the privatisation process is a significant part of the 
context of the enterprise agreements, we deal with it in further detail below.

[11] Aurizon Network Pty Ltd is a subsidiary of Aurizon Operations Limited and operates 
the Central Queensland Coal Network. Australia Eastern Railroad Pty Ltd is the other 
employer in the Aurizon Group and is covered by one of the enterprise agreements. 

[12] The Aurizon business, comprising the various corporate entities, is structured on 
functional lines. The operations division deals with coal, freight, rolling stock maintenance, 
program delivery, operations planning and safety. The network division operates the rail 
network comprising approximately 2,670 kilometres of heavy haul rail infrastructure in 
Central Queensland, one of the world’s largest coal supply chains. Other functional divisions 
within the Aurizon Group deal with Human Resources, Commercial and Marketing, Strategy 
and Business Development, Finance and Enterprise Services (including IT, Procurement and 
Real Estate).

[13] The Aurizon business offers rail based freight transport and infrastructure services 
throughout Queensland, New South Wales, South Australia, Victoria and Western Australia. 
It is Australia’s largest rail freight operator and the world’s largest rail transporter of coal to 

                                               
39 Exhibit F5
40 Exhibit F6
41 Exhibit F7
42 Exhibit R4
43 Exhibit R6
44 Exhibit A1








[2015] FWCFB 540

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port for export markets. It moves an average of 700,000 tonnes of coal, iron ore, other 
minerals, agricultural and general freight across Australia each day. At any particular time 
Aurizon operates approximately 60 coal trains in the Central Queensland Coal Network alone. 
The freight service delivery business is a national business covering bulk commodities 
including iron ore. The majority of bulk freight services are provided in Queensland and 
Western Australia. The Network Operations Division maintains the track, bridges, structures, 
overheads and associated facilities as well as planning, scheduling and controlling the running 
of trains on the Central Queensland Coal Network. The rolling stock maintenance division 
comprises three heavy maintenance workshops and 14 running maintenance facilities. It is 
responsible for maintaining all “above rail” assets.

[14] Apart from the mining companies that are its customers for the transport of coal from 
the Bowen Basin in Queensland, Aurizon’s customers include producers, suppliers and 
exporters of bulk agricultural, mineral, intermodal and other commodities.

[15] Aurizon employs over 6,000 employees located throughout Australia, who often reside 
in regional communities within close proximity to crew depots.

[16] Aurizon’s major competitor is Pacific National, which is wholly owned by publically 
listed company Asciano Limited. It also originated from government owned entities—
National Rail and Freightcorp. Pacific National has obtained access to Aurizon’s Central 
Queensland Coal Network and has made a significant capital investment in its Queensland 
operations in order to compete for work. The markets in which Aurizon operates commonly 
involve contracts awarded on the basis of competitive tendering. 

The privatisation process and the making of the enterprise agreements

[17] On 2 June 2009, the Queensland Premier issued a Ministerial Statement concerning 
the sale of a number of State owned entities including Queensland Rail. The Statement 
guaranteed employees’ terms and conditions of employment in enterprise agreements for the 
life of those agreements and provided employment guarantees for two years beyond the date 
of each asset sale.

[18] On 28 May 2010, QR National was informed that the Queensland government’s
position was that the employment guarantees were to be effected by inserting an enforceable 
mechanism into new enterprise agreements. The following day the government informed QR 
National that the guarantees were to be for a period of three years and to proceed with 
enterprise agreements on that basis. 

[19] Mr Tim Conroy, who was involved in discussions with the Queensland government at 
the time on behalf of QR National, gave evidence that the employment guarantees were of 
significant concern to QR National at the time. He said that the guarantees presented very 
significant constraints on the manner in which it would be able to manage its business in the 
future, as future restructuring of QR’s business was inevitable. Mr Conroy also said that other 
new clauses were added to the agreements at the behest of the Unions despite his view that 
they had no place in the agreements. He said that the clauses were inserted due to the pressure 
being exerted by the Queensland government to make new agreements with the Unions or the 
government would make decisions on QR’s behalf.








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[20] The operative enterprise agreements at the time had not passed their respective
nominal expiry date. Most had a nominal expiry date of 30 April 2011. One agreement had a 
nominal expiry date of 30 June 2013 and two others had a nominal expiry date of 30 March 
2011. 

[21] Because of the need to give effect to the Queensland government’s directive on the
employment guarantee, negotiations commenced for new enterprise agreements using the 
existing enterprise agreements as a starting point. The end result was that limited changes 
were made. The core provisions of the old agreements were maintained and the new 
agreements contained the employment guarantee and some of the other provisions that had
been sought by the Unions. In September 2010 the Fair Work Australia (FWA) approved all 
but one of the agreements. The other agreement was approved by FWA on 3 March 2011. The 
nominal expiry date of each enterprise agreement was 31 December 2013. The application 
before us seeks to terminate these agreements, apart from the two we have earlier identified.

[22] In October 2010 the initial public share offer for shares in QR National was made and 
on 22 November 2010, QR National Limited was listed on the Australian Stock Exchange. 

Aurizon’s concerns about the enterprise agreements

[23] Aurizon considers that as a result of the operation of its enterprise agreements, Pacific 
National has a significant labour cost and productivity advantage over Aurizon in the Central 
Queensland Coal Network. Aurizon considers that its business is seriously impaired by many 
restrictions and inefficiencies that are enshrined in its enterprise agreements, and which are 
largely a legacy of its previous government ownership, the privatisation process, and the 
requirements to insert provisions in the enterprise agreements to give effect to commitments 
and guarantees given by the Queensland government at the time.

[24] Apart from Pacific National, Aurizon must also compete with other providers of rail 
services. In recent times these have included the mining producers themselves, who have 
invested in rolling stock for the transport of their product.

[25] Mr Adrian Browne, a former consultant with Booz and Company, and a former 
employee of Freightcorp, has been employed by Aurizon as a consultant for the past five
years. He gave evidence about a labour analysis he undertook in relation to Aurizon’s coal 
haulage business. The detail of his analysis was admitted into evidence on a confidential 
basis. The analysis contains comparative cost data between Aurizon and Pacific National and 
a quantification of ten key differences between the operational restraints on the two 
companies that pertained to Aurizon’s ability to effectively deploy train crew to desired tasks. 
For example, his evidence was that:

“A demarcation that exists under the QR Traincrew Agreement is the restriction on train 
crew performing ground work, such as shunting work, notwithstanding that train 
drivers are trained and competent to perform ground work.

Clauses 98.7 to 98.9 of the QR Traincrew Agreement have also resulted in the 
following restrictions:








[2015] FWCFB 540

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a. Train drivers who have completed driving duties, cannot be required to 
perform “ground work”, notwithstanding that they may have returned to the 
depot well prior to the conclusion of their rostered shift;

b. Train drivers can often spend the balance of their rostered shift filling in 
time unproductively; and 

c. Aurizon is required to employ and roster for duty yard crews who perform 
the ground work that train drivers are qualified for but do not perform.

The result of the demarcations is that Aurizon must employ ground staff to perform 
the ground work that could otherwise by performed by train crew employees. These 
are therefore categorised by me as Demarcation Conditions.

...

Aurizon is required to provide coal train crew employees with a minimum of 20 days 
off in any eight week period (see clause 81.1 of the QR Traincrew Agreement). This 
condition is an Availability Impact Condition.

This is, on average, two and half days per seven-day period. Days off (or “single 
leisure period”) constitutes a full 24-hours off commencing from 0001 hours and 
concluding at 2359 hours (see clause 80.6 of the QR Traincrew Agreement).

By way of example, this means that, if an employee finishes a shift at 8am, or any time 
thereafter, their “day off” will not start until 12:01am the next day, even though they 
are not working after 8am (or after such other time as their shift finishes).

Pacific National, on the other hand, is only required to provide rostered off duty 
periods  calculated on the basis of the number of weeks in the roster cycle multiplied 
by two (clause 19.3 of the 2009 PN Coal Agreement).

...

There are currently restrictions imposed by the QR Traincrew Agreement on 
Aurizon’s capacity to require train crew to perform car driving duties. 

The relevant restrictions are: 

a. Train crew cannot be required to drive a motor vehicle for more than two 
hours between the hours of 10:00pm to 6:00am - clause 98.11;

b. Train crew cannot be rostered on to a car driving shift - clause 98.13 

c. Train crew may be able to drive a motor vehicle during their shift only if 
they are signed off within the limitations of their hours - clause 98.13 

d. If a train crew employee who is driving a motor vehicle has reached 10 
hours of duty and the train crew employee is within the “car driving radius” (a 
physical boundary, which must be a minimum 1 hour’s driving distance around 








[2015] FWCFB 540

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each depot), then the employee will continue to drive to the depot provided that 
in such circumstances, the driver must be signed off by the 11th hour of their 
shift - clauses 98.15.2 - 98.21;

e. Where train crew employees are not within the car driving radius by the 10th 
hour of their shift, then they are required to stop their motor vehicle and be 
relieved by another Aurizon employee.

The impact of these demarcations is that somebody other than the train crew 
employees who are actually assigned to drive the train must undertake the call car 
driving, with the train crew being passengers in that car.

Often this work is performed by train crew employees who are not at the time assigned 
to the train in question, which reduces the time that those employees can be rostered to 
and therefore actually, drive a train.

Alternatively, the work is performed either by other classifications of employees (i.e., 
someone who is not a train crew employee), or third party contractors such as taxi’s, 
hire cars or other similar services.

The Demarcation Condition exists, even though:

a. In all instances, the call car is either picking up or delivering the train crew 
from or to trains; and 

b. Train crew employees, including those assigned to the train, are trained in, 
and are qualified to perform, the call car driving.

...

There are currently provisions in the QR Traincrew Agreement dealing with “time 
allowances” for signing on and signing off from duty (clause 77.1 of the QR 
Traincrew Agreement).

These provisions in their practical operation mean that there are 20 minutes “set aside” 
on each shift for signing on and signing off. This reduces the total productive time 
available in the shift for productive working. This condition is therefore an 
Availability Impact Condition.

...

Clause 67.1 of the QR Traincrew Agreement contains a table describing the maximum 
allowable rostered shift length arrangements which apply in respect of various crewing 
arrangements. 

From a crew planning perspective, having various maximum shift lengths makes the 
consistent application of the most efficient shift length to a particular origin and 
destination combination much more difficult to achieve. This condition is therefore an 
Availability Impact Condition. 








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By way of illustration, from a planning perspective, a loading journey, on the 
Blackwater system, to and from the Gregory mine could be most efficiently covered 
by a 10.5 hour shift. However the maximum allowable rostered shift lengths 
prescribed in clause 67.1 of the QR Traincrew Agreement means that it is not always 
possible to roster a 10.5 hour shift to cover that loading journey.

...

Lift up and lay back is when employees can be called in early (lifted up) to an earlier 
sign-on time or have their shift commencement delayed (laid back) to a later time than 
shown on the posted roster.

By reason of clauses 85.4 and 85.5 of the QR Traincrew Agreement, Aurizon is only 
permitted to effect a “lift up” or “lay back” of one hour. Aurizon is restricted from 
“lifting up” or “laying back” a train crew’s shift at any time after the daily roster is set, 
which is any time in the period after 3pm, two calendar days before the train is 
scheduled to commence the relevant journey.

In contrast, Pacific National had the capacity to utilise lift up and lay back procedures 
which provided that lift up and lay back of four hours respectively could be utilised.”45

[26] Other witnesses called by Aurizon gave evidence about operational restrictions and 
inefficiencies in the enterprise agreements. We do not propose to detail all of these matters in 
this decision. Apart from those mentioned in the evidence of Mr Browne and those referred to 
later in this decision, mention should be made of a “no forced redundancy” clause contained 
in each of the enterprise agreements. The application of the “no forced redundancy” clause
requires Aurizon to continue to employ a significant number of employees in transition; that
is, employees whose positions have become redundant but where no redeployment 
opportunities exist. At the time of the hearing of this application there were approximately 69 
employees in this category. These employees are not engaged in any productive work. Mr 
Heenan said the following in relation to these employees:

“The inclusion of a “no forced redundancy clause” in the Expired Enterprise 
Agreements has led to a significant number of “employees in transition” within 
Aurizon. “Employees in transition” are those employees whose former positions 
within Aurizon became surplus to requirements and who are now registered with
Aurizon's “Career Transition Unit”.  The “Career Transition Unit” is responsible for 
managing employees in transition. This entails identifying possible redeployment 
opportunities with assistance from an external career transition adviser. The employees 
in transition are required to attend at Career Transition Unit locations each day and 
undertake job seeking activities. I am informed by Elizabeth Mills, Manager Career 
Transition Unit, that there are currently 67 employees in transition within Aurizon.46

Unfortunately it is unlikely that in all cases redeployment opportunities will be 
identified for employees in transition. In cases where Aurizon cannot identify such 
opportunities it is prevented from effecting compulsory redundancies by reason of the 
“no forced redundancy” clauses in the Expired Enterprise Agreements.

                                               
45 Exhibit  D24 at [40]-[42], [77]-[80], [102]-[107], [125]-[126], [142]-[144] and [153]-[155]
46 Note the revised figure at PN299 is 69








[2015] FWCFB 540

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The costs that Aurizon incur as a result  of the “no forced redundancy” clauses 
includes the wages of employees in transition, the costs of managing employees in 
transition, including provision of office space, internal administration and career 
counselling.

In my experience the no forced redundancy clause has given rise to circumstances 
whereby surplus employees are unwilling to consider relocation opportunities because 
they are immune from retrenchment.  This has led to situations where Aurizon has 
been forced to recruit and train new staff for roles that could have been filled by 
surplus employees from other locations within Aurizon's business.

Aurizon wishes to discontinue the “no forced redundancy” clause which has a 
detrimental effect on, and is unsuitable for, its business.”47

[27] The evidence of other witnesses also dealt with restrictive provisions in the enterprise 
agreements said to be a barrier to productivity improvements and efficiency as well as the 
changes sought by Aurizon and the operational context of the changes. We deal with this 
evidence further below when considering the changes sought by Aurizon in the negotiations 
for new enterprise agreements.

Expert evidence on Aurizon’s market position

[28] The Unions opposed to the applications commissioned expert reports on the nature of 
Aurizon’s business, the markets in which it operates and employee perspectives on such 
matters. Dr Chris Hale is now a consultant in his own consulting business. He was previously 
a lecturer in Transport at the University of Melbourne. The executive summary and key 
findings from his report are as follows:

“The analyst's considered appraisal suggests: that Aurizon currently faces a stable 
business outlook, involving only mild, constrained and manageable competitive 
pressures toward its core business activities. Aurizon holds resources, capabilities and 
advantages of incumbency in a concentrated, highly regulated sector that will allow it 
to maintain a dominant position within the Australian and Queensland rail freight 
sector for the foreseeable future.

Key findings include:

 The freight rail industry to which Aurizon and its competitors belong is 
largely a legacy industry, which is highly regulated and concentrated, and 
which continues to be shaped by the history of public rail asset ownership 
from which it emerged. Although there is a diverse sector of mainly 
privately-owned transport operators in the country, the utilisation of rail for 
freight purposes within a bulk haulage or an integrated supply chain fashion 
is to a large degree a function only of the activities of Aurizon, Asciano and 
Qube.

                                               
47 Exhibit D8 at [144]-[148]








[2015] FWCFB 540

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 Aurizon holds a roughly 70-75% market share for coal haulage in 
Queensland.

 Aurizon's ownership and control over large swathes of Queensland's coal and 
other rail infrastructure assets results ultimately in an Aurizon-Asciano 
duopoly (to all practical intents and purposes) in rail bulk haulage, rather than 
a “marketplace” featuring even low levels of real diversity of firms or 
competition.

 Rail track ownership can be considered a monopoly (to Aurizon) under most 
accepted practical definitions, across most of the Queensland geography. 
This of itself provides a clear explanation of the real level of “competitive 
business pressure” experienced by Aurizon.

 Within Queensland, Aurizon holds further advantages through its “vertically 
integrated” track+ operations model - which reinforces its market dominance 
and relative freedom from open and genuine competitive business pressures.

 The “integrated rail freight” market across Australia is an effective tri-opoly, 
consisting of Aurizon, Asciano, and Qube. From an estimated annual 
sectorial revenue of $AUD 3.54 billion, a market share of around 29% is held 
by Aurizon.

 Aurizon dominates the Australian stock market-listed freight (and rail 
freight) sector. Its market capitalisation of around $AUD 9.73 billion 
compares to Asciano at around $6 billion and Qube at some $2.6 billion. This 
sector is concentrated and lacking in diversity of sizeable firms, with 
Chalmers holding position as the next largest stock market listed freight 
company with a market value of $180 million.

 The dominance of Aurizon, Asciano and Qube in business scale (compared to 
other listed companies) suggests little or no medium term likelihood of 
market challenge and genuine competition emerging from other existing 
players.

 Aurizon has continued to grow its revenues year-on-year for the last three 
financial years.

 Aurizon has continued to grow its return on invested capital (ROIC) year on-
year for the past three financial years. It now rests at some 8.8% per annum -
which is appropriate, and within expectations for asset-heavy companies 
operating in highly regulated markets with limited competition and 
contestability (such as privatised former utilities).

 There are currently no identifiable changes to regulatory or policy based 
mechanisms within the rail freight sector either flagged or foreseeable from 
major regulators - hence little likelihood exists at this time that competitive 
pressures and contestability will be substantially enhanced through those 
avenues.








[2015] FWCFB 540

14

 Given the pre-eminence and very robust market position of companies like 
Aurizon, it is unlikely that Australia or Queensland will see the entry, 
emergence or growth of genuine rail freight competitors over the medium 
term. Rail freight in Queensland will most likely remain a largely non-
competitive duopoly for many years to come.

 Aurizon faces a stable forward business outlook according to its senior office 
holders.

The overall picture emerging from this investigation is a situation of ongoing stability, 
moderate business growth, and freedom from any prospect of genuine, hard edged 
competitive pressures of the sort faced by most mainstream businesses operating in 
Australia.

A reasonable appraisal would suggest that Aurizon faces only marginal competition 
pressures toward its overwhelmingly dominant position in sectors such as Queensland 
coal haulage—and the company needs to stand and face those limited pressures 
through mainstream responses of business strategy and ordinary ongoing adaptation. 
Any “competition” faced by Aurizon lies at the more abstract and faint end of a 
spectrum, given its scale and dominance and its highly regulated and concentrated 
industry contexts.

This analytical exercise found no evidence of any discussion among reasonable 
independent Australian business operators, or independent experts in rail or 
competition policy, suggesting that Aurizon is subject to meaningful competitive 
pressures at this time.”48

[29] Mr Richard Robinson is a Senior Economist and Associate Director - Economics with 
BIS Shrapnel and had a principal role in the compilation of a report by his firm entitled “The 
Economic Impact of Terminating Aurizon’s Enterprise Agreements with the RTBU.” Key 
aspects of the BIS Shrapnel report are as follows:

“In the current Australian environment, the pervading corporate logic is to reduce costs
to achieve two objectives: firstly, to increase profitability of their operations, and 
secondly to allow them to better compete for business and increase market share. This 
logic applies to both Aurizon and Pacific National. Their virtual duopoly in the 
Queensland coal freight market sets the scene for aggressive competition between the 
two companies, both in terms of winning business and driving down costs from their 
suppliers, including suppliers of labour.

Aurizon has indicated in its evidence that it seeks to reduce its labour costs and is 
currently restricted by the conditions imposed under the Enterprise Agreements. If  the  
Fair  Work Commission  (Commission) agrees  to  Aurizon's application  to  terminate  
these  Enterprise Agreements, the  only  restrictions  on  future employment conditions  
would be  the  minimum standards provided  by  the applicable  awards for each 
category  of labour  and  the National Employment Standards. These minimum 
standards are below the corresponding conditions provided by the Enterprise 
Agreements. Any wage levels or conditions above that minimum would be determined 

                                               
48 Exhibit F11, Attachment “CH3” page 4-5








[2015] FWCFB 540

15

by the interaction of supply and demand for the types of labour covered by the 
Enterprise Agreements and the market power of Aurizon relative to labour in this 
market. As I will outline below, due to the significant market power of Aurizon in the 
labour market for the coal haulage industry and the structural oversupply of labour that 
is likely to result from the removal of the protections provided in the Enterprise 
Agreements, I believe that termination of the Enterprise Agreements would lead to a 
significant reduction in wage levels and employment conditions for employees of 
Aurizon.

Currently, two companies dominate coal rail haulage services in Queensland, Aurizon 
and Pacific National. A third operator, BMA, commenced operations in 2013, but their 
operations are only on a very small scale compared to Aurizon and Pacific National. 
Aurizon also owns rail infrastructure which Pacific National, BMA and other potential 
haulage operators use for coal haulage services in Queensland, for which Pacific 
National and other operators pay Aurizon access fees under an access agreement 
approved by the Queensland Competition Authority. There are significant barriers  to 
entry to this market due to the large investment required in rollingstock  and  
employees,  the  need  to  pay  access  fees  to  Aurizon  to  use  their  rail 
infrastructure,  the  relationships  needed  with  coal  suppliers  to  secure  long-term  
haulage contracts and the scale required to compete efficiently in this industry with 
large established companies. Therefore I consider it unlikely that another company 
will attain a significant share as a supplier in the Queensland coal haulage market or 
become a significant purchaser of labour for the Queensland coal haulage industry in 
the medium term.

This  market  structure  gives  Aurizon and  Pacific  National  significant  market  
power in  the Queensland coal haulage market as virtual duopolies, since each is one 
of only two dominant suppliers of the service. Aurizon and Pacific National also have 
significant market power in the labour market for the Queensland coal haulage 
industry as duopsonies, since each is one of only two major purchasers in the market 
for this form of labour. Aurizon's market power in the labour market allows it to exert 
downward pressure on wages and conditions, as there is limited need to compete with 
other employers to secure a sufficient supply of labour. A collective bargaining  
process  provides  a countervailing restraint  as  it increases  the  market  power of 
workers from what they would have as individuals so that they are likely able to 
achieve a more favourable  outcome  than  through  individual  bargaining.   I 
understand that the bargaining process between Aurizon and the Rail, Tram and Bus 
Union (RTBU) for replacement enterprise agreements was ended by Aurizon, and that 
Aurizon is now seeking to terminate the existing Enterprise Agreements.

The  termination  of the existing Enterprise  Agreements  is likely  to reduce  the  
capacity  of employees  or the RTBU to negotiate replacement enterprise agreements 
due to the following circumstances.  I understand that unless the application to 
terminate is approved by the Commission, the conditions currently provided by the 
Enterprise Agreements will persist until replaced by other enterprise agreements. I 
understand that, if  the Enterprise  Agreements are terminated, workers currently 
covered by these will be subsequently employed for the following 6 months under the 
conditions provided by the Undertaking to Employees dated 12 May 2014 issued  by  
Aurizon, unless  and until these are replaced  by another  enterprise  agreement  or 
employment  contract. I understand that these conditions are more favourable to 








[2015] FWCFB 540

16

Aurizon and less favourable to the RTBU and Aurizon's employees than those 
provided by the Enterprise Agreements.  Therefore, if the  termination  results  in  
Aurizon obtaining  changes  to  working conditions  that it considers  to  be less  
efficient than  those  in Pacific National  (or  Aurizon's desired  “optimum”), it will 
remove  the incentive Aurizon currently has to negotiate  with workers for 
replacement enterprise agreements to amend those “less efficient” conditions that will 
otherwise continue. Furthermore if the termination is granted, it will remove the 
current restriction on Aurizon’s ability to exercise its market power and will mean 
employees are unlikely to be able to use collective bargaining to improve their 
employment conditions from those set by Aurizon in the Undertaking to Employees. 

...

Based on our above forecast rate of 0.2% per annum, growth in unit labour demand in 
the Queensland coal haulage industry in aggregate could absorb just over 1 percentage 
point of this amount by 2018-19. As will be demonstrated below, many of these 
employees are based in regional Queensland, an area which offers minimal alternative 
employment opportunities for these workers, and so there would be little reduction in 
the oversupply by movement to (i.e. employment in) other industries. Therefore I 
forecast there would be a long-term surplus of labour in the coal haulage industry if 
these Enterprise Agreements are terminated, which would have  two  results: it  will  
cause  structural  unemployment  in  the  industry  and  allow  further downward 
pressure on wages and labour conditions in the industry.

...

I expect that if the Enterprise Agreements were terminated, Aurizon would be able to 
materially reduce unit labour costs, as asserted in the Browne Statement and other 
evidence submitted by Aurizon. In that case, Pacific National's employment conditions 
would be uncompetitive relative to those of Aurizon. Therefore, when the Pacific 
National 2014 Agreement nominally expires in May 2017, it would be in Pacific 
National’s economic interest to propose to its employees wages and conditions 
equivalent to Aurizon in a replacement enterprise agreement for 2017 and, if they did 
not agree, to apply for a termination of the agreement, supported by the same 
arguments as those made by Aurizon in the current application.

If the Commission refused the application, after having accepted the application for 
Aurizon to terminate its Enterprise Agreements, it would require Pacific National to 
continue with more restrictive employment conditions than Aurizon and face higher 
unit labour costs. This would entrench the competitive disadvantage  of Pacific 
National and further reduce its capacity to pressure  Aurizon to pass  on its  labour
costs savings  in  the form  of  lower  prices  for  coal haulage. It would also further 
strengthen Aurizon's market power as the major provider of rail haulage in Queensland 
and the major purchaser of labour in this industry, and potentially allow Aurizon to 
increase the coal haulage prices it charges to coal producers already facing low 
profitability due to falling world coal prices.

If the Commission accepted Pacific National's application for termination, this would 
contribute to the dismantling of the enterprise bargaining system from the QLD coal 
haulage industry. It may allow Aurizon and Pacific National to exercise  their market 








[2015] FWCFB 540

17

power in labour  markets to reduce  employment  conditions  due to  the loss  of a  
countervailing  restraint  from  collective bargaining  by  workers. In  effect,  there  is  
a strong  motivation  for  both Aurizon  and Pacific National to aggressively reduce 
their labour  costs and, as a virtual duopsony in terms of rail haulage, will have the 
economic power to achieve these reductions in conditions at the expense of workers in 
the absence of the countervailing power such as collective agreements. Moreover, the 
removal of certain protections on working conditions currently provided by for the 
coal haulage industry may threaten the safety of employees in the industry, with the 
lower safety of the employees and potentially for the wider community “contrary to 
the public interest”.

... 

While acknowledging that all the job losses would not be in regional Queensland 
areas, it is likely that the majority of the train crew and other workers (other than those 
in administration at the Brisbane head office), will live in rural and regional areas of 
Queensland, and in Central Queensland in particular. While the numbers are not large
relative to total employment in these regions, the problem is that these workers will 
become unemployed in regions where the labour market is already weak and 
unemployment is rising - making it less likely the retrenched workers will find 
alternative employment. Employment in Central Queensland is  suffering at present 
due to job losses in the coal mining sector, losses associated with the severe drought 
(affecting both on-farm labour and lower spending in rural communities), rising 
unemployment in the construction sector as the mining and gas-related investment 
declines and a local tourism sector weakened by the high Australian dollar. Potential 
job losses in the rail haulage sector will also have secondary ‘knock-on’ effects as 
lower incomes and spending from these retrenched workers affects retail and service 
industries in the regional towns. The end result is higher unemployment in these 
regions.

I believe the effects of the potential job losses, both direct and indirect effects 
(including the uneconomic social impacts), represent a major negative to the 
community and therefore would be “contrary to the public interest”.”49

[30] Dr Olav Muurlink, a qualified psychologist, is a senior Lecturer in Strategic 
Management/Human Resource Management at Central Queensland University.  He conducted 
a survey of Aurizon employees. The conclusions he drew from the results of the study were as 
follows:

“The results of this study of Aurizon employees indicate a few things quite 
conclusively. There is a high degree of at least superficial awareness of the EBA, and 
redundancy restrictions, pay and conditions generally are highly salient components of 
the Aurizon agreements that members wish to retain. In conducting this study, I sought 
to deal with two weaknesses common in attitude surveys. Firstly, unless one is very 
careful, guiding respondents towards a particular desired response is easy.  We asked 
an identical ‘do you support the termination of your current agreement’ question both 
at the beginning and end of the interview, to check for the impact of priming (‘push 
polling’) on responses.  There was no significant impact.  Secondly, a mere ‘yes’ ‘no’ 

                                               
49 Exhibit R5- at [19]-[23], [31] [36]-[38] and [43]-[44]








[2015] FWCFB 540

18

poll can be deceptive, because it gives little indication of the conviction with which an 
attitude is held (Abelson, 1988), and the degree to which an attitude is based on 
knowledge, or the underlying causes of that attitude being held. We asked respondents, 
very early in the interview, to list the three aspects of the current agreements that are 
most important for them.  Such non-guided, open-ended questions are ideal for 
interpreting underlying attitudes, and confirm the strong concerns the respondents had 
about the importance of the redundancy provisions in particular.

On one level, the study offers a simple answer to the key question: there is 
overwhelming opposition to the termination of the agreements.  Key components of 
the agreements-forced redundancy restrictions, starting and finishing time restrictions, 
shift lengths, mandatory consultation for major changes, shunting changes and 
restrictions on work impeding on blocks of leisure times-did prove to be highly 
important to members, when they were directly asked.  There was one exception:  the 
rules on restricting shunting. However, even here, a significant majority rated this as 
highly important.

All other components were given a modal (i.e. most common) response, on a scale of 
zero to ten, of ten.  Clearly issues of health and safety, as well as work-life balance 
underpin some of these strongly held views, and remuneration is a clear concern in the 
qualitative comments given by workers. However, the issue of anxiety about 
redundancy appears from the data to be related to the fungibility of skills gained in the 
rail industry. I found a statistically significant negative relationship between an 
employee's confidence in their ability to get a job elsewhere and the importance of the 
forced redundancy restrictions.

It is worth noting that there is also a latent suspicion of Aurizon. Aurizon's role in
negotiations is not perceived positively.  On the occasions in the open ended responses 
when Aurizon's name was mentioned by respondents directly, 89% of these mentions 
were clearly negative, with the balance neutral or understanding of Aurizon's position
(“I understand the issues that Aurizon has” or “Aurizon is only a business”) rather than 
positive.  The negative comments clustered around three themes:  bullying and 
recalcitrance (“Aurizon are stonewalling,” “Aurizon won't budge”, “I think Aurizon 
should stop trying to bully and tell us what we can and can't have”), bad faith (“I think 
the union are but we don't think Aurizon are. We think they're negotiating so we get to 
the point where the Fair Work Commission cancels our agreement”) and propaganda 
(“We are being bombarded with what I would call propaganda from Aurizon”).   More 
generally, the members expressed concern about being poorly informed or sensing that 
they did not have full knowledge of the facts.”50

[31] Aurizon commissioned two reports prepared by Mr Euan Morton, Principal, of 
Synergies Economic Consulting. Mr Morton has degrees in economics, law and commerce. 
He is a former member of the National Competition Policy Unit of Queensland Treasury and 
the inaugural Director of the Queensland Competition Authority. His first report was a 
response to the witness statement of Dr Hale. The summary and concluding remarks in his 
report are as follows:

                                               
50 Exhibit F12, Attachment “OM3” pages 14-15 








[2015] FWCFB 540

19

“I do not agree with the following statements of Dr Hale, for the reasons set out in 
italics:

a) Rail freight   in Queensland   will   most   likely remain a largely non-
competitive duopoly for many years to come.

The rail freight market in Queensland is characterised by insubstantial 
barriers to entry, entry by well-resourced suppliers over the last five years, and 
vigorous competition between suppliers.

b) The  overall  picture  emerging  from  this  investigation  is  a  situation   of 
ongoing   stability,  moderate   business  growth,   and  freedom   from  any 
prospect of genuine  hard edged  competitive  pressure  of the sort faced by 
most main stream businesses operating in Australia.

Aurizon faces vigorous competition in coal haulage, effective regulation of its 
below-rail activities and operates in a market that is volatile and risky.

c) Any competition faced by Aurizon lies at the more abstract and faint end of a 
spectrum, given it scale and dominance and its highly regulated and 
concentrated industry contexts.

Aurizon faces vigorous not abstract or faint competition in coal haulage and 
effective regulation of its below-rail activities.

d) It can also be contended  on a reasonable basis that  the Aurizon-Asciano 
duopoly does not, for the most  part, involve  'competition'  as  that  term would   
be  used  in  any  mainstream   business,  academic or  vernacular 
understanding of the concept.

Aurizon and Asciano do not constitute a duopoly. Insubstantial barriers to 
entry and the fact of entry result in vigorous competition in the market which is 
recognised as such.

e) In short, Aurizon's ownership and control of track assets appears to limit and 
constrain, a priori, any opportunity for even a semi-competitive ‘open market 
regime’ for coal haulage or track usage by other organisations in Queensland.

Regulation by the QCA prevents Aurizon from taking advantage of its control 
over below-rail services to reduce competition in coal haulage or track usage.

f) In   short,   there   is no current   or   looming   prospect   of a   genuinely
‘competitive’ coal haulage market in Queensland-without major changes to 
regulation, a move to vertical separation of Aurizon's business, and/or the  
appearance of serious  new  market  entrants.  There is currently   no prospect 
of these eventualities.

The QCA effectively regulates Aurizon Network. As a result, there is no need 
for major regulatory change of vertical separation. Nor are such changes 








[2015] FWCFB 540

20

likely. The market has already accommodated two serious new market 
entrants, demonstrating that it is genuinely competitive.

g) From these figures it is clear that Aurizon is a leading and equal national 
market player, in the context of a sector with only three major companies and 
hence very limited levels of real competition.

The ‘Australian’ market for integrated   non-coal rail freight to which Dr Hale 
is referring exhibits competition between road and rail. It is not possible to 
determine that it lacks ‘real competition’ by an analysis of only the rail 
operators that supply that market. Nor do I consider that it lacks real 
competition.

h) The very  concepts  of competition  and  change  in business  circumstances 
remain  at  the  margins  of  business  realities  and  business  planning   for 
Aurizon - at least for the next 3-4 year period.

Aurizon faces vigorous not abstract or faint competition in coal haulage and 
effective regulation of its below-rail activities which it must recognise and 
manage through its business planning.

i) Aurizon currently faces a stable business outlook, involving only mild and 
constrained external competitive pressures towards its core business activities.

Aurizon faces a risky business outlook because of the combined effects of 
regulation, vigorous competition and potentially volatile markets for export 
coal.”51

[32] The second report was a response to the witness statement of Richard Robinson. Mr 
Morton’s summary and concluding remarks were as follows:

“In summary:

a) I do not agree with Mr Robinson that Aurizon and  Pacific National have 
market  power  in the Queensland  coal haulage  market  because the threat and  
actuality  of entry, as well as competition  inter se, results in vigorous 
competition incompatible with market power.

b) I do not agree with Mr Robinson that Aurizon and Pacific National have 
market power in the market for Queensland coal haulage labour.  I am unable 
to determine whether there is a distinct market for Queensland coal haulage 
labour, although this seems doubtful.  In my view, the evidence and reasoning 
presented by Mr Robinson do not demonstrate that there is such a market.  
Accordingly, Mr Robinson has not established  an essential pre-requisite,  
namely  the existence of a distinct  market,  that would allow him to validly  
conclude  that  Aurizon  and  Pacific National  have  market power within it.

                                               
51 Exhibit D28, Annexure “EM-2” pages 26-27








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c) I do not agree  that  the likelihood  that labour  cost reductions  for Aurizon 
will be passed  on in  the form  of lower  prices  is limited  by  long  term 
contracts and  market power in the Queensland coal haulage  market. This 
proposition is inconsistent with my finding that the Queensland coal haulage 
market is competitive.

d) Similarly, I do not consider that the assumed higher labour costs of Pacific 
National until 2017 under its EAs are likely to represent a floor that would 
limit the extent to which Aurizon is forced to pass on its cost savings in the 
form of lower   prices.  Nor  do  I  consider   that   they  would   limit  the
competitive  pressure  on Aurizon  for any new  contracts  that came up for 
renewal  between  now  and  2017. These propositions are also inconsistent 
with my finding that the Queensland coal haulage market is competitive.”52

[33] In our view aspects of the evidence of Dr Hale do not represent a sound analysis of the 
market position of the rail freight industry. We found his evidence overly dismissive of 
obvious competitive pressures and unduly complacent in relation to the necessity for cost 
reductions and work practice improvements. In particular his view that there could not be a 
competitive market when only two competitors were involved adopts an overly technical 
approach. Pacific National has made major inroads into Aurizon’s market dominance in a 
very short time. Such competitive pressures cannot be ignored by Aurizon. In our view Dr 
Hale’s evidence failed to address the actual business circumstances of Aurizon in a realistic or 
practical manner.

[34] The evidence of Mr Robinson is characterised by a significant misunderstanding as to 
the effect of termination of the agreements. In assuming that Aurizon would be able to 
enforce bare award terms on its employees and significantly undercut Pacific National’s cost 
base, he has failed to appreciate the ongoing bargaining process and the likelihood of a new 
agreement on negotiated terms. He seemed unaware that bargaining for a new agreement 
could continue and the Unions and employees could avail themselves of protected industrial 
action to advance employee claims. While it is likely that Aurizon will be able to introduce
some changes if it is free to do so, it is in our view also reasonable to expect that any new 
enterprise agreements while containing less operational inefficiency, will also contain similar 
wages and conditions of employment for employees. This is because the bargaining power of 
the employees and their bargaining representatives, the Unions, is not insignificant. The 
assumptions made by Mr Robinson in his evidence were not, in our view, sound and his 
evidence did not provide a great deal of assistance to us.

Legacy provisions and the changes sought by Aurizon

[35] As we earlier indicated, various of the witnesses called by Aurizon gave evidence 
about the key changes that it sought to negotiate as terms of any new agreements. These 
changes and the Unions’ responses are summarised below. 

[36] Mr Michael Heenan the Manager of Employee Relations for Aurizon gave evidence 
about the scope, nature and impact of the current enterprise agreements in the context of 
Aurizon’s business operations. He said that 13 of the 14 agreements cover employees of 
Aurizon Operations Limited and Aurizon Network Pty Ltd and that all of these agreements 

                                               
52 Exhibit D29, Annexure “EM-2” page 29








[2015] FWCFB 540

22

contain a number of “legacy provisions” or terms and conditions that were applicable to QR 
Limited, as and when it operated as a government corporation.53 The circumstances in which 
these provisions were included in the enterprise agreements is set out in the evidence to which 
reference has already been made, of Mr Tim Conroy, Aurizon’s Human Resources Manager.54

Mr Heenan said that Aurizon regards a number of the “legacy provisions” as having a 
detrimental effect on, and as unsuitable for its business.55

[37] Mr Heenan detailed the structure of Aurizon and said that Aurizon has changed since 
privatisation from a “business unit structure” to a “functional model”56. He said that the 
"functional model" which Aurizon has adopted, has resulted in a division of the organisation,
along functional lines, as follows:

 Operations (which includes coal, freight, rolling stock maintenance, program
delivery, operations planning and safety);

 Network;
 Human Resources;
 Commercial and Marketing;
 Strategy and Business Development;
 Finance; and
 Enterprise Services (which includes IT, procurement, real estate, etc). 57

[38] Mr Heenan said that in Aurizon's current organisation, there is delineation between the 
operations and support functions within the business, excepting Network, which operates
under a specific statutory regime and is structurally separate. He said that Network has its 
own operations function and limited support functions such as finance, commercial 
development and network regulation.58

[39] The changes sought through bargaining by Aurizon are said to be necessary for 
operational and commercial reasons. That is, the operation of a number of the “legacy 
provisions” results in significant inefficiencies and restraints on Aurizon’s operations and 
negatively impacts on productivity and the reasonable utilisation of its workforce. 
Specifically, Aurizon says it is seeking to remove restraints on three affected areas:

 planning and utilisation of labour; 
 scheduling; and 
 the execution process for coal haulage.59

[40] There is nothing in the evidence suggesting a motive other than that which Aurizon 
has advanced.

                                               
53 Exhibit D8 at [19] - [20]
54 Exhibit D11
55 Exhibit D8 at [22]
56 Ibid at [22]
57 Ibid at [23]
58 Ibid at [24]-[25]
59 PN3957 - PN3960 








[2015] FWCFB 540

23

[41] Further, Aurizon argued that the removal of restrictive provisions will enhance its
ability to compete for contracts across the coal rail network, freight, the intermodal business 
and maintenance services. There can be little doubt that this is so.

[42] The “legacy provisions” include:60

 “No forced redundancy” 

 QR National Passes policy

 Recruitment and selection clause

 Credit for service with Queensland Rail clause

 Individual Flexibility Agreements

 Dispute Resolution

 Roster cycles

 Drug and alcohol testing

 Complex and inconsistent entitlements across the Expired Enterprise Agreements

 Shift worker swapping public holidays on RDOs.

[43] The evidence about some of these is examined briefly below.

“No forced redundancy” 

[44] The no forced redundancy clause prevents Aurizon from reducing its workforce in the 
event of positions becoming redundant or because of organisational or structural changes, 
other than by seeking volunteers. It is thereby also limited in its capacity to select the most 
appropriate person for any redundancy by using objective selection criteria having regard to 
the operational needs of the business.

[45] As we have already noted, Mr Heenan gave evidence that the “no forced redundancy” 
clause has led to a significant number of "employees in transition", being those employees 
whose former positions are no longer required. At the time of hearing, Mr Heenan confirmed 
there were 69 employees61 registered with Aurizon's "Career Transition Unit", which is 
responsible for managing employees in transition. He said it was unlikely that redeployment 
opportunities will be identified for all employees in transition. Therefore, Aurizon is 
prevented from effecting compulsory redundancies where it cannot identify redeployment
opportunities for affected employees, and these persons remain employed but ‘in transition’
by reason of the "no forced redundancy" clauses.62

[46] Mr Heenan said:

“In my experience the no forced redundancy clause has given rise to circumstances 
whereby surplus employees are unwilling to consider relocation opportunities because 
they are immune from retrenchment. This has led to situations where Aurizon has been 

                                               
60 Exhibit D8 at [22], [144]-[169]
61 PN298  
62 Exhibit D8 at [144] - [145]








[2015] FWCFB 540

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forced to recruit and train new staff for roles that could have been filled by surplus 
employees from other locations within Aurizon's business.”63

[47] The continuation of the no forced redundancy provision was budgeted at cost of $8.6
million for this financial year.64  The average cost is $120,000 per employee.65 Mr Heenan 
said that the costs associated with the no forced redundancy clauses included wages, and the 
cost of managing employees in transition, including provision of office space, internal 
administration and career counselling.66

QR National Passes policy

[48] The QR National Passes policy is a legacy entitlement derived from the then existing 
entitlement of Queensland Rail employees to free or concessional rail travel. As a result, 
Aurizon employees, their dependents and partners receive free or discounted rail travel 
depending on their purpose of travel and employee’s length of service. 

[49] The QR National Passes policy can only be changed with the agreement of the Unions 
covered by each agreement.67

[50] Aurizon does not operate the rail services to which the pass relates. Mr Heenan said
that from 1 January 2014, Aurizon was “required to pay Queensland Rail and Translink (a 
division of the Department of Transport and Main Roads) a fee to secure the rail pass benefits 
for its employees. In addition, Aurizon is required to pay fringe benefits tax on this benefit.”68

Mr Heenan said that the estimated cost of maintaining the "QR National Passes policy" is in 
excess of $3 million annually.69 Aurizon maintains that there is “no ongoing justification for a 
provision that in effect prevents Aurizon from discontinuing the provision of free or 
discounted rail travel to Aurizon employees”.70

Recruitment and selection

[51] The enterprise agreements impose a requirement, with some limited exceptions, that 
Aurizon advertise all identified vacancies internally. Mr Heenan said this led to excessive 
administration and that it would be more efficient to appoint an employee who is acting in the 
role, or who has been identified as having the necessary skills and experience to meet the 
requirements of the role.71

Dispute resolution

[52] The essence of the evidence given by Mr Heenan was that the restriction on 
implementation of workplace changes until steps in the dispute settlement procedure had been 

                                               
63 Ibid at [147]
64 PN299 - PN303 
65 PN301
66 Exhibit D8 at [146]
67 Ibid at [149]
68 Ibid at [151]
69 Ibid at [151]
70 Ibid at [152]
71 Ibid at [153]








[2015] FWCFB 540

25

completed resulted in its use by the Unions to bring about unnecessary and tactical delays so 
as to frustrate Aurizon’s capacity to implement change.72

Roster cycles

[53] Mr Heenan gave evidence that the roster cycle provisions of the various agreements 
impose restrictions on the way in which Aurizon may roster working hours of its employees. 
In consequence Aurizon is unable to roster in a manner that best suits its operational 
requirements.73

Drug and alcohol testing

[54] Mr Heenan’s evidence74 was that Aurizon should be able to use any lawful and 
reliable means to test employees as part of its alcohol and drug testing program. The 
enterprise agreements prevent it from doing so and limit its capacity to use blood or urine 
testing.

Complex and inconsistent entitlements across the enterprise agreements

[55] Aurizon seeks consistent provisions. For example, it manages over 900 classification 
points and a multiplicity of allowances and disability payments payable under the various
enterprise agreements. The effect is inconsistency in entitlements across Aurizon's workforce, 
complexity and administrative burden.75This was demonstrated in the different shift payment 
regimes that applied across various groups of employees.76

Other restrictive provisions

[56] Mr Heenan gave evidence about the limited matters77over which flexibility 
arrangements could be reached and said this was unnecessarily restrictive. The result is that 
Aurizon is limited in its capacity to deal with its employees to reach genuine agreement about 
terms and conditions of employment.78

[57] It must follow that flexibility arrangements between Aurizon and willing employees 
could not be made to respond to changing employee needs or to changing operational 
requirements.

[58] Mr Heenan gave evidence about the shift work swap arrangements. He said, for 
example, in Network Control, for one shift work roster change under the provision, the result 
was an average of just over 6 days additional payment per employee per year.79 This imposed 
an unnecessary cost burden to Aurizon.

                                               
72 Ibid at [162]
73 Ibid at [163]
74 Ibid at [164]
75 Ibid at [165]
76 Ibid at Tab 11 
77 In seven of the enterprise agreements only the matter of annual leave loading may be the subject of such an arrangement
78 Exhibit D8 at [158] - [159]
79 Ibid at [168]








[2015] FWCFB 540

26

[59] Evidence was also given about the restrictions on Aurizon’s capacity to ensure that all 
hours for which train crew employees were paid could be utilised for the performance of 
productive work. The performance of productive work by train crew employees was described
as “footplate” hours. In essence the evidence was that a number of paid hours of train crew 
employees were not available as “footplate” hours because of various restrictive provisions in 
enterprise agreements covering train crew employees and shunting employees. The 
Demarcation between drivers and shunters contributed to this. The evidence was that Aurizon
could significantly improve the productivity of train crew employees by the removing or 
altering some of the restrictions and thereby increasing the number of “footplate” hours 
worked by train crew employees.80

Impact of changes on employees

[60] Largely unchallenged evidence was given by witnesses for the Unions about the 
importance to employees of the provisions discussed above, the impact of their removal on
employees and about the employees’ opposition to the termination of the enterprise 
agreements.

[61] The evidence dealt with the rationale for no forced redundancy and relocation, rail 
passes, dispute procedure, drug and alcohol testing, internal vacancies, RDOs on public 
holidays and RDO arrangements.

[62] The thrust of this evidence was that each of the provisions with which Aurizon takes 
issue, were explicable and reasonable conditions of employment having regard to the nature 
of Aurizon’s business, the locations at which work is carried out and the conditions under 
which work is performed.

[63] For example, Mr Stewart Rach, a train driver employed by Aurizon at Gladstone gave 
evidence about the changes sought to the shunting demarcation. He said that shunters have 
better training to perform the work and maintaining the demarcation reduces the workload for 
train drivers. Further, he said that the roster and advance notice of change were important to 
maintaining a work life balance, given the already unusual hours worked by Aurizon 
employees. He also provided evidence about the configuration of some trains and said that 
driver only operations can be more dangerous.81

[64] Ultimately, it was submitted that the evidence demonstrated that the enterprise 
agreement provisions had been dealt with as a package in the initial negotiations. The rates of 
pay that employees have received for a number of years were lower because of the existence
of these terms. The terms were valued by the employees and contributed to the maintenance 
of a work life balance. Some of the terms were also important mechanisms by which 
occupational health and safety issues are addressed.

[65] As to the “no forced redundancy “provisions, it was submitted that many employees 
have legitimate concerns about job security. When account is taken of age, length of service
and location, it is clear that there is a reduced prospect of finding alternative work outside of 
Aurizon in the event of redundancy. Consequently the concern is reasonable. It is clear on the

                                               
80 Exhibit D24
81 Exhibit F18








[2015] FWCFB 540

27

evidence that 69 employees’ employment will be brought to an end almost immediately, if 
this provision was removed.82

[66] Aurizon argued that restrictions such as “lift up” and “lay back” of train crew, that is,
the capacity to alter start and finishing times of train crew once the daily roster is set, are
inflexible and an inefficient use of train crew.83

[67] The evidence led by the Unions was to the effect that such provisions are necessary so
that employees have certainty about their hours of work. This was important in an 
environment where employees already worked varying shifts and uncertain patterns.
Accordingly, predictability of hours of work was an important consideration. It was submitted 
that there was no demonstrable benefit in removing restrictions on lift up and lay back and
that there was no evidence about how productivity would be affected. 

[68] Evidence was also given that if Aurizon sought to contact employees on short notice 
so as to alter their start times, compensation for the alteration of start and finish times was 
sought or but the clear preference of employees was to retain the restrictions.

[69] As to the maintenance of rail passes, the evidence was that this was a long-standing 
entitlement allowing employees to travel on the rail network free of cost, and that for some 
employees, particularly on the suburban train network, this represented substantial value, for 
which they would seek compensation if it is to be altered.

[70] As to the demarcation between driving and shunting duties, the evidence led by the 
Unions suggested that shunting work was dangerous, it should only be undertaken by those 
appropriately trained, and given the variety of arrangements between depots and the potential 
consequences (serious injury) if mistakes in shunting were made, train crews as well as 
shunters supported retaining the current restrictions.

[71] Health and safety concern was also the reason articulated as underpinning the car 
driving restrictions. The Unions argued these restrictions should be maintained, given the 
dangers associated with train crew driving motor vehicles after the performance of train 
driving duties.

Bargaining for new agreements

[72] Bargaining for the new agreements commenced in April 2013.

[73] At the time this application was made, Aurizon and various of its employees were 
covered by 14 enterprise agreements, each of which had passed its nominal expiry date on 31 
December 2013. A table was provided as part of Mr Heenan’s evidence identifying each of 
the expired enterprise agreements, their scope and the approximate number of employees 
covered by each agreement.

[74] Formal bargaining commenced at an offsite location on 29 April 2013. The Unions
rejected Aurizon’s proposal to commence bargaining by negotiation which Aurizon described 

                                               
82 PN590
83 Aurizon’s outline of submissions at [102(f)]; see also Exhibit D13 at [109] - [111]; Exhibit D19 at [81] - [85] and Exhibit 

D24 at [153] - [164]








[2015] FWCFB 540

28

as “common conditions”. The Unions instead first sought to reach agreement on the number 
and scope of agreements that would apply to Aurizon employees.

[75] In May 2013, Aurizon provided the Unions with three documents as its proposal for 
bargaining. Several meetings followed but no agreement was reached on the number of 
enterprise agreements or their scope. The Unions subsequently provided a log of claims, 
which it was understood, was underpinned by a proposal that nine enterprise agreements
would be made. Some further scheduled meetings were adjourned to allow the Unions final 
endorsement of matters in the log of claims.

[76] After a further series of meetings, Aurizon filed a bargaining dispute application 
pursuant to s. 240 of the Act in June 2013. A series of conferences were facilitated by the 
Commission and associated Statements issued. The Commission recommended a framework 
for discussions. Further meetings were convened and the evidence of Aurizon and the Unions 
in summary terms, details the series of meetings and the minimal progress that was achieved 
in negotiations. Evidence was provided by Aurizon and the Unions about the details of these 
negotiations. These matters have been carefully considered. It is of some significance that, 
after a number of meetings chaired by Deputy President Asbury, the following Statement of 4 
March 2014 to the parties was issued.84

“[1] On 14 June 2013 Aurizon Operations Limited (Aurizon) made applications under 
s.240 of the Fair Work Act 2009 (the Act) for the Fair Work Commission to deal with 
bargaining disputes. The Commission has conducted 14 conferences to date 
attempting to assist the parties to reach agreement. Conferences have involved State 
Officials and Delegates of the abovementioned Unions.

[2] A framework was put in place to enable provisions that are applicable to all 
employees to be discussed (such as leave entitlements) and to identify those clauses 
which were specific to particular-groups of employees (such as hours of work and 
rostering) so that they could be discussed with those groups of employees.

[3] The draft agreements tabled by Aurizon seek significant changes and offer wage 
increases in return. Aurizon has indicated that the changes are necessary for it to 
remain competitive in the current economic environment, and reflect provisions that 
are common in other agreements, including those of its competitors.

[4] Union officials and Delegates have indicated that they will not agree to changes to 
existing Agreement provisions and that Aurizon must justify such changes clause by 
clause. Negotiations have been slow and difficult. On 19 February 2014, I attended 
negotiations for the following proposed agreements:

• Transport Operators, Maintenance and Infrastructure Enterprise Agreement 
2014; and
• Staff Enterprise Agreement 2014.”

[5] One of the issues being discussed was hours of work. Aurizon seeks flexibility in 
shift lengths up to twelve hours. Aurizon maintains that the current Agreements are 

                                               
84 Matters B2013/955 and B2013/956








[2015] FWCFB 540

29

inflexible and either place limitations on shift lengths or require levels of agreement 
by employees to alter shift lengths, and that these restrictions impact unfavourably on 
the Company's ability to respond to the needs of its customers. Union officials and 
Delegates responded to this issue by indicating that they would not agree to any 
changes to the current provisions of the Agreements.

[6] Aurizon has spelled out the change it seeks in relation to hours of work. The 
Company's position was rejected by officials and delegates without a counter proposal 
being advanced. If Aurizon now changes its position and winds back its proposal, it 
will in effect be betting against itself.

[7] The discussion on hours of work is typical of the way in which the negotiations 
have proceeded, and indicates that the likelihood of reaching agreement is virtually nil. 
Negotiation requires willingness to move on both sides. While some matters have been 
agreed, there is no agreement on significant issues such as hours of work and rosters.

[8] The Aurizon agreements expired in December 2013. Those agreements remain in 
operation until they are replaced or terminated. There is no capacity for employees to 
obtain a wage increase other than through negotiating a new agreement, because the 
wage rates in the current agreement exceed those in the Rail Industry Award 2010.

[9] If the parties maintain their current position, the options are that:

• The current agreements continue to operate and employees do not receive any 
wage increase until the wage rates in the agreements fall below those for the 
same classification in the Rail Industry Award 2010 and other relevant Awards.
• Employees take protected industrial action to press their claims to maintain 
the terms and conditions in the existing agreements and to receive wage 
increases.

[10] If the first option is taken, given the amount by which the agreement rates exceed 
those in the Awards, there will be no wage increases in the foreseeable future.

[11] If the second option is taken, provisions of the Fair Work Act 2009 will be 
potentially triggered allowing Aurizon to:

• Take defensive action such as locking employees out of their employment or
where work bans are implemented, by reducing payments to employees.
• Apply to the Fair Work Commission to terminate or suspend protected 
industrial action on grounds including that it is causing significant damage to 
the Australian economy or an important part of it.

[12] The Act also contains provisions which allow the Commonwealth Minister for 
Employment or third parties such as customers of Aurizon, to also make application to 
terminate or suspend industrial action on the grounds that it is causing significant 
damage to the Australian economy or an important part of it.

[13] Where industrial action is terminated, and all matters that were in issue in 
bargaining for an agreement have not been settled, the Commission can make a 
determination, and must do so as soon as possible. A determination is made instead of 








[2015] FWCFB 540

30

an agreement. In making a determination, the Commission must take into account 
matters including the interests of the employer and employees who will be covered by 
the determination and how productivity might be improved in the enterprise 
concerned. These provisions were used in the case of Qantas.”

(emphasis added)

[77] It seems clear from the statement that as at 4 March 2014, bargaining had been 
protracted and that there has been little or no progress made on any substantive issue. The 
Deputy President also set out the options under the Act available to the bargaining parties to 
progress the bargaining. Most telling however is that whilst the Deputy President remained 
ready to assist the parties, she indicated, based on her experience of the negotiations, the 
futility of continued negotiations between the parties whilst the current deadlock of positions 
of the parties was maintained. The Statement concluded by indicating that the Deputy 
President was “not prepared to undertake further conciliation while those positions are 
maintained.”

[78] Aurizon next released three proposed enterprise agreements which would replace 14 
expired enterprise agreements. Mr Heenan gave evidence that in an email sent to the Unions 
on 12 August 2014, Aurizon was seeking a reasonable response from the Unions to address 
Aurizon’s proposals. It seems to us on the evidence that the proposals contained in the email 
and accompanying proposed agreements carried with them a rationale, that was reasoned and 
that explained the commercial necessity underpinning the proposals. In the context of 
bargaining to that point, it also seems to us that the proposals deserved a considered and 
constructive response. 

[79] The Unions submitted that the negotiations were difficult, but that there is nothing 
particularly irregular about that. They submitted that to intervene at this stage by terminating
the agreements would be premature and against the scheme of the statute and that a reason for 
the protracted bargaining was that Aurizon was seeking massive change.

[80] During the hearing of this application, Mr Reitano alerted the Full Bench to the filing 
by the RTBU of applications for orders for protected action ballots. He submitted that the 
absence to date of such applications and at any protected action strongly indicated that 
bargaining was proceeding in accordance with a process envisaged by the Act.

[81] Mr Dixon referred to the evidence of bargaining and submitted that it establishes that 
no real effort has been made by the Unions to address the issues between the parties in any 
meaningful or responsive way.

[82] Aurizon made the following submission about the relevance and evaluation of the 
conduct of the bargaining parties to the question whether it was appropriate to terminate the 
enterprise agreements:

“MR DIXON:   They have two significant relevances, your Honour.  The first is that 
there's no real prospect of agreement being reached given that type of behaviour, and 
the second is it is an ameliorating factor in respect of the complaint that there is 
massive change, which I will come to deal with.  Where it has been suggested that the 
changes which Aurizon seeks will have adverse consequences and there has been no 








[2015] FWCFB 540

31

attempt to engage in a way to ameliorate those consequences in a constructive manner, 
it would be a relevant consideration in dealing with the case that is put against us.

DEPUTY PRESIDENT GOSTENCNIK:   Mr Dixon, sorry, before you go on, what do 
you say to the proposition that there may well not be a prospect of reaching agreement, 
but that arises as much as a consequence of Aurizon trying to bite off more than it can 
chew in one negotiation, as opposed to any particular conduct by the union, and how 
do we assess that?

MR DIXON:   Your Honour, that would require an evaluation, if one is going to apply 
that test, of whether the premise is a correct one and, in our respectful submission, and 
I'm going to try and deal with that issue, that the premise is not a correct one.  Because
in the circumstances - and 'm going to try and deal with each of the so-called losses - if 
one puts them in their proper context that premise would not be a justifiable one.  

There is no evidence from the bargaining representatives who put the position as to 
why a particular issue has a dollar value beyond - all the matters have a dollar value 
much more than what was being offered in the overall context of what is being 
offered, but the primary issue I think is to make an assessment of whether what is 
being sought is as radical as has been suggested, and we would submit that it's not.

In relation to - again, if I may return to, your Honour the presiding member's question, 
the evidence not only in the bargaining but the evidence in these proceedings proffered 
by the union representatives and the union members shows a total adherence to terms 
and conditions such as the no forced redundancy provision.  There is no prospect at all 
of reaching agreement with Aurizon with those provisions remaining binding on it.  It 
makes no commercial or business sense for it to agree to such a provision for the 
future.

In addition, the resistance in the evidence, the union's evidence, to sensible change in 
respect of other matters shows that there was and is no prospect of reaching agreement 
whilst that resistance remains and nothing has changed since the application was made 
in May of this year, as is illustrated by the events six months later, August and 
September, in respect of bargaining.

Can I then come to deal with the suggestion that there has been massive change - what 
Aurizon is proposing is massive change.  We do not accept that that is an accurate or 
true position in respect of an operation of this kind.  Firstly, can I just deal with 
shunting.  Is there a disadvantage to employees to be utilised as train crew, properly 
trained to do work in their ordinary shifts in paid time?  No.  

Rostering, there was a concentration on this issue, particularly in coal haulage.  The 
starting point is that within the same organisation in freight, there are much more 
flexible lift up and layback provisions which operate with no identifiable hardship.  At 
Pacific National, flexibilities are greater with no apparent or proven hardship or 
displacement of work, life balance.  That is the case both in respect of the 2009 
enterprise agreement and the 2014 enterprise agreement that was put in evidence in 
relation to Pacific National which provide for flexible rostering.








[2015] FWCFB 540

32

Then there is the BMA rail agreement... exhibit D7, which contains a copy of the 
BMA Rail Greenfields Agreement 2013...  Behind tab 2... note clause 3(a) as to what 
the total remuneration includes.  Total remuneration includes a wide range of work, 
overtime, loadings and the like, and then if one turns to clause 4, the hours of work 
clause, you will see at 4(b) that the maximum hours of work are simply those that are 
in accordance with the national employment standards fatigue management and part of 
the rail safety management system.

Minimum hours, simply as regulated by legislation.  Mandatory rest periods as set out 
in 4(d), and then if one comes to deal with roster cycle variations, shift changes, lift 
ups and lay backs, clause 4(e).  One of the most flexibile [sic] provisions that one 
could readily find, simply guidelines, may vary the roster cycle, change roster shifts, 
may be lifted up and laid back a maximum of four hours respectively, only make three 
changes to your roster shifts per day.  You must at all reasonable measures to make 
yourself available.

You will see that there are provisions for shift cancellations and there's an obligation 
in 4(h) to work reasonable additional hours.  Now, that enterprise agreement was 
negotiated by the ARTBU on behalf of future employees of BMA Rail.  It was 
endorsed by the executive of that union, paragraph number 2505.  It was said that the 
union looked at national standards across the whole industry to try and achieve an 
outcome that meets industry standards.

This was the product, and any fatigue management and other policies stand outside of 
that enterprise agreement and are therefore not enforcible [sic] in the enterprise 
agreement.  BMA Rail uses the same rail network, and then in addition you will recall 
the evidence of Mr McKeiver that every other freight operator in the country that he's 
aware of has the flexibility which Aurizon does not have in coal to direct lift up or lay 
back, that's paragraph number 926.

So if one is making an objective valuation of the impact of change that Aurizon is 
seeking, that must be part of the background.  Can I then try and deal with the no 
forced redundancy provision.  Aurizon accepts that this is a change which in isolation 
and not taking account of any other matters alters employees' present position 
significantly.  But taken in their proper context the effects are significantly mitigated 
and taken in the context as to how long this provision was intended to apply, that 
would be a relevant factor.

Firstly, you've heard evidence that Aurizon where possible and where available offers 
relocation and retraining.  Secondly, any redundancies will be accompanied by a 
generous redundancy package, three weeks per year of service, and if you compare the 
BMA Rail agreement for the purposes of redundancy, that clause...8(f).  The 
entitlements there are significantly lower than a three week per year of service.  It is in 
that context, it is not a condition that should be regarded as so significant in 
circumstances where there is no evidence that the unions press for this entitlement in 
other enterprise agreements where they do not exist.  Next we submit in assessing this 
issue, it has to be recognised that even if it is a reduction from what pertained in 
Queensland Rail, as a government owned entity supported by government, the absence 
of such terms in private sector is not regarded as an industry standard, the absence of 
which in all the circumstances is unreasonable.








[2015] FWCFB 540

33

Then it's important to bear in mind that the origin of this clause and what was in effect 
required by the Queensland government when Queensland Rail was being 
nationalised.  You will recall from the evidence of Mr Morton that the premier of the 
Queensland government in 2009 required the undertaking to be honoured not 
indefinitely and into the future but for the balance of the period of the then enterprise 
agreements, that when made ended up being three years.

Employees have now had four years' benefit.  It was not a promise for life, and it was 
clearly one measure of lessening the transition from public sector to private sector.  
Those are important contextual matters to bear in mind when one wishes to consider 
whether it is demanding too much to apply standards which are generally accepted and 
in respect of which there is no similar restraint in private enterprise.  Can I deal with 
the nine day fortnight...

Greater flexibility in rostering, to utilise all days, does not necessarily - particularly if 
accompanied by reduced daily hours - impose an unfair burden.  The commission has 
no means of assessing the desire to utilise labour other than on a nine day fortnight or 
to change the rostering arrangements in that way, will impose undue burdens on 
employees such as diminishing the value of what Aurizon was offering or creating any 
unfair burden if more flexibilities result.

Next may I deal with inefficiencies in crew rostering.  Making more efficient and 
productive work does not impose additional or unfair burden.  Yes, there might be a 
greater lift up or lay back.  But again, in assessing objectively that issue, all the factors 
that I mentioned earlier must come into play in assessing the impacts of it.  If one 
looks for example at the driver restrictions and car driving restrictions, if Aurizon 
alters the arrangements so that it reduces the inefficiencies in that way, there has been 
no suggestion other than some faint suggestion that these are safety issues which are 
dealt under a safety regime, to suggest that this would impose any unfair burden or 
hardship on the loco drivers or the car drivers.

The same is the case in respect of other parts of the businesses.  So in our respectful 
submission, in assessing the argument put against Aurizon, the commission would 
bear in mind the absence of any real attempt to bargain so as to in any way mitigate 
perceived burdens which might flow from the removal of these matters.”85

[83] We think the approached urged on us is a sensible and appropriate one, and we 
propose to adopt it.

Re-opening of matter

[84] On 6 January 2015, the RTBU made an application to reopen the proceedings as it 
sought to lead evidence about the events that had occurred since we reserved our decision. We
agreed to re-open the matter so that all information relevant to the proceedings could be 
considered. A further hearing was held on 10 February 2015.

                                               
85 PN3975 - PN3995








[2015] FWCFB 540

34

[85] Witness statements dealing with the continuation of the negotiations between the 
parties were filed. A statement of Mr Peter Allen of the RTBU was tendered.86Mr Allen was 
not required for cross-examination. 

[86] Mr Allen’s evidence dealt with the further negotiations and correspondence between 
some of the parties and the protected industrial action (supported by a majority) that had been 
taken since 12 November 2014. It was suggested by the Unions that Mr Allen’s evidence 
indicated progress directed at securing an agreement.

[87] Mr Allen considered that the bargaining for a new agreement was continuing, that a 
proposal had been put to Aurizon and there was a prospect of agreement being reached.

[88] Mr Heenan was cross-examined on his statement87 and on the recent negotiations since 
12 November 2014. The Unions sought to demonstrate that negotiations were progressing and 
the RTBU and the AFULE had sought protected action ballot orders to take industrial action 
and were in the process of notifying Aurizon of the action that was to be taken. Therefore, it 
was premature for the Commission to intervene to terminate the agreements. In short, it was 
suggested that the events set in train should be allowed to play out. 

[89] We do not think that the evidence establishes that any real progress had been made. 
There was no demonstrable change in the status of the negotiations that formed the basis of 
Deputy President Asbury’s assessment, regarding the futility of the negotiations. If anything, 
the evidence on 10 February 2015 reinforced, rather than refuted, the picture painted by the 
evidence given before us in late 2014, that little progress was being made in bargaining for 
new agreements. 

[90] That is not to say that no progress had been made. Mr Heenan conceded, in cross-
examination, that there had been some movement in relation to the area of ‘car driving’, 
although an agreement in principle had not been reached.88 Mr Heenan said that there had 
been quite a bit of debate and discussion around it.89Mr Heenan also said that there had been 
some progress on the train crew transfer guidelines.90

[91] However, in response to a question from Mr Reitano, about Aurizon’s position that 
there is no reasonable prospect of agreement, Mr Heenan indicated that his view was that 
there was still no reasonable prospect of agreement, “absent any proposal from the unions that 
deals with the key issues in a way that is satisfactory...we haven’t had a proposal that deals 
with those issues.”91

[92] Mr Dixon submitted that while a number of meetings with delegates have been held 
over January and into February 2015, there had been “virtually no material progress made at 
all”92 or “meaningful proposal on the key issues of concern”93 and that nothing has changed 

                                               
86 Exhibit R8
87 Exhibit D33; PN33-PN130 (10 February 2015)
88 PN61(10 February 2015)
89 PN68 (10 February 2015)
90 PN75 (10 February 2015)
91 PN105 (10 February 2015)
92 PN145 (10 February 2015)
93 PN150 (10 February 2015)








[2015] FWCFB 540

35

since the hearing of the matter in November 2014. We are inclined to accept that that is 
correct.

[93] As to the industrial action taken and proposed, there is no evidence of that fact 
materially altering the position of any party. Moreover, recourse to industrial action will 
remain an option whether the enterprise agreements are terminated or not.

[94] It therefore seems to us clear that no material change had occurred between November 
2014 and 10 February 2015 that bears upon our decision.

Aurizon’s Undertakings

[95] Aurizon has offered written undertakings to its employees, which it says are 
enforceable at common law, in the event that the enterprise agreements are terminated. The 
written undertakings would operate from the date of the termination of the agreements and for 
a period of six months following (subject to an earlier intervening event). It provides, in
addition to the minimum entitlements under the National Employment Standards (NES) and 
the Rail Industry Award 2010 (Award), Aurizon will provide certain terms and condition of 
employment94 (Undertakings).

[96] The Undertakings are provided by Aurizon Operations Limited, Aurizon Network Pty 
Ltd and Australia Eastern Railroad Pty Ltd to their respective employees covered by one of 
the agreements the subject of the application and employed in the state of Queensland on the 
termination date. The Undertakings would not apply to employees now covered by the new 
Staff Agreement.

Duration of the Undertakings

[97] The Undertakings will cease to apply on the earliest of a number of identifiable events 
including: 

 the commencement of operation of a new enterprise agreement or a workplace 
determination made by the Commission which applies to the employee; 

 an agreement in writing between an employee and Aurizon that the Undertakings will 
no longer apply; 

 a change in employment to a role outside Queensland; or 
 a change in employment to a role in relation to which the undertakings do not apply. 

[98] If none of these events occur, the Undertakings [other than paragraphs 7 (redundancy 
pay) and 9 (retirement allowance)] will cease to apply six months after they commence to 
apply to an employee, or a date after that date that is determined by Aurizon. Aurizon may 
continue some parts of Undertakings after six months, whilst others might cease to apply. 

[99] Aurizon proposes that the Undertakings operate for six months because, in its view, if 
the agreements are terminated, it is reasonable to suppose that one or more new agreements 
containing more flexible provisions would be made within that period.  Aurizon did not rule 
out extending the period of operation of the Undertakings. 

                                               
94 Exhibit D8 at Tab 12








[2015] FWCFB 540

36

What is Aurizon undertaking to do?

[100] The Undertakings provide for the following terms and conditions:

 Rates of pay contained in wages schedules. Classification Levels are consistent with 
the wages schedules of the Agreements sought to be terminated, and also include a 
Rail Industry Classification Level that corresponds to the Undertaking Classification 
Level. The Undertakings set out that upon the termination date, employees will be 
assigned to a Rail Industry Classification Level that corresponds to an Undertaking 
Classification Level, and employees will be paid at the applicable rate for their 
Undertaking Classification Level in which the employee was permanently employed 
at the termination date or the Undertaking Classification level to which an employee 
covered by the Undertakings is subsequently appointed. 

 Allowances, to be paid to an employee who was paid the allowance on the termination 
date or who is appointed to another role for which an Undertakings Classification 
Level is provided for. 

 A “standard rate” for the calculation of a shift allowance (where applicable under the 
Rail Industry Award 2010) of $26.44 per hour. 

 Maintenance of the enhanced remuneration packages (ERP) that were entered into and 
binding at the termination date. Aurizon undertakes that it will continue to apply the 
Annual Review Performance Plan provided for under the relevant ERP.

 Calculation of redundancy pay at three weeks pay (at the base rate of pay) for each 
year of continuous service (with a pro rata payment for an incomplete year of service). 
It also provides for a minimum redundancy pay of 4 weeks at their base rate of pay for 
employees with between 1 and 2 years service. Part-time service will receive pro rata 
redundancy for that period, and a maximum redundancy payment will be 104 weeks at 
an employee’s base rate of pay. 

 Unauthorised or unpaid leave (other than community service leave or unpaid leave 
prescribed by the Act) to be deducted from an employee’s period of continuous 
service. 

 Superannuation rates (other than to employees of AER) for contributory or non-
contributory accounts.

 Retirement allowance for employees (other than AER employees) with service prior to 
1 February 1995 and who have not joined with a QSuper contributory or defined 
benefit fund, providing for a maximum retirement allowance of 52 weeks. 

 Overtime is provided for the Train Crew Stream, the AER Stream and other streams. 
 Maintenance of the hours balance of any accrued leave held by an employee covered 

by an agreement the subject of the Application on the termination date.  
 Long service leave rates, and leave accruals and deductions for the Train Crew 

Stream, AER Stream and other streams.
 Part-time employees are to receive equivalent pay and conditions (on a pro rata basis) 

to full-time employees who do the same work.
 Casual employees minimum rates and loading. 

[101] Payments made to employees pursuant to the Undertakings are intended to satisfy all 
entitlements to wages and allowances otherwise payable under the Award, the NES or 
contract of employment and Aurizon will “set-off” or “absorb” any payment or benefit 
provided by the Undertakings against any payment or benefit to which an employee is 
otherwise entitled under the Award, the NES or contract of employment. 








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37

[102] The wages schedules are provided specifically for the Train Crew and AER streams, 
with additional notes on the breakdown of the rates, and schedules are also provided for the 
other streams. 

[103] In comparing the resulting entitlements arising from the Undertakings, Mr Reitano 
provided a summary document listing a series of conditions in the enterprise agreements the 
subject of this application that are not included in the Award or the NES. He questioned how 
the Undertakings would deal with the absence of the application of these provisions if the 
agreements were terminated.

[104] The document provided by Mr Reitano included the “legacy provisions” about which 
Aurizon complains. The summary document also identified a number of other provisions that 
Mr Reitano argued also would be lost. For example, the document referred to the QR National 
Rollingstock and Component Services Enterprise Agreement 2010, which included provisions 
relating to consultation on major change, dispute resolution, particular public holidays 
provisions, long service leave and jury service, commitments to training, anti-discrimination 
and OHS. Similarly, a series of provisions in the QR National Train Crew Enterprise 
Agreement 2010 were detailed, for example, for time spent at training credited as 
work, annualisation of hours, and consultation on major change. 

Operation of the Undertakings

[105] Aurizon submitted that the Undertakings would apply contractually to the relevant 
employees, in addition to the obligations under the NES and the Award. The Undertakings
would be enforceable at common law.

[106] It submitted that if the employees take the benefit of the Undertakings, by accepting 
payment and working the hours that are related to the payment, the Undertakings are
contractual and Aurizon would not have the unilateral right to withdraw or alter them, except 
according to their terms.  Mr Dixon submitted that although Aurizon could seek to withdraw 
the Undertakings “in the absence of consent, whether that consent be express or implied or by 
conduct, the undertakings will be contractually enforceable according to their terms for their 
duration and, of course, the undertakings themselves permit such an outcome”95.

[107] Mr Dixon relied on Brambles Holdings Ltd v Bathurst City Council96 and 
Commonwealth v Crothall Hospital97 to make good his point.

[108] The Unions submitted that the Undertakings were not enforceable or there was at least 
a sufficient degree of doubt about enforceability. Mr Friend submitted that neither Crothall
nor Brambles were of assistance to Aurizon’s proposition. Mr Friend submitted that while the 
cases held that a party who had acted in accordance with a variation was bound by it, 
employees of Aurizon are not being asked to do anything other than that which they have 
already contracted to do. Consequently the question is not whether the employees are bound 
by the variation, but whether the Aurizon will be bound. 

                                               
95 PN4047 
96 (2001) 53 NSWLR 153
97 (1981) 36 ALR 567; 54 FLR 439








[2015] FWCFB 540

38

[109] Mr Friend emphasised that a variation to a contract must be supported by 
consideration and questioned what consideration would move from the employees to Aurizon 
in support of a variation of the contract which would allow employees to enforce the 
Undertakings. Referring to Ajax Cooke Pty Ltd v Nugent,98 Mr Friend submitted that it was 
difficult in the present case to characterise consideration as employees giving consideration
for Aurizon’s Undertakings by remaining in employment for the months of the undertaking. 

[110] Mr Reitano submitted that the Undertakings were “no more and no less individual 
contracts that have no place in the Act”.99 It was submitted that the undertakings were 
unenforceable and worthless, and that there was no power in the scheme of the Act accepting 
undertakings in exchange for terminating an agreement. 

[111] Ultimately it is not necessary for us to determine whether the Undertakings will be
legally binding and enforceable as terms of an employment contract or otherwise.  For our 
part there is no reason to suppose that the Undertakings have not been given or proposed in 
good faith or that Aurizon is not genuine in giving or proposing the Undertakings.  We are 
satisfied that Aurizon intends to and will, if the enterprise agreements are terminated, make 
good on its Undertakings. The Undertakings are given to the affected employees, not to the 
Commission. As such the question of the power of the Commission to accept the 
Undertakings is moot. However, that Aurizon has or proposes to give the Undertakings, and 
the terms of the Undertakings is a matter that is relevant in our assessment of whether it is 
appropriate to terminate the enterprise agreements. We propose therefore to take the 
Undertakings into account for that purpose.

Interaction of the Undertakings and bargaining

[112] Mr Reitano submitted that the Undertakings created a third basis for bargaining (in 
addition to a modern award or enterprise agreement), which is unilaterally determined by 
Aurizon100. Mr Dixon submitted that the Undertakings, operating as a variation to the 
contract, would not alter the statutory regime upon which the Act proceeds for further 
bargaining101.

[113] Mr Dixon submitted that the effect of the Undertakings ceasing in six months' time, 
must be assessed in light of what were described by Mr Richard Robinson, Associate Director 
Economics, at BIS Shrapnel as “countervailing restraints which will be available and all the 
powers and remedies available to the parties for protected industrial action and proper 
bargaining under the bargaining stream s. 228.” 102

[114] We think this is correct.

3. The Statutory Test 

Approach to construction of the relevant statutory provisions

                                               
98 (1993) 5 VIR 551
99 RTBU’s final submissions at [35]
100 PN2460 
101 PN4046 
102 PN4048 








[2015] FWCFB 540

39

[115] In considering the relevant statutory provisions at issue in this application the starting 
point is to construe the words of the statute according to their ordinary meaning having regard 
to the context and legislative purpose.103 The words of the statute being construed should be 
read by reference to the language of the statute as a whole.104 As Lawler VP and Bissett C 
observed in JJ Richards and Sons Pty Ltd v Transport Workers’ Union of Australia,105 after 
reciting relevant authorities concerning statutory construction:

“Drawing these principles together, the task of statutory interpretation is concerned 
with ascertaining the intention of the legislature as manifested by the text of the 
legislation. Context (using that word in its widest sense to include such things as the 
existing state of the law and the mischief which, by legitimate means, one may discern 
the statute was intended to remedy) and the purpose or object underlying the 
legislation must always be considered. These must be considered in the first instance, 
not merely at some later stage when ambiguity might be thought to arise. The text of a 
provision, read in context and having regard to the object and purpose of the provision, 
is always the surest guide.”106

[116] In J.J. Richards & Sons Pty Ltd and Another v Fair Work Australia and Another 107

Flick J discussed three long established and fundamental principles to statutory construction. 
In so doing His Honour said:

“First, the so-called “golden rule” of the common law as to statutory construction is that 
“the grammatical and ordinary sense of the words is to be adhered to, unless that 
would lead to some absurdity, or some repugnance or inconsistency with the rest of the 
instrument, in which case the grammatical and ordinary sense of the words may be 
modified, so as to avoid that absurdity and inconsistency, but no farther”: Grey v 
Pearson [1857] EngR 335; (1857) 6 HLC 61 at 106 per Lord Wensleydale. See also: 
Australian Boot Trade Employés’ Federation v Whybrow & Co [1910] HCA 53; 
(1910) 11 CLR 311 at 341 to 342 per Higgins J. The “golden rule” is not confined to 
circumstances where a “mistake” has been made in the wording of an Act; the rule is 
also applied to avoid construing legislation so as to produce patently unintended or 
absurd results: Footscray City College v Ruzicka [2007] VSCA 136 at [16], 16 VR 498 
at 505 per Chernov JA (Warren CJ and Maxwell P agreeing). 

Second, the common law also recognised that “[i]t is a strong thing to read into an Act 
of Parliament words which are not there, and in the absence of clear necessity it is a 
wrong thing to do”: Thompson v Goold & Co [1910] AC 409 at 420 per Lord Mersey. 
See also: Dallikavak v Minister for Immigration and Ethnic Affairs (1985) 9 FCR 98 at 
103 per Northrop and Pincus JJ; Minister for Immigration and Citizenship v Hart 
[2009] FCAFC 112 at [6] per Spender J. 

Third, a construction of a statutory provision is to be preferred “that would best achieve 
the purpose or object of the Act”: Acts Interpretation Act 1901 (Cth) s 15AA. The 

                                               
103 Construction, Forestry, Mining and Energy Union v Hamberger and Another (2011) 195 FCR 74 at [70]; Alcan (NT) 
Alumina Pty Ltd v Commissioner of Territory Revenue (NT) (2009) 239 CLR 27 at [14]; CIC Insurance Ltd v Bankstown 
Football Club Ltd (1997) 187 CLR 384 at 408.
104 Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355 at [69].
105 [2010] FWAFB 9963
106 Ibid at [29]
107 (2012) 201 FCR 297






http://www.fwc.gov.au/decisionssigned/html/2010fwafb9963.htm


[2015] FWCFB 540

40

requirement to look to the purpose or object of an Act is more than an instruction to 
adopt the traditional mischief or purpose rule in preference to the literal rule of 
construction; s 15AA requires no ambiguity or inconsistency in a statutory provision 
before a court is not only permitted, but required to have regard to purpose: Mills v 
Meeking [1990] HCA 6; (1990) 169 CLR 214 at 235. Dawson J there went on to 
observe that the provision there in question, being a provision comparable to s 15AA, 
“... requires a court to construe an Act, not to rewrite it, in the light of its purposes”. 
Similarly, in Trevisan v Commissioner of Taxation (1991) 29 FCR 157 at 162, 
Burchett J observed that s 15AA “... is not a warrant for redrafting legislation nearer to 
an assumed desire of the legislature. It is not for the courts to legislate ...”. See also: R 
v L (1994) 49 FCR 534 at 538 per Burchett, Miles and Ryan JJ; Skea v Minister for 
Immigration, Local Government and Ethnic Affairs (1994) 51 FCR 82 at 85 per Moore 
J; Minister for Immigration and Multicultural Affairs v Lim [2001] FCA 512 at [7], 
[2001] FCA 512; 112 FCR 589 at 592 to 593 per Sundberg J. “In the end the task of 
the court is to ascertain and to enforce the actual commands of the legislature”: Re 
Application of The News Corp Ltd (1987) 15 FCR 227 at 236 per Bowen CJ.”108

[117] We respectfully agree and apply these principles to construing the provisions at issue 
in this application. 

Relevant statutory provisions and context

[118] The legislative mechanisms by which an enterprise agreement may be varied or 
terminated are dealt with in Division 7 of Part 2– 4 of the Act. Subdivision C of Division 7 
sets out the manner in which an enterprise agreement may be terminated by the agreement and 
for the approval of the termination of the enterprise agreement by the Commission.

[119] Subdivision D of Division 7 contains provisions which enable the termination of an 
enterprise agreement to be terminated after the agreement has passed its nominal expiry date. 
These provisions are as follows:

“Subdivision D—Termination of enterprise agreements after nominal expiry date

225 Application for termination of an enterprise agreement after its nominal 
expiry date

If an enterprise agreement has passed its nominal expiry date, any of the following 
may apply to the FWC for the termination of the agreement:

(a) one or more of the employers covered by the agreement;

(b) an employee covered by the agreement;

(c) an employee organisation covered by the agreement.

226 When the FWC must terminate an enterprise agreement

                                               
108 Ibid at 310-311, [50]-[52]








[2015] FWCFB 540

41

If an application for the termination of an enterprise agreement is made under 
section 225, the FWC must terminate the agreement if:

(a) the FWC is satisfied that it is not contrary to the public interest to do so; and

(b) the FWC considers that it is appropriate to terminate the agreement taking into 
account all the circumstances including:

(i) the views of the employees, each employer, and each employee 
organisation (if any), covered by the agreement; and

(ii) the circumstances of those employees, employers and organisations
including the likely effect that the termination will have on each of them.

227 When termination comes into operation

If an enterprise agreement is terminated under section 226, the termination operates 
from the day specified in the decision to terminate the agreement.”

[120] As we have indicated above, these provisions, and relevantly s. 226, must be construed 
in a manner that is consistent with the language and purpose of the provisions by reference to 
the language of the Act as a whole, and so the context, general purpose and policy of the 
provision are an important means by which the meaning and effect of a provision is to be 
ascertained.109

[121] These provisions form part of a scheme established by Part 2-4 of the Act designed, 
inter alia, to enable bargaining for, making of, approving, varying and for the termination of, 
enterprise agreements. 

[122] The object of Part 2-4 is set out in s. 171, which provides as follows:

“171 Objects of this Part

The objects of this Part are:

(a) to provide a simple, flexible and fair framework that enables collective bargaining 
in good faith, particularly at the enterprise level, for enterprise agreements that 
deliver productivity benefits; and

(b) to enable the FWC to facilitate good faith bargaining and the making of enterprise
agreements, including through:

(i) making bargaining orders; and

(ii) dealing with disputes where the bargaining representatives request 
assistance; and

                                               
109 Project Blue Sky Inc & Others v Australian Broadcasting Authority (1998) 194 CLR 355 at 381 – 382








[2015] FWCFB 540

42

(iii) ensuring that applications to the FWC for approval of enterprise 
agreements are dealt with without delay.”

[123] Also relevant is the object of the Act contained in s. 3, which provides:

“3 Object of this Act

The object of this Act is to provide a balanced framework for cooperative and 
productive workplace relations that promotes national economic prosperity and social 
inclusion for all Australians . . .”

[124] The means by which this object is to be achieved is set out in the various paragraphs 
enumerated in s. 3 as follows:

“(a) providing workplace relations laws that are fair to working Australians, are
flexible for businesses, promote productivity and economic growth for Australia’s 
future economic prosperity and take into account Australia’s international labour 
obligations; and

(b) ensuring a guaranteed safety net of fair, relevant and enforceable minimum terms 
and conditions through the National Employment Standards, modern awards and 
national minimum wage orders; and

(c) ensuring that the guaranteed safety net of fair, relevant and enforceable minimum 
wages and conditions can no longer be undermined by the making of statutory 
individual employment agreements of any kind given that such agreements can 
never be part of a fair workplace relations system; and

(d) assisting employees to balance their work and family responsibilities by providing 
for flexible working arrangements; and

(e) enabling fairness and representation at work and the prevention of discrimination 
by recognising the right to freedom of association and the right to be represented, 
protecting against unfair treatment and discrimination, providing accessible and 
effective procedures to resolve grievances and disputes and providing effective 
compliance mechanisms; and

(f) achieving productivity and fairness through an emphasis on enterprise-level 
collective bargaining underpinned by simple good faith bargaining obligations 
and clear rules governing industrial action; and

(g) acknowledging the special circumstances of small and medium-sized businesses.”

[125] Other provisions of the Act providing context in which s. 226 is to be construed 
include:

 The various provisions of Part 2–4 of the Act, which provide for the making, varying 
and termination of enterprise agreements.110

                                               
110 ss. 172, 181, 182; 207 - 212 and 220 - 227








[2015] FWCFB 540

43

 Part 2–4 of the Act also contains the various provisions which facilitate bargaining. 
These are set out in Division 8 and include: 

o the identification of good faith bargaining requirements that a bargaining 
representative for a proposed enterprise agreement must meet;111

o the capacity for the Commission to make bargaining orders in certain 
circumstances where one or more of the bargaining representatives is not 
meeting the good faith bargaining requirements or where the bargaining 
process is not proceeding efficiently or fairly because there are multiple 
bargaining representatives for the proposed agreement;112

o the availability of a serious breach declaration in cases of serious and 
sustained contraventions of bargaining orders where contraventions 
significantly undermined bargaining for a proposed agreement,113 with 
the prospect of a bargaining related workplace determination being 
made;114

o majority support determinations, which may be made in cases where, 
inter-alia, the majority of existing employees of the employer wished to 
bargain with the employer for a proposed agreement;115

o scope orders, which may be made  in certain circumstances to resolve 
disputes about the scope of a proposed enterprise agreement;116

o enabling the Commission, on application by a bargaining representative 
for the proposed agreement, deal with a dispute about the agreement, and 
may do so by arbitration if all of the bargaining representatives have 
agreed;117 and

o specific provisions facilitating bargaining by low-paid employees and by 
multiple employers who have a commonality of interest. 118

 Provisions that enable employees to organise and engage in protected industrial 
action described as employee claim action and employee response action,119 and 
those enabling an employer to respond to employee action through employer 
response action.120 Subject to compliance with the various statutory preconditions, 

                                               
111s. 228
112 ss. 229-233
113 ss. 234-235
114 s. 269 (which appears in Part 2 – 5 of the Act)
115 s. 236 – 237
116 ss. 238 – 1039
117 s. 240
118 For Low Paid Bargaining see ss. 241 – 246 and for Single Interest Employer Authorisation see ss.  247 – 252
119 ss. 408-410
120 ss. 408 and 411








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44

such action when organised or taken will attract a limited immunity from suit.121

Unlike the corresponding provisions in the Workplace Relations Act 1996,122 an 
employer is not permitted to engage in protected industrial action for the purpose of 
supporting or advancing its claims in bargaining except in response to employee 
claim action.

 Under the statutory scheme, whilst an employer and a valid majority of employees 
may make an enterprise agreement which has statutory effect if subsequently 
approved by the Commission, there is nothing in the scheme which compels 
bargaining parties to reach or make an enterprise agreement. This is made clear in 
the provisions dealing with the good faith bargaining requirements.123

 Division 4 of Part 2–4 contains the pre-approval steps, the approval steps and the 
content requirements for an enterprise agreement.  Relevantly one of the content 
requirements is that an enterprise agreement must specify a date as its nominal 
expiry date and that date may not be more than 4 years after the day on which the 
Commission approves the enterprise agreement.124

 The operation of an enterprise agreement is dealt with in s. 54 of the Act. An 
enterprise agreement commences to operate from either seven days after it is 
approved by the Commission or from any later date that is specified in the 
agreement.125 An enterprise agreement will cease to operate either on the day on 
which a termination of the agreement comes into operation pursuant to ss. 224-
227,126 or another enterprise agreement that covers the employees comes into 
operation and there are no employees to whom the first agreement applies,127

whichever occurs earlier.

[126] The legislative scheme therefore enables and facilitates good faith bargaining for an 
enterprise agreement. It also facilitates the making of enterprise agreements but does not 
mandate that result. Once an enterprise agreement is made and approved by the Commission, 
it seems clear that the legislative scheme does not intend that such agreements operate in 
perpetuity. Agreements have a finite nominal life. At the end of the nominal life of an 
agreement, bargaining parties may bargain for a new agreement utilising all of the tools 
available under the Act; or a person to whom an agreement applies may take steps to bring the 
agreement to an end in accordance with the provisions of the Act; or both may occur.

Proper construction and application of section 226

[127] In construing a provision of an enactment, an interpretation that would promote the 
purpose or object underlying the Act (whether that purpose or object is expressly stated in the 

                                               
121 s. 415
122 WR Act ss. 435 – 448
123 s. 228 (2)
124 s. 186 (5)
125 s. 54 (1)
126 s. 54 (2) (a)
127 s. 54 (2) (c) and s.58








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45

Act or not) is to be preferred to a construction that would not promote that purpose or 
object.128

[128] The power under s. 226 to terminate an enterprise agreement that has passed its 
nominal expiry date, is exercisable only if an application for the termination of the agreement 
has been made under s. 225.  Once such an application has been made the power must be 
exercised if the Commission:

 is satisfied that it is not contrary to the public interest to do so; and

 considers that it is appropriate to terminate the agreement taking into account all the 
circumstances including:

o the views of the employees, each employer, and each employee organisation (if 
any), covered by the agreement; and

o the circumstances of those employees, employers and organisations including 
the likely effect that the termination will have on each of them.

[129] Section 226(a) requires a consideration of whether termination of the agreements is 
not contrary to the public interest.  It seems to us that a consideration of the public interest 
will involve something that is distinct from the interests of the persons and bodies covered by 
the agreements.  This distinction seems to be reflected in the structure of s. 226.  The question 
of how the public interest is to be assessed was considered by a Full Bench of the Australian 
Industrial Relations Commission in Re Kellogg Brown and Root, Bass Strait (Esso) 
Onshore/Offshore Facilities Certified Agreement 2000.129  The decision in Kellogg Brown 
concerned an application to terminate a certified agreement pursuant to s. 170MH of the WR 
Act. The Full Bench observed:

“The absence of any reference to the interests of the negotiating parties in s.170MH(3) 
is significant. It follows that the views of persons bound by the agreement may be 
relevant to the exercise of the discretion if they shed light upon the effect of 
termination on the public interest, but they should not be given any independent 
weight. To do so would be to import into the application of the section something 
which on its proper construction it does not include. 

The notion of public interest refers to matters that might affect the public as a whole 
such as the achievement or otherwise of the various objects of the Act, employment 
levels, inflation, and the maintenance of proper industrial standards. An example of 
something in the last category may be a case in which there was no applicable award 
and the termination of the agreement would lead to an absence of award coverage for 
the employees. While the content of the notion of public interest cannot be precisely 
defined, it is distinct in nature from the interests of the parties. And although the 
public interest and the interests of the parties may be simultaneously affected, that fact 
does not lessen the distinction between them.”130

                                               
128 s. 15AA of the Acts Interpretation Act 1901 as in force on 25 June 2009; see s. 40A of the Act
129 (2005) 139 IR 34
130 Ibid at 40








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[130] After considering the decision in Re Queensland Electricity Commission; Ex parte 
Electrical Trades Union of Australia,131 the Full Bench in Kellogg Brown said:

“It is clear from this passage that the ascertainment of the public interest may involve 
balancing countervailing public interests. That the Commission should take all of the 
circumstances into account is made clear by Dawson J in Re Australian Insurance 
Employees Union; Ex parte Academy Insurance Pty Ltd [(1988) 78 ALR 466 at 467]. 
These authorities provide useful general guidance in the application of the test in s.
170MH(3). They illustrate the types of interests which can be properly described as 
public interests and confirm the breadth of circumstances which may be relevant to the 
ascertainment of those interests.

It should be emphasized that the Commission's consideration of the public interest for 
the purpose of s. 170MH(3) is directed to the consequences of terminating the 
agreement. In a given case, some consequences will be clearly predictable, others will 
be less so. For the most part the Commission should be guided by the likely 
foreseeable consequences of termination rather than speculation about possible 
consequences.”132

[131] Section 226, unlike s. 170MH(3) of the WR Act, clearly requires the interests of the 
persons or bodies covered by an agreement to be taken into account.133 Those interests are 
considered separately from the question of the public interest,134 although it is accepted that 
these interests may nevertheless be similarly affected. It seems to us therefore, that the 
approach to the question of whether termination of an agreement is not contrary to the public 
interest in Kellogg Brown remains apposite. 

[132] The scope and application of s. 226 of the Act was first considered by Vice President 
Watson in Energy Resources of Australia Pty Ltd v Liquor Hospitality and Miscellaneous 
Union (ERA). 135 In that case his Honour observed: 

“In my view this is an important consideration. Enterprise bargaining lies at the heart 
of the workplace relations system and has done so since the early 1990s. Enterprise 
instruments have had different titles and have been subject to different rules, but there 
is nevertheless consistency in many respects.

Enterprise Agreements made and approved under the FW Act, Workplace Agreements 
made under the WR Act, and Certified Agreements made under the Industrial 
Relations Act 1988 have all been required to have a specified duration with an upper 
limit on that duration.

The prevailing legislative provisions have provided for the continuation of agreements 
after their nominal expiry date subject to an ability to make application to terminate 
the Agreement. Different tests have applied, some more limited than the current 
provisions and some less restricted. It is clear that enterprise agreements are intended 

                                               
131 (1987) 61 ALJR 393
132 (2005) 139 IR 34 at 41
133 s. 226(b)
134 s. 226(2)
135 [2010] FWA 2434








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to apply for a limited period and either be renegotiated, renewed, varied, replaced, 
terminated or left unaltered depending on negotiations between the parties and the 
operation of the legislative provisions.

The primary object of the FW Act is to provide a balanced framework for cooperative 
and productive workplace relations that promotes national economic prosperity and 
social inclusion. The means by which this is to be achieved include providing 
workplace relations laws that are fair to working Australians, are flexible for business 
and promote productivity and economic growth and achieving productivity and 
fairness through an emphasis on enterprise level collective bargaining.”136

[133] Subsequently in Re Tahmoor Coal Pty Ltd137 Vice President Lawler said:

“The objects in s 3(f) and s 171(a) are particularly relevant. They indicate that 
collective bargaining in good faith for an enterprise agreement is the central way in 
which, in the framework that has been established by the FW Act, productivity 
benefits are to be achieved.

The object in s 171(b) is also clearly relevant. It emphasises that a key role of FWA is 
to facilitate good faith bargaining and the making of enterprise agreements. This 
suggests that that one of the effects of termination which should be considered is 
whether termination will enhance or reduce the prospects of the parties concluding a 
new agreement through bargaining.

The object in s 3(a) is advanced by a termination of an agreement where this would 
promote productivity. However, the object in s 3(a) is expressed in general terms 
whereas the objects in s 3(f) and s 171(a) are more specific. Given that principle of 
construction that the specific overrides the general, this suggests that the emphasis on 
promoting productivity (part of the object in s 3(a)) is primarily to be achieved through 
collective bargaining in good faith (the objects in s 3(f) and s 171) rather than by other 
means, such as termination of an expired agreement.”138

[134] After referring, inter alia, to the passages from the decision in ERA to which we have 
earlier referred, his Honour said the following:

“While his Honour emphasised only the object in s.3(a), for the reasons I have given, I 
consider that the objects in s.3(f) and s.171 are also of particular importance and 
should be seen as qualifying the general object in s.3(a). I respectfully agree with the 
outcome in ERA. However, it needs to be born in mind that the circumstances in that 
case were very unusual indeed. The agreement in question was some 10 years past its 
nominal expiry date and had a continuing application to only three employees - less 
than one per cent of the employer’s workforce. The remainder of the relevant 
workforce was employed on statutory individual contracts and the terms and 
conditions of their employment would not be directly affected by termination of the 
agreement in that case. Clearly enough, ERA was not a case where bargaining for a 

                                               
136 Ibid at [24] – [27]
137 (2010) 204 IR 243; [2010] FWA 6468
138 Ibid at 255, [49] – [51]








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replacement agreement had been ongoing since the passing of the nominal expiry date 
of the agreement in question.

I respectfully agree with his Honour that it is not intended by the legislation that 
agreements should remain in place indefinitely and that it is unreasonable to lock an 
expired agreement in place indefinitely. On the other hand, this does not mean that a 
party to an agreement has a prima facie right to have the agreement terminated merely 
because the agreement has passed its nominal expiry date.

It seems to me that under the scheme of the FW Act, generally speaking, it will not be 
appropriate to terminate an agreement that has passed its nominal expiry date if 
bargaining for a replacement agreement is ongoing such that there remains a 
reasonable prospect that bargaining (in conjunction with protected industrial action 
and or employer response action) will result in a new agreement. This will be so even 
where the bargaining has become protracted because a party is advancing claims for 
changes that are particularly unpalatable to the other party. While every case will turn 
on its own circumstances, the precedence assigned to achieving productivity benefits 
through bargaining, evident in the objects of the FW Act, suggests that it will 
generally be inappropriate for FWA to interfere in the bargaining process so as to 
substantially alter the status quo in relation to the balance of bargaining between the 
parties so as to deliver to one of the bargaining parties effectively all that it seeks from 
the bargaining.”139

[135] The approach taken in Tahmoor Coal to the construction of s. 226 seems to have been 
followed in a number of subsequent decisions of members of the Commission.140  For 
example in Royal Automotive Club of Victoria141 Commissioner Roe said:

“. . . Section 226 concerning the termination of agreements is found in Part 2-4 of the 
FW Act which deals with Enterprise Agreements. The legislative scheme and objects 
of the Act and the objects of Part 2-4 in particular in this respect are quite different 
from the WR Act. Part 8 of the WR Act which dealt with Workplace Agreements did 
not have separate objects. The FW Act places a strong emphasis on the objective of 
facilitating and enabling collective bargaining, bargaining in good faith and the 
making of enterprise agreements. The termination of an agreement without the 
agreement of all parties covered by the agreement must now be considered in this 
context. It is clearly a public interest consideration under s 226(a) if the termination of 
an agreement would be contrary to the objectives and scheme of the legislation in 
respect to facilitating and encouraging bargaining and agreements. It is also a context 
within which the interests of and effects on the parties should be considered as 
required by Section 226(b).

The legislative context created by the FW Act is consistent with the approach taken by 
Justice Boulton in the Mount Thorley Operations Enterprise Agreement matter. Justice 
Boulton found that:

                                               
139 Ibid at 256 – 257, [53] – [55]
140

For example see  Royal Automotive Club of Victoria [2010] FWA 3483 (per Roe C) Victorian Canine Association 
Trading as Dogs Victoria [2013] FWC 4260 (per Lee C); SDV (Australia) Pty Ltd [2013] FWC 5385 (per Sam DP); Country 
Club Ltd [2013] FWCA 2005 (per Sams DP); Badman v Altus Traffic Pty Ltd [2013] FWC 4409 (per O’Callaghan SDP).
141 [2010] FWA 3483








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49

“It is preferable that the parties negotiate a new agreement to replace the 1996 
Agreement rather than having that Agreement terminated by the Commission 
under Section 170MH. In most cases certified agreements remain in place and 
the terms and conditions of employment provided thereunder continue to apply 
until a new certified agreement is negotiated by the parties to replace the 
agreement (see s 170LX(2)).”

It has certainly been the case since the introduction of a legislative scheme for 
collective bargaining in Australia that the platform for bargaining replacement 
agreements has been with very few exceptions the old agreement. That is, the terms 
and conditions provided by the old agreement remain in place until a new agreement is 
negotiated by the parties. There has never been a drop dead date for agreements. The 
FW Act reinforces this by making the unilateral termination of agreements more 
difficult including by the introduction of s 226(b) and by the removal of any 
equivalent to Section 393 of the WR Act. The FW Act also reinforces this by 
removing the option of statutory individual contracts and by encouraging and 
facilitating bargaining in good faith.

The termination of an agreement in many cases will result in a significant shift in the 
balance of forces in bargaining. The legislature has deemed it fair to restrict the 
unilateral termination of agreements and to preserve a situation where in most cases 
collective agreements remain in place until a new agreement is negotiated to replace it. 
There is nothing in the legislation that suggests that there should be bias towards 
terminating an agreement because there is a long period since its nominal expiry date 
or because it is only relevant to a small number of employees.”142 [Endnotes omitted]

[136] To similar effect, Deputy President Sams in SDV (Australia) Pty Ltd143 said the 
following:

“In addition, Roe C observed in Royal Automotive Club of Victoria [2010] FWA 3483
at para [23]:

'It has certainly been the case since the introduction of a legislative scheme for 
collective bargaining in Australia that the platform for bargaining replacement 
agreements has been with very few exceptions the old agreement.'

It is pellucidly clear that the legislature has deliberately made it more difficult to 
terminate an expired agreement than has been the case in the past. This is so, because 
unlike its predecessor legislation, (Workplace Relations Act, 1996) there is no capacity 
for the unilateral termination of an expired agreement, simply upon the giving of 
written notice by an employer. It seems to me that the continued operation of an 
expired agreement is desirable for the following policy reasons:

 it permits the parties to negotiate from the standpoint of the 'status quo' and 
there is no significant shift in the balance of the forces of bargaining; and 

                                               
142 Ibid at [21] – [24]
143 [2013] FWC 5385






http://www.fwc.gov.au/decisionssigned/html/2010fwa3483.htm


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50

 employees do not suffer an immediate reduction in the terms and conditions 
of their expired agreement.

Obviously, the practical effect of terminating an agreement is to substantially alter the 
'status quo' in relation to the bargaining process. I agree with Lawler VP's comments in 
Tahmoor Coal that it would generally be inappropriate for the Commission to interfere 
in the bargaining process by terminating an existing agreement.

In this case, there is no doubt the nominal term of the TWU Agreement has expired, 
that the Union and its members wish to engage in negotiations with the applicant for a 
new agreement and have commenced, albeit in a preliminary way, discussions for such 
an agreement. All these ingredients, reinforce in my mind, the inappropriateness of 
altering the 'status quo' so as to plainly advantage one party's negotiating starting point
over the other. This is a powerful reason why it would be inappropriate to terminate 
the TWU Agreement at this point in the bargaining cycle. I would wish to emphasise, 
that to do so would be contrary to the objects of the Act and the principles 
underpinning the primacy given to enterprise bargaining under the Act.”144

[137] Most recently in Metropolitan Fire & Emergency Services Board v United 
Firefighters’ Union of Australia145 Commissioner Wilson endeavoured to qualify or explain 
an aspect of the decision in Tahmoor Coal, as follows:

“In forming this view I have taken into account that the chief factor weighing in 
support of the proposition that termination of the 2010 Agreements is contrary to the 
public interest is the finding made below relating to the effect that termination would 
have on the relative balance of the parties’ bargaining position. In the context of the 
matter argued before me, I consider this issue to be more about the private interests of 
the parties, as between each other, than it is about the public interest.   
Notwithstanding that it was said by Lawler VP in Re Tahmoor Coal that “it will 
generally be inappropriate for FWA to interfere in the bargaining process so as to 
substantially alter the status quo in relation to the balance of bargaining between the 
parties”, the context of that reference in the overall decision allows the view that the 
statement was predominantly in relation to the appropriateness of termination, rather 
than the statement being predominantly in connection with considerations of the 
public interest.”146 [Endnotes omitted]

[138] This is the first occasion on which a Full Bench of the Commission has had the 
opportunity to consider the operation of s. 226 of the Act.  To the extent that the decision in 
Tahmoor Coal and the decisions which have followed it suggest that:

 the object related provisions in s. 3(f) and s.171 override, are more important than or 
are to be given greater weight in construing and applying s. 226 than the object 
related provision in s. 3(a); 

 the precedence assigned to achieving productivity benefits through bargaining than 
by other means, is evident in the objects of the Act; or 

                                               
144 Ibid at [38] – [41]
145 [2014] FWC 7776
146 Ibid at [148]








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51

 generally speaking, it will not be appropriate to terminate an agreement that has 
passed its nominal expiry date if bargaining for a replacement agreement is ongoing 
such that there remains a reasonable prospect that bargaining (in conjunction with 
protected industrial action and or employer response action) will result in a new 
agreement,

we would respectfully disagree.

[139] In our view, there is no statutory imperative that the promotion and delivery of 
productivity benefits at an enterprise level is primarily or exclusively to be achieved through 
enterprise bargaining in good faith rather than by other means. True it is that bargaining, 
where it occurs, must occur consistently with the good faith bargaining requirements. But 
there is no imperative that an agreement must result in productivity improvements. Much less
is there any requirement that a resulting agreement must deliver a productivity benefit at the 
enterprise level. Good faith bargaining for an enterprise agreement may, or may not, deliver 
productivity benefits at any enterprise level. 

[140] The statute also mandates that on application by the person covered, an agreement that 
has passed its nominal expiry date must be terminated if the circumstances identified in s. 226 
exist. Productivity benefits might also be delivered by terminating an agreement that has 
passed its nominal expiry date. Such benefits might be delivered through a combination of 
both means.

[141] As we have already observed, s. 226 forms part of a scheme in Part 2 – 4 of the Act to 
which the object in s. 171 is directed.  Self evidently s. 226 is then a part of a scheme of 
provisions through which the parliament intended that the object might be achieved.  There is 
no basis for concluding, at a level of generality, that continuing the operation of an agreement 
that has passed its nominal expiry date (whether bargaining is continuing or not) will be any 
more an effective means by which the object in s. 171 is to be achieved than terminating that 
agreement.  Continuing the operation of an agreement that has passed its nominal expiry date 
may impede rather than enable an enterprise agreement to deliver productivity benefits at an 
enterprise level. It may also impede rather than promote good faith bargaining resulting in an 
agreement which delivers those benefits. The same may be true for the termination of the 
agreement.  Ultimately, the circumstances will dictate the matter.

[142] In our view, to approach the construction of s. 226 in the manner suggested in 
Tahmoor Coal, particularly at [55] results in a predisposition against the termination of an 
enterprise agreement that has passed its nominal expiry date.  There is no indication in the 
section or elsewhere in the Act that this should be the case.  Section 226 operates according to 
its terms.  Its application is guided by the language and purpose of the provision by reference 
to the language and purpose of the Act as a whole so that the meaning and effect of the
provision is properly understood.

[143] Further, there is nothing in the structure or content of the Act to suggest that its object 
(of providing a balanced framework for cooperative and productive workplace relations that 
promotes national economic prosperity and social inclusion for all Australians) is to be 
exclusively or primarily to be achieved by enterprise level collective bargaining.








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[144] Paragraphs (a) - (g) of s. 3 are not properly described as objects of the Act. The object 
of the Act is as stated in the previous paragraph.

[145] The means by which this object is to be achieved is then set out in the paragraphs 
which follow in (a) - (g). The means chosen do not have any particular hierarchy or 
precedence. It seems clear from the structure of the section that each of the means 
individually, and the means collectively are intended to achieve or further the object.

[146] We agree with Aurizon’s submission that his Honour’s reference in paragraph [51] of 
Tahmoor Coal, to the principle of construction that the specific overrides the general, with the 
result that emphasis on promoting productivity (s. 3(a)) is primarily to be achieved through 
collective bargaining in good faith (s. 3(f) and s. 171) rather than by other means, such as 
termination of an agreement that has passed its nominal expiry date, was misplaced. 

[147] The principle or maxim generalia specialibus non derogant is not a rule that results in 
general provisions of an enactment giving way to more specific provisions.  The maxim is to 
be invoked only where there is a conflict or inconsistency between provisions of an enactment 
and that conflict or inconsistency cannot be resolved as a matter of ordinary statutory 
interpretation.147

[148] As we have already indicated, s. 3 of the Act should be read as a whole. Paragraph 3(f) 
is not given a particular precedence over, nor does it override or qualify, any other parts of s.
3. Each of the paragraphs can be read harmoniously.  Each describes a means by which the 
Act’s object is to be achieved.  Read together, the section describes the various means by 
which the object of the Act is to be achieved. There is in our view no conflict or 
inconsistency between the various paragraphs in s. 3 of the Act.

[149] Further there is not, in our view, any conflict or inconstancy between s. 3 (or any of its 
paragraphs) and s. 171 of the Act. Section 171 contains the particular objects of Part 2–4 of 
the Act.  Its terms do not conflict with or qualify s. 3 of the Act and can be read harmoniously 
with s. 3 of the Act.  Section 171 is relevant to the construction and application of s. 226 of 
the Act, but in our view, it does not operate on s. 266 in the manner suggested in Tahmoor 
Coal. On our reading of ss. 3 and 171, there is nothing in those provisions, when read 
harmoniously, that would suggest that the emphasis on promoting productivity (in s.3(a)) is 
primarily to be achieved through collective bargaining in good faith (in s. 3(f) and s. 171) 
rather than by other means, such as termination of an expired agreement. Moreover, such a 
construction assumes some incompatibility with terminating an enterprise agreement that has 
passed its nominal expiry date and collective bargaining. In our view the two are not 
incompatible.

[150] When read harmoniously with s. 3, s. 171 does not qualify or restrict the exercise of 
the power of termination under s. 226 of the Act in the manner suggested in Tahmoor Coal.
Indeed the object in s. 171 (a) is directed to providing:

. . . a simple, flexible and fair framework that enables collective bargaining in good 
faith, particularly at an enterprise level, for enterprise agreements that deliver 
productivity benefits.

                                               
147 Purcell v Electricity Commission of New South Wales [1985] HCA 54 at [16]; (1985) 60 ALR 652 at 657








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[151] Section 226 of the Act is part of the simple, flexible and fair framework, established 
by Part 2–4 to which the objects in s. 171 relate. There is nothing inherently inconsistent with 
the termination of an enterprise agreement that has passed its nominal expiry date and 
collective bargaining in good faith. There is nothing incompatible with the termination of 
such an agreement and the continuation of collective bargaining that has commenced in good 
faith at an enterprise level for an enterprise agreement that delivers productivity benefits. The 
framework that is established by Part 2–4 provides for applications and orders to be made for 
the termination of an enterprise agreement that has passed it nominal expiry date. It is not too
difficult to suppose that such an agreement in particular circumstances might no longer 
deliver productivity benefits, or that such an agreement has never done so. It is not too 
difficult to suppose that the termination of such an agreement might better support good faith 
bargaining for an agreement that delivers productivity benefits at the enterprise level.

[152] In our view, there is no express or contextual indication that the objects in s. 3 or s.
171 operate on s. 226 in the way suggested in Tahmoor Coal.  It follows that we do not 
propose to follow Tahmoor Coal in its construction of s.226 to the extent that the construction 
appears to place limits on the discretionary considerations in s. 226(b) because of that which 
we regard as an incorrect interpretation of the interrelationship of the objects in s. 3 and s. 171
of the Act. In our view the limitation is not justified.

4. Is termination of the enterprise agreements contrary to the public interest? 

[153] As we have said above, we approach this question by applying the Full Bench decision 
in Kellogg Brown.

[154] Aurizon submits that where significant endeavours have been made to negotiate a 
replacement agreement and there is, nonetheless, little prospect of reaching agreement, it will 
not be contrary to the public interest to terminate a nominally expired enterprise agreement. It 
submits that when all of the circumstances are considered the Commission should be satisfied 
that it is not contrary to the public interest to terminate the Enterprise Agreements. 

[155] The RTBU submits that the reduction or loss of entitlements as a result of termination 
of the enterprise agreements compels the conclusion that it is contrary to the public interest to 
terminate the enterprise agreements. It says that it is a significant matter to remove 
entitlements that were freely negotiated in the scheme of the Act that has as one of its objects 
the provision of a fair framework for collective bargaining and good faith bargaining. It 
submits the following matters are relevant to the public interest:

 the Act places an emphasis upon enterprise level collective bargaining. Removing an 
enterprise agreement in favour of a modem award does not, in the circumstances, 
promote enterprise bargaining;

 the Act also places an emphasis upon proving a fair framework for collective 
bargaining and the facilitation of good faith bargaining. Terminating the agreements 
will disturb the current bargaining position of the parties and thus be counter to the 
achievement of that object;

 there will, in the event the agreements are terminated, be little or no incentive for 
Aurizon to bargain for a collective agreement in circumstances where it enjoys a 








[2015] FWCFB 540

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significant competitive advantage over its main competitor in relation to employee 
costs;

 the Commission will become the effective arbiter of  terms and conditions of 
employment for Aurizon employees in circumstances where the scheme of the Act 
lays the principle focus on the parties for determining what terms and conditions will 
apply at the enterprise. The Commission's role under the Act is confined in so far as 
it determines terms and conditions of employment. It is noteworthy that s.226 does 
not focus upon the terms and conditions of employment as being contrary to the 
public interest or being inappropriate, but rather focuses upon whether termination of 
the agreement is not contrary to the public interest or appropriate;

 there will, in the event that the agreements are terminated, inevitably be a significant 
short term and longer term reduction in wage levels and of conditions of 
employment for employees of Aurizon, and ultimately for employees of its 
competitor (because of the duopoly that exists for rail haulage services);

 in the event that the agreements are terminated there will be an oversupply of labour 
in the coal haulage labour market in Queensland, which will create unemployment 
(concentrated in regional Queensland) and exert downward pressure on wages and 
conditions in the industry;

 contrary to Aurizon's submissions given that most of its longer term contracts are 
already in place termination of the agreements will have little effect upon 
productivity in the industry and will more likely than not simply result in profit 
taking by Aurizon; and

 the loss in employment and the consequent increase in unemployment that will occur 
in parts of Queensland where the labour market is already weak, where 
unemployment is rising, where the effect of job losses in the mining industry is 
already being felt, where the effects of severe drought are already being felt and 
where the effects of  the weaker Australian dollar are already taking effect are 
significant matters that will follow in the event of termination of the agreements and 
that suggest termination of the agreements is not in the public interest. These effects 
do not take into account the knock on effect in these rural communities of lower 
spending in the retail and services industries. The sheer economic and social impact 
of unemployment is regional Queensland is a strong matter that would prevent the 
Commission from forming the opinion that termination of the agreements is not 
contrary to the public interest.

[156] The other Unions make similar submissions. They submit that termination would 
undermine bargaining and deliver a tremendous advantage to Aurizon in their negotiations 
because Aurizon would be able to negotiate from a very low base and be very likely to 
achieve significant advantages in its operations over those of its competitors covered by 
enterprise agreements. The Unions submit that granting the application would lead to a race to 
the bottom, not the maintenance of proper standards in terms and conditions of employment 
in the industry.








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[157] We have considered all of the circumstances of this matter and have formed the view 
that it is not contrary to the public interest to terminate each of the 12 agreements earlier 
identified. 

[158] As we have earlier indicated, there is nothing inherently inconsistent with the 
termination of an enterprise agreement that has passed its nominal expiry date and the 
continuation of collective bargaining in good faith for an agreement. Neither the Unions nor 
Aurizon have suggested that bargaining will stop if the agreements are terminated. Neither 
have suggested that they will not pursue new agreements or that they will cease bargaining if 
the agreements are terminated. 

[159] While we accept that a termination of the agreements will disturb the current 
bargaining positions, we do not accept, as the Unions submit, that this is counter to the object 
of a fair framework for collective bargaining and facilitating good faith bargaining. Collective 
bargaining will remain available to the bargaining parties. The bargaining parties in their 
bargaining will continue to be required to meet the good faith bargaining requirements. The 
disturbance of the bargaining position does not result in the disappearance of collective 
bargaining or the rules by which the bargaining parties must abide.

[160] Moreover the Unions and employees will have available to them the full arsenal of 
tools under the Act to exert legitimate industrial pressure on Aurizon to bargain and to reach 
agreement. It is therefore not correct that the termination of the agreements results in little or 
no incentive on Aurizon to bargain.

[161] We also do not accept that by terminating the agreements, the Commission becomes 
the effective arbiter of terms and conditions of employment of the employees of Aurizon, 
because the effect is to alter the terms and conditions of employment of the employees. The 
Act sets out the safety net terms and conditions of employment. They comprise the relevant 
modern award and the NES. Whether an agreement passes the better off overall test is also 
measured by reference to these instruments, not the antecedent enterprise agreement.

[162] Whilst a nominally expired agreement applies to any employee, the termination of it 
will result in an alteration of terms and conditions of employment. The effect of the Unions’
submission is that it will always be contrary to the public interest to terminate an agreement in 
such circumstances. This simply cannot be correct. If it were, it would have been a simple 
matter for the parliament to have made clear that termination of an agreement that has passed 
its nominal expiry date must only occur if it no longer applies to any employee. Clearly s. 226 
is not so confined.

[163] We are also not persuaded that the termination of the agreements will result in the 
oversupply of labour, profit taking by Aurizon and significant loss of employment as 
suggested by the unions. It is to be borne in mind that Aurizon has not suggested it intends to 
reduce its workforce in any significant way. Its real complaint is that the current constraints in 
the agreements preclude effective utilisation of labour, and unreasonably constrain its 
capacity to deploy and redeploy labour so as to coincide with its need and demand for its 
services. Indeed it says that by freeing itself from some of the restrictive provisions of the 
current agreement, job security will be enhanced rather than diminished because its 
competitive position will improve. We accept, other things being equal, that this is so.








[2015] FWCFB 540

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[164] The circumstances in which the agreements were made is a significant factor. As part 
of the privatisation processes the Queensland government required Aurizon to provide a three 
year employment guarantee and formalise that in the enterprise agreements. The pressure 
exerted by the government led to other concessions to claims that Aurizon would not have 
otherwise agreed on. The three year period expired some 18 months ago, yet they continue to 
apply, and to restrain Aurizon’s capacity to conduct its business more effectively and 
productively. 

[165] Many of the provisions sought to be removed or varied are not common in most 
enterprise agreements. They restrict Aurizon in making business changes that it wishes to 
make in response to a competitive market situation. The restrictive provisions restrain 
Aurizon’s capacity to effectively manage its labour resource needs. Aurizon has endeavoured 
to negotiate changes to those provisions but the lengthy and comprehensive negotiations have 
not led to an agreement. Many of the changes sought by Aurizon in the negotiations seem to 
us to be rationally based. We readily understand its desire that its now private sector business 
no longer be restrained by provisions that were effectively imposed through the privatisation 
process. We do not think the changes proposed, objectively viewed, involve exploitation or 
unfairness in the terms and conditions of employment of Aurizon employees.

[166] The question of whether it is contrary to the public interest needs to be considered 
against all of the circumstances and for the reasons given we are satisfied that it is not 
contrary to the public interest to terminate each of the agreements.

5. Is it appropriate to terminate the enterprise agreements?

[167] All of the circumstances also need to be taken into account in considering whether 
termination of the agreements is appropriate. In particular the views of employers and 
employees covered by the agreement, their circumstances, and the impact of termination need 
to be taken into account. The requirement in s. 226(b) to take into account all of the 
circumstances including those set out in s. 226(b)(i) and (ii) is a requirement to take the 
matters into account and to give them due weight in assessing whether it is appropriate to 
terminate an enterprise agreement.148  In assessing appropriateness by taking into account all 
of the circumstances, we approached the task by reference to the construction of s. 226 and 
the contextual matters that bear upon that construction dealt with earlier as well as giving 
specific consideration to the matters identified in s . 226(b)(i) and (ii).

[168] Aurizon accepts that the Unions and a number of employees do not support 
termination but cautions against over generalisation of employee views as reflected in 
submissions by the unions. It submits that termination is likely to have the following effects 
on employees: 

(a) They will be entitled to the maintenance of proper industrial standards as they will 
be covered by the Modern Award and the NES, which will ensure the maintenance of 
such standards;

                                               
148

See for example Nestle Australia Ltd  v Federal  Commissioner of  Taxation (1987)16 FCR  167 at  184;  Elias v 
Commissioner  of  Taxation [2002]  FCA  845; (2002) 123 FCR 499 at [62]; Construction, Forestry, Mining and Energy 
Union v New Oakleigh Coal  Pty  Ltd and another [2012] FWAFB 5107 at [15]








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57

(b) All employees  will  further  have  the  benefit  of  extensive  undertakings  from  the 
Applicants  as to their  wages, allowances and other  defined  benefits to  operate in the 
event that the Enterprise Agreements are terminated  by the Commission;

(c) The employees  will  not  be prevented  from  making  a new  enterprise  agreement 
with  their   employer   appropriate   to  their   interests  and  the   interests  of  their 
employer, consistent with minimum  standards, and will remain  free to pursue their 
preferred  outcome in accordance with the processes set out in the FW Act;

(d) The termination of the Enterprise Agreements will enhance the prospect of longer-
term sustainable employment for the vast majority of the  employees  of  the 
Applicants.

[169] Aurizon submits that termination is likely to have the following effects on itself:

(a) It will  remove  constraints, restrictions  and  inefficiencies  imposed  on  them  by  a 
range of terms  in the Enterprise  Agreements and will allow them  to operate their 
businesses without such constraints;

(b) It will  enable  it  to  utilise  their  workforces  to  much  greater  benefit during 
working and paid hours;

(c) It will  enable  it  to  more   readily  and  reasonably  reorganise  their businesses so 
as to meet the demands, including  the  changing demands, of their customers in a 
competitive environment;

(d) It will relieve it of being forced or required to employ more employees than are 
reasonably needed, or more employees than are reasonably needed in a particular 
location or locations, than it can presently achieve;

(e) It will allow it, over time, to reduce their operating costs which will allow them to be 
competitive in a very competitive market;

(f) It will enable the Applicants to provide longer term sustainable employment for the 
majority of employees of the Applicants;

(g) The  Applicants  will  remain   free  to  negotiate   for  the  making  of  new  
enterprise agreements  if that  can be achieved  within  the processes set out in the FW 
Act to best secure an efficient and productive  workplace for it and its employees.

[170] The Unions submit that termination will have a drastic effect on employees and this is 
recognised by Aurizon in making its Undertakings. However the Unions contend that 
enforcement issues and the ability of Aurizon to change its mind means that the meaning and 
intent of the undertakings are totally in the hands of Aurizon and cannot be judged until after 
the event. The Unions submit that the following factors are relevant to the issue as to whether 
it is appropriate to terminate the enterprise agreements:

(a) substantially all of the employees of Aurizon oppose termination of the enterprise 
agreements, as do all of the industrial organisations covered by the enterprise 
agreements;








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(b) the basis for opposing termination of the enterprise agreements, as reflected in the 
evidence, is for sound and good reason (that is, it is not for some arbitrary or 
capricious reason);

(c) one circumstance relevant to the employees is that they were, for the most part, all 
employed at the time that they and Aurizon bargained for, negotiated, voted upon and 
had the Commission approve each the enterprise agreements;

(d) all employees will lose significant benefits associated with their employment as a 
result of termination of the enterprise agreements;

(e) termination of the enterprise agreements is unlikely to have any material effect on 
the business of Aurizon - its coal haulage business is, and is likely to remain, 
profitable, it has in place significant long term haulage contracts entered into when the 
enterprise agreements were in place and it has sound prospects of obtaining a 
substantial share of higher coal haulage volumes;

(f) termination of the enterprise agreements and default to the minimum modem award 
and  NES standards is likely only  to reflect itself in significant profit taking by 
Aurizon rather than anything else - the benefits would be taken from employees and 
given back to Aurizon;

(g) the bargaining position in respect of the current negotiations for a new agreement 
should not be disturbed, especially where it is Aurizon and not the industrial 
organisations that have called off the bargaining which, on  the  evidence, was 
proceeding in a productive way, and where disturbing that bargaining position will 
operate substantially to the benefit of the party who has called off the negotiations;

(h) the ‘contested provisions,’ which Aurizon describes as ‘legacy’ conditions 
(including but not limited to redundancy or relocation, collaborative rostering, dispute 
settling provisions and consultative provisions) all have a sensible and rational basis for 
their existence - whatever a ‘legacy’ condition means, none of the conditions referred to 
can be regarded as exceptional or unusual, or even unnecessary;

(i) the evidence  does not support the  suggestion  that the  present provisions  have a 
significant adverse effect on Aurizon's capacity to operate its business - the evidence 
suggests that the business is doing well and is very profitable; and

(j) the fact that terminating the enterprise agreement will deliver to Aurizon everything 
it wants will operate so as to remove any incentive on its part to bargain for a new 
enterprise agreement.

[171] As is clear from the chronology of bargaining outlined above, termination of the 
twelve enterprise agreements is sought in the context of a stalemate in the current enterprise 
bargaining negotiations. Those negotiations, from Aurizon’s perspective, have sought to 
remove some restrictive provisions which impeded productivity and efficiency. Aurizon does 
not propose to reduce wages, indeed it has proposed real wage increases. In those negotiations 
the Unions are seeking enhanced benefits such as wage increases. Aurizon is seeking the 
removal of restrictions on workplace change and other flexibilities so as to enhance its 








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competitive position and improve productivity. Save for that which we have earlier said about 
the restrictive provisions in the current agreements, it is not appropriate that we form a 
particular view as to the respective merit of the bargaining parties’ positions on such matters. 

[172] However it is important to note that many aspects of the agreements sought to be 
changed have a peculiar history arising from the privatisation of Aurizon, from Aurizon’s 
public sector past and from directions issued to it from its previous owner, the Queensland 
government. It is also relevant to note that provisions sought to be changed such as the no 
forced redundancy provisions relate to an employment guarantee that was intended to expire 
some 18 months ago. Other changes relate to work practices that seem to us to be clearly 
inefficient and out of step with the needs of a flexibile and productive enterprise that can 
adopt to changing economic and competitive environments. 

[173] Termination of the enterprise agreements does not mandate any particular outcome to 
the ensuing enterprise bargaining. Bargaining for new agreements will continue. Protected 
action would still be available. The assistance of the Commission would still be available. 
Unless the circumstances give rise to an industrial action workplace determination or a 
bargaining related workplace determination, bargaining can be expected to continue until
there is agreement. The bargaining dynamics will necessarily change. Currently the Unions 
are reluctant to agree on changes in conditions to which employees have an ongoing 
entitlement - including the no forced redundancy provision that has been locked in by 
operation of the Act well beyond its intended life. Aurizon can be expected to make use of the 
powers it will obtain by the elimination of workplace restrictions, either through negotiations 
or unilaterally. But the change in bargaining dynamics that would result following a 
termination must be viewed in context. A number of the “legacy provisions” (and specifically 
the no forced redundancy provision) about which Aurizon complains did not find their way 
into the enterprise agreements through collective bargaining in the traditional sense. They 
were in effect imposed on Aurizon by the Queensland government as a cost of the 
privatisation transaction.

[174] If termination occurs it is likely that 69 employees who do not currently have a 
productive role in the organisation and are in transition, will have their employment 
terminated by reason of redundancy—unless other redeployment options are taken up. As 
unfortunate as this may be for the employees concerned, termination of employment because 
of redundancy is not an unusual circumstance. Indeed it is a usual element of any 
restructuring in enterprises that operate in a competitive market. Even those that do not 
operate in a competitive market cannot justify the continued employment of persons who are 
not productively utilised.

[175] We accept that the preponderance of the employees who are covered by the twelve 
agreements oppose the termination of those agreements. It is also clear that the employee 
organisations that are covered by those agreements opposed their termination. We also accept 
that there is a sound basis for these parties to oppose the termination of the agreements. 
Employees are understandably concerned that termination of the agreements which currently 
apply to their employment will result in a diminution of the terms and conditions of 
employment that they currently enjoy. This is not an insignificant matter. However, the 
Undertaking given by Aurizon for the maintenance of the core terms and conditions of 
employment applicable to employees, including wages and allowances, for a period after any 
termination of the enterprise agreements, should that occur, goes some way to assuage that 
concern. 








[2015] FWCFB 540

60

[176] Although there has been doubt expressed about the enforceability of the Undertakings, 
it is to be expected, if the application is granted, that Aurizon as a publicly listed company, 
will make good on the undertakings given during the public hearings of this application. 
Moreover we are satisfied that the safety net terms and conditions of employment will not be 
disturbed. Ultimately, it cannot be expected that terms and conditions of employment 
contained in an enterprise agreement with continue unaltered in perpetuity after the agreement 
has passed its nominal expiry date.  Terms and conditions may be altered by making a new 
agreement or by terminating the existing agreement.  The statute guarantees the continuation 
of the safety net, not the terms and conditions contained in a nominally expired enterprise 
agreement. 

[177] Given the matters earlier discussed we are not satisfied that the prospect of a reduction 
in the terms and conditions of employment of the employees covered by the 12 agreements at 
some time in the future (assuming new enterprise agreements are not made) is so significant a 
factor as to outweigh these other matters.

[178] The Unions have not persuaded us that other workplace changes that may be 
implemented by Aurizon are undesirable or unnecessary for Aurizon to implement, 
oppressive on employees, or in some way inappropriate. Aurizon, like any employer, needs to 
improve its efficiency and productivity and consider how inefficient work practices can be 
modified. In our view it is entirely appropriate that it do so and insofar as restrictive work 
practices relate to terms and conditions of employment that they be dealt with by the parties in 
enterprise bargaining negotiations.

[179] We are satisfied that the rail freight industry is in a dynamic state of transition 
following the privatisation of major employers and the efforts of customers to reduce costs. In 
our view the economic imperative in such a situation is for employers to look for 
improvements and efficiencies that can be implemented and which do not impose unfairness 
on employees. Ultimately it will be in the interests of employees as well as the employer if the 
business can enhance its competitive position, retain its market share and compete more 
effectively for new market opportunities.

[180] In all of the circumstances we are satisfied that it is appropriate to terminate each of 
the 12 enterprise agreements that remain the subject of this application.

6. Conclusion

[181] We have concluded that it is not contrary to the public interest to terminate the 12 
agreements that remain the subject of this application. We have also concluded, after taking 
into account the views of employees, the employers and the employee organisations, their 
circumstances, and the impact of termination of the agreements, that it is appropriate to 
terminate the agreements. The bargaining parties now need to set their attention on the 
appropriate terms and conditions of employment that focus, not on the past, but on the 
circumstances that prevail in 2015 and those which are foreseeable beyond. It is in the 
interests of Aurizon and its employees that bargaining continue in a constructive and 
cooperative manner having primary regard to the contemporary needs of the business and its 
employees. As the termination will likely give rise to some reconsideration by the parties of 
their circumstances, we propose a prospective date on which the 12 enterprise agreements will 
terminate. The orders we will issue will provide that termination will occur on 18 May 2015.








[2015] FWCFB 540

61

VICE PRESIDENT WATSON

Appearances:

Mr HJ Dixon SC and Mr S Meehan of counsel for Aurizon.
Mr W Friend QC for AFULE, QSU, CEPU, AMWU and Together Queensland.
Mr R Reitano of counsel for RTBU.
Ms M Anthony for APESMA.

Hearing details:

2014.
Brisbane.
November 5, 6, 7, 10, 11, 12.

2015. 
Brisbane.
February 10. 

Printed by authority of the Commonwealth Government Printer

Price code J,  PR560303 


THE OF THE FAIR WORK C. SEN THE NOISS

Cases cited by this decision: