Lessons for new players
A start-up company can make an enterprise agreement with a few employees and have that agreement operate later for a much larger workforce, but they need to do it properly according to a recent Fair Work Commission (FWC) full bench decision.
The problem for a small maintenance company was identified after two unions appealed the approval of its agreement, arguing that with only three employees, the company had not really “fairly chosen” the workers who would be covered by the agreement.
FWC disagreed with that proposition, saying unequivocally, that a company and three employees could make an agreement which contained more than three classifications in it. FWC went further and cited with approval some earlier federal court cases which had reached the same conclusion.
However, FWC upheld the appeal from the unions on other grounds. The bench identified that the range of classifications proposed to be covered fell within the scope of more than just the one award which was used as the comparator award for the better off overall test. The FWC said that the agreement could be held to cover more than just maintenance personnel and could apply to a “range of different industries”.
Despite the fact that FWC found error with the original decision to approve the agreement, it gave the employer the opportunity to give undertakings in order to preserve the agreement. The matter was referred for re-hearing.
The importance of this decision lies in the confirmation of the strategy some employers are using to circumvent the union stranglehold on green-fields agreements. By hiring a small number of employees and making an agreement for a project or business with them, albeit to apply to a much larger workforce later, these employers are able to truly negotiate. Even so, employers have to be careful how they word their agreements and which awards they nominate for the better off overall test.