A full bench of the Fair Work Commission has been overruled by the Federal Court because it speculated about the future application of an enterprise agreement when reaching a decision to reject it.
The case involved a construction company that made an agreement with three employees who were the only three employees engaged at the time and to whom the agreement would apply. However the contents of the agreement included classifications in which no person was, at the material time of the making of the agreement, actually employed in those classifications.
The Commission at first instance approved the agreement however the union successfully appealed to a full bench of the Commission. The bench concluded that because the agreement would apply in future to more employees, that the ‘fairly chosen’ requirements of the Act hadn’t been met. That is to say, the bench speculated about the future application of the agreement. It also said that the approach in the case undermined collective bargaining.
But the Court disagreed, firstly pointing out that there is no power at all to reject an agreement on the grounds that it ‘undermines collective bargaining’. The Court said there is a prohibition on undermining good faith bargaining, but that was not what was alleged or complained of in this matter. The Court also said that the Bench was jurisdictionally in error when it decided to overturn the approval decision because it couldn’t decide who the agreement would eventually cover. This was beyond power the Court said.
Of major interest to employers in this case is the Court’s dismissive tone towards the idea that an enterprise agreement cannot be fairly made if there are no any employees in some of the classifications in the agreement at the time the agreement is made. This is crucial where an employer has a start-up workforce and wants to get the industrial regulation bedded down so that there is certainty for the project or undertaking. Such a situation is analogous to the greenfields agreements routinely made, where there are actually no employees employed.