Entitlement to arrears not limited

Employees entitled to back pay for increases to their pay and entitlements under an enterprise agreement commencing during their employment but coming into effect after their resignations on the first pay period after the enterprise agreement came into effect – ss51 and 54 of the Fair Work Act 2009 (Cth) construed to mean that an entitlement to arrears not limited to employees still employed when the enterprise agreement comes into operation

In Murtagh v Corporation of the Roman Catholic Diocese of Toowoomba [2023] FCAFC 172 (30 October 2023) the Full Court of the Federal Court (Collier, Logan and Meagher JJ) allowed an appeal by two employees against a decision to dismiss an application for back pay for increases to their pay under enterprise agreements commencing during their employment but coming into effect after each employee had resigned (at [50]).

In doing so, the Court held that ss51 and 54 of the Fair Work Act 2009 (Cth) (FW Act) do not limit an entitlement to arrears to employees still employed when a relevant enterprise agreement comes into operation (at [46]).

The first and second appellants were employees whose resignations took effect in December 2019 (at [2]-[3]) (Employees). The Employees had both been employed on 1 July 2019 (at [4]).

In November 2020, the Fair Work Commission (FWC) approved enterprise agreements (Enterprise Agreements) which respectively covered the Employees (at [5]-[8]).

The Enterprise Agreements contained commencement clauses which contained words to the effect that the Enterprise Agreements would operate seven days after approval from the FWC and where the Enterprise Agreements specify an earlier operative date for a particular provision, then that provision shall operate from that date for all “applicable employees” employed at that earlier date (at [9]-[10]).

The Enterprise Agreements provided for staged salary increases that were backdated to 1 July 2019 (at [11]).

The first and second respondents were the former employers of the Employees (Employers). The Employers did not pay the 1 July 2019 pay increases to the Employees or other employees who were employed at 1 July 2019 but, in particular, had resigned before the Enterprise Agreements came into operation (at [16]).

This decision is of great significance because it provides authority for the operation of ss51-54 of the FW Act in relation to entitlement to back pay after enterprise agreements come into operation. This is so despite the relevance of the specific text of the Enterprise Agreements in question (at [18]).

A key argument made by the Employers was that the only employees who had an entitlement to back pay were those who remained employed when the enterprise agreements came into operation (at [23]). 

The Bill, which became the FW Act, expressly contemplated that, once operative, enterprise agreements could provide for back pay for work performed prior to the operative date of the agreements (at [46]).

Critically, the Court did not find “an overt intention to discriminate in terms of coverage” between employees who were employed as at 1 July 2019 but ceased employment before the Enterprise Agreements came into operation and those employees who remained employed when the Enterprise Agreements came into operation (at [48]).

Nadia Stojanova is a barrister at the Victorian Bar. The full version of these judgments can be found at www.austlii.edu.au.