Key Points

Several important lessons arise from the recent decision in Murtagh v Corporation of the Roman Catholic Diocese of Toowoomba [2023] FCAFC 172 in which a Catholic school employer in Queensland, Australia was held liable to back-pay to two teachers whose employment ended prior to the approval of an enterprise agreement: 

• The Fair Work Act 2009 (Cth) (FWA) provisions allow for the existence of retrospective clauses in an enterprise agreement (EA).
• EA provisions are likely to have a retrospective effect if it is clear both in the language and context of the agreement that a retrospective effect is intended.
• EA provisions may apply retrospectively and to a limited group of people, but only if there is a clear intention in the EA to discriminate on this basis.
• Clear backpay clauses are preferred – precise language as to the coverage of certain EA provisions will provide a strong defence against similar claims.

Background 

Toowoomba Catholic Education (TCE) operates several schools across Queensland which were subject to separate enterprise agreements set to expire on 30 June 2019. New EA’s were approved by the Fair Work Commission and came into effect in December 2020 providing for salary increases for teaching staff. The two teachers who brought the legal proceedings against TCE had resigned in December 2019, a year before the new EA’s were approved. 

The two teachers alleged TCE had failed to back-pay the salary increase contained in the new EAs for the period between 1 July 2019 (when the new EAs were intended to take effect) and their respective resignation dates in December 2019. At an initial trial, the application by the two teachers was dismissed, and the matter was then appealed to the Federal Court. 

Decision 

The Full Court of the Federal Court allowed the appeal in favour of the two teachers, finding that the new EAs conferred an entitlement to retrospective backpay. TCE was ordered to pay the salary increases the teachers were entitled to for the period between 1 July 2019 and their resignations in December 2019.  

What should employers do?

What might have assisted the employer in this case would have been a carefully drafted pay increase or backpay clause in the proposed enterprise agreement. Such clauses should be drafted to ensure that employers are not required to pay former employees retrospectively if employment ends prior to the approval of an enterprise agreement.