Business Toolbox

A recent decision by the Fair Work Commission (FWC) has clarified how far businesses can go when varying an existing enterprise agreement under the Fair Work Act 2009 (FW Act). 

In a ruling handed down on February 12, the FWC approved a comprehensive variation to the newly-acquired Ventia subsidiary PowerNet Constructions’ agreement, despite the changes effectively replacing the agreement with substantially new terms and conditions. 

The decision has provided important guidance for employers considering whether to vary an agreement or bargain for a new one. 

‘Variation’ even when it rewrites the agreement 

The key legal question before the FWC was whether an application that substantially rewrote the agreement could still be considered a valid “variation” under Part 2-4, Division 7 of the FW Act. 

Commissioner Mark Perica determined that it could. 

The FWC accepted that where a variation replaced most of an agreement’s text, it could still fall within the statutory definition of a variation, provided the parties agreed and the procedural requirements of the FW Act were met. 

What this means for businesses 

Laura Fry, Managing Associate, Workplace Relations at Business Law WA said the decision provided clarity for employers navigating agreement updates. 

“This decision sets out clear guidance for businesses on how broad the scope of applications to vary an agreement are under the FW Act," Fry said. 

“As the Commissioner referred to in their decision, this variation in effect replaced the agreement with new terms and conditions. 

“While the circumstances in this situation are unique, it signals that if parties to an enterprise agreement agree, the Commission will likely not stand in the way of substantial amendments to an agreement as long as it follows the process outlined by the FWC and the Act.” 

The decision reinforces that the variation pathway can offer a flexible alternative to negotiating an entirely new agreement, but only where employers strictly comply with statutory requirements and it is a suitable option in the circumstances. 

Key takeaways for employers 

The case highlights several important considerations: 

• Process remains critical: Employers must follow all FW Act procedural requirements, including providing employees with access to the variation, ensuring genuine agreement and meeting voting obligations. 
• Agreement between parties is central: The FWC placed weight on the employees’ approval and union support for the variation.  
• Scope is broader than many assumed: A variation can be extensive – even replacing most terms – without automatically requiring a new enterprise agreement. 
• Unique facts still matter: The circumstances were specific to the parties involved, meaning employers should seek advice before relying on the variation mechanism for large-scale changes. 

Do you need advice about legal contracts or enterprise agreements? Get in touch with an employment lawyer at Business Law WA on 08 9365 7746 or via [email protected]. 

This article is authorised by Business Law WA, an incorporated legal practice and wholly-owned subsidiary of CCIWA. The content of this article is general in nature and is not legal or professional advice and should not be relied upon as such.