Can the commission block our new workplace agreement if it might break federal rules?

The situation

I am a shop steward for a small retail group based in Victoria, Australia. For the last six months, our management team and the union have been negotiating a new variation to our existing enterprise agreement to better manage our roster patterns. We finally reached a deal last Tuesday, and we have just submitted the paperwork to get the changes officially approved. However, during our final review of the proposed changes, one of our senior administrators realised that the new way we plan to track overtime might accidentally clash with some federal payroll laws regarding how certain allowances are calculated. We are worried that if we go ahead with this specific variation, the company might end up being fined or even committing a serious offence under Commonwealth law because the new rules are a bit messy. I have already spoken to our internal HR manager, and they want to push the application through anyway to save time, but I am feeling very uneasy about it. My main concern is whether the Fair Work Commission has the power to actually reject our application just because they think the new terms might lead to us breaking a federal law or facing a massive financial penalty. Can they stop the whole variation from happening for that reason?

Detailed Analysis

Under the Fair Work Act 2009, the Fair Work Commission (FWC) acts as a watchdog for workplace agreements. Regarding your specific situation with the retail group in Victoria, the FWC has the authority to stop your proposed variation from being approved.

Specifically, the law states that the FWC "may refuse to approve the variation if the FWC considers that compliance with the terms of the agreement as proposed to be varied may result in: (a) a person committing an offence against a law of the Commonwealth; or (b) a person being liable to pay a pecuniary penalty in a relation to a contravention of a law of the Commonwealth"^[1]. A 'pecuniary penalty' is a fancy way of saying a fine or a sum of money you are ordered to pay as punishment^[1].

Because your senior administrator has identified that the new overtime tracking method might clash with federal payroll laws, this puts your application at risk. If the FWC reviews your paperwork and decides that following your new roster and overtime rules would lead to your company committing a federal offence or being fined, they can legally block the variation^[1].

It is also worth noting that for certain types of agreements, such as supported bargaining agreements or cooperative workplace agreements, the FWC holds similar powers to refuse approval if the terms might lead to legal breaches or penalties^[2].

While the FWC can refuse the application, they also have the option to refer the agreement to another body they think is appropriate^[1]. However, the primary risk for your employer is that the variation simply will not be approved in its current form.

Statutory Citations

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