The Attorney General, in referring to the scope of the amendment in the 1996 legislation to the unfair contract provision, referred to comments made by the Court of Appeal in Walker v Industrial Court of NSW (1993) 53 IR 121. In that matter, the Full Bench of the Industrial Court had overturned relief granted at first instance to Mr Walker for the unfairness of his employment contract and rejected the Court's first instance order for payment of appropriate termination monies. The Court of Appeal upheld the minority judgment of the Full Bench which found there was discrimination afforded by the employer to Mr Walker in a comparison between the benefits on termination paid to other employees in the circumstance where no such equivalent monies were paid to Mr Walker.
111 However, as the Hon J.W. Shaw, Attorney General, said the purpose of the amendments to the section was to make clear the "scope of the section". In Walker, the Court of Appeal rejected the expressed view of the majority of the Full Bench of the Commission who concluded that conduct by the employer on termination, even if such conduct was unfair, did not alter the terms of the contract and therefore did not make the contract itself unfair. The Court of Appeal rejected this proposition and held (at 133):
In determining whether "unfairness" in the contract or arrangement has been established, regard may be had not merely to the terms of the contract or arrangement, as originally negotiated, but also to the manner in which the contract or arrangement has ultimately worked out and operates as between the parties to it. ...
112 The scope of the legislative provision s 106 addressed in Walker therefore was whether "conduct" could be held to make a fair contract unfair, not that an award employee is barred from access to s 106 if under the contract of employment there is unfair conduct. The Court of Appeal directly rejected the proposition of the majority that conduct could not affect a term of an agreement in a consideration as to how that term "worked out such as to attract relief if the conduct made the contract unfair".
113 Simply because an award employee enjoys under the relevant award minimum "terms and conditions" of employment (which Award is an industrial instrument and is statue barred from attack under s 105) that employee is not thereby denied access to a consideration under s 106 of whether his/her "contract of employment" was fairly conducted so as to ensure, in its performance, the contract remained fair.
114 It is necessary, to give force to this conclusion, to recite the authorities of which this conclusion is reached. In Byrne v Australian Airlines Ltd (1995) 185 CLR 410 the High Court held the proposition that the obligation to observe an award arises by force of statute, not because the award was imported into a contract of employment. The provisions of the award are not an implied term of the contracts of employment, because such an implication is not necessary for the provisions to be reasonable and effective in all the circumstances.
115 In Burgess v Mount Thorley Operations Pty Ltd (2004) 132 IR 400, [2003] NSWIRComm 432, the Commission in Court Session considered applications brought after the amendment in s 105 brought under s 106 by miners who had been made redundant. While the essential issue in that case was whether the orders sought were inconsistent with provisions of the Federal Award, the Commission in Court Session also considered the application of the relevant principles to the jurisdiction of the Industrial Court to hear applications under s 106 by award employees. The Commission in its reasoning as to the applicable principles adopted the view of the High Court stating:
56 In Byrne v Australian Airlines (1995) 185 CLR 410 it was held that the terms of the relevant award were not incorporated into the contract of employment independently of the intention of the parties; that the award operated with statutory force and there was no need to convert statutory rights and obligations into contractual rights and obligations.
116 As said by Hungerford J, in Stonham v The Speaker of the Legislative Assembly of New South Wales (2009) 97 IR 325; [2000] NSWIRComm 69 who recently considered a similar submission to that made by Mr Warren. His Honour (in dealing with an interlocutory application to dismiss a claim under s 106) held at [34]:
34 I turn then to deal with the primary grounds of attack on the s 106 claims as advanced by Mr Menzies (for the Respondent). That challenge was mounted, as I have said, on two bases. The first was that no order could be made under the section which would have the effect of rendering any part of the enterprise agreement or the award void, either in whole or in part. Mr Ferrier (for the Applicant) conceded the force of that submission but met it with the submission that no part of the Applicant's claim sought to avoid or vary such enterprise agreement or award; rather, as he put, the challenge was to the contract of employment between the Applicant and the Respondent. In my view, Mr Ferrier's concession was properly made and this aspect of the argument need be taken no further as it misconceived the real character of the Applicant's claim.