Earlier this month, the Full Court of the Federal Court delivered a significant decision on the proper approach of construing modern awards.

The case arose out of enterprise bargaining in the black coal mining industry, where the construction of two provisions in the Black Coal Mining Industry Awards (the 2010 and 2020 Awards) was relevant to the 'better off overall test' (BOOT).

The Full Court allowed the appeal, reversing the primary judge's decision in Mining and Energy Union v OS ACPM Pty Ltd [2025] FCA 200 and in doing so issued an important reminder: when construing modern awards, the text is paramount – turning to historical intention has its limits.

OS ACPM Pty Ltd engages employees to work across black coal mines operated by BHP subsidiaries in Queensland and New South Wales. Absent a valid enterprise agreement, those employees are covered by the Awards.

The Mining and Energy Union brought proceedings seeking declarations on the meaning of two disputed clauses. The primary judge found for the MEU on both issues. On appeal, however, the Full Court reversed both.

1. The first issue was whether clause 27.5(a) (2010 Award) and clause 29.5(a) (2020 Award), which provide that "work will not be carried out on 2 [public holidays]", operate collectively or individually. The Full Court preferred the individual construction, giving each employee two days free from work (not necessarily the same days).

2. The second issue concerned "ordinary hours" in clause 15.1(b) and (c) of the 2020 Award. The primary judge treated this as a 10-hour cap on the total length of a shift. The Full Court disagreed, holding that the clause limits only hours paid at ordinary rates. Shifts may exceed 10 hours, provided additional hours are paid at overtime rates.

In both instances, the primary judge had been persuaded by the industrial history of the Awards. The Full Court rejected that approach.

At paragraphs 26 to 40, the Full Court undertook a careful synthesis of the applicable principles of construction. It affirmed the seven orthodox principles recently distilled in the Australian Workers’ Union case (see Australian Workers’ Union v UGL Resources (Contracting) Pty Ltd [2025] FCAFC 107), including that:

• the text is the starting point,

• that a purposive approach is to be preferred, and

• that industrial context may inform construction.

However, the Court went on to identify a number of important limitations that arise in the specific context of modern awards (as distinct industrial instruments):

1. Context is not an end in itself (at [30]). The language of the instrument remains the start and end point. Historical material cannot displace the natural meaning of the text.

2. "Intention" is objective, not subjective (at [32]–[33]). Because an award has legislative character, the task is not to ascertain the subjective intentions of its makers. Rather, construction must focus on the meaning conveyed by the words used, to discern the objective, expressed intention from the text of the instrument in light of context and purpose.

3. Context must be established in fact (at [31]). Historical context will carry weight only where it reveals a clear and continuous path of meaning. Where that chain is incomplete or equivocal, it cannot found a controlling construction.

4. Pre-instrument practices are not presumed to be cemented (at [34]). A practice existing before the inception of an instrument does not, without more from the text or extrinsic material, establish that the instrument was intended to preserve it.

5. Modern awards are a distinct statutory instrument (at [35]–[38]). Unlike a bargained enterprise agreement or an instrument arising from a specific dispute, a modern award is created by the Fair Work Commission (FWC) to set national minimum standards across an industry. It consolidates a large body of earlier instruments, often making any search for a coherent "framer's intention" difficult, if not illusory.

6. Modern awards are not assumed to be drafted by "lay persons" (at [39]). Unlike earlier instruments, modern awards are made and varied by the FWC, whose members include judicial officers and qualified lawyers. It should not be assumed that a liberal or practical construction is required because the instrument was drafted by lay persons.

Modern awards govern the employment conditions of millions of Australians. Questions of their construction arise regularly in enterprise bargaining (as in this case), in underpayment disputes and in proceedings before the FWC.

The FWC's decision places serious limitations on the ability to lead evidence relying on longstanding industry practice or history to displace the plain meaning of the text. Such arguments may be limited to circumstances where the history of the award includes, for example, variation applications.

The decision's treatment of the ordinary hours issue provides a clear illustration. The MEU submitted that the term "ordinary hours" had long been used in the black coal industry to denote actual hours worked, relying on tribunal authority extending back to 1939. The Full Court rejected that approach in emphatic terms (see OS ACPM Pty Ltd v Mining and Energy Union [2026] FCAFC 59 at [94]). The 2020 Award contains an express definition of “ordinary hours” in clause 2 and that definition must prevail. Historical usage arising in a different era and under a distinct legislative framework cannot be deployed to displace or qualify the meaning of a defined term.

For employers and practitioners engaging with modern award disputes, the decision carries several practical consequences.

• Start with the text and use defined terms. Arguments based on historical usage that conflict with an express definition are unlikely to succeed.

• Reconsider reliance on pre-modernisation materials. Evidence of what an earlier award "always meant" or how the industry has "always operated" may not displace the ordinary meaning, particularly if those earlier awards were made under entirely different legislative schemes.

• Review payroll for any underpayment exposure. Where payroll is calibrated to award interpretation, employers should review that interpretation to ensure it is defensible.

If you have any questions about how this decision affects your organisation, please contact Megan Kavanagh or Tyrone Prisk from the Brisbane Employment & Safety team.