No employees working, but agreement still OK
The High Court has given the green light to an enterprise agreement even though the employees had not actually started at a new work site, after the company appealed a full federal court decision disallowing the agreement.
The orthodox way to establish an agreement before opening the doors to trade, is to do an agreement with the relevant union(s) – the “greenfields site” route. But this employer chose another path, first calling for expressions of interest from existing employees to work in the new branch.
When the company received 17 responses it entered into negotiations with those employees. Once settled, the agreement was presented to the Fair Work Commission which approved it. The union then appealed all the way through to a full court of the Federal Court which threw the deal out. It said that since there were no employees working there, then the agreement was invalid.
But the unanimous High Court view was that the employees were employed by the company at the relevant time, so a greenfields site deal was not available. The only way an employer can make a greenfields site EA is if there are no employees. Just because the building wasn’t finished did not alter the employment relationships between those who would be covered by the EA and who would work there in future.
The High Court reminded the parties that the legislation clearly distinguishes between an agreement covering an employee and also applying to an employee. It said that the employees were covered by the agreement because they were employed by the company and would work in the classifications the EA contained when the new branch opened. At that point the EA would also apply to their actual terms and conditions.
The relevance of this seemingly obscure point is this; an employer can make an EA for a greenfields workplace as long as the employees who make that EA with the employer are employed at the time the EA is made and it can apply to their employment in the future.
If the employer would like the employment rules settled before people actually start work, then doing what this company did is one way to attempt to achieve that.
And it’s nice to know that the High Court agrees that it can be done.