Employers should welcome High Court bargaining decision
The High Court has provided some welcome relief for employers in the increasingly challenging enterprise bargaining environment.
In its decision in Aldi Foods Pty Limited v Shop, Distributive & Allied Employees Association & Anor  HCA 53, the Court confirmed that an employer can enter into an enterprise agreement with existing employees to cover a new enterprise that it is establishing, without needing to wait until those employees are actually working in that enterprise to vote on the agreement.
In early 2015, Aldi Foods Pty Limited (Aldi) was in the process of establishing a new undertaking in Regency Park in South Australia (Regency Park region). It sought expressions of interests from its existing employees in its stores in other regions to work in the Regency Park region. Seventeen employees accepted offers of employment to work in the Regency Park region when it was established. Aldi then commenced a process of bargaining with those employees. Those employees were not represented by a union.
The employees voted on the Aldi Regency Park Agreement 2015 (Aldi Agreement) when the Regency Park region was still under construction. Aldi applied to the Fair Work Commission for approval of the ALDI Agreement. The Commission approved the Aldi Agreement as operative from 29 September 2015.
The Transport Workers’ Union of Australia (TWU) and the Shop, Distributive and Allied Employees Association (SDA) appealed against the approval of the Aldi Agreement. They argued that the Aldi Agreement should have been made as a ‘greenfields agreement’ because the Regency Park region was not established and Aldi had not, when it made the Agreement, employed any employees who would be necessary for the normal conduct of the enterprise. It was also argued that the Aldi Agreement did not pass the better off overall test (BOOT). The Full Bench rejected both arguments, and dismissed the appeal. The SDA applied to the Full Court of the Federal Court (Full Court) for judicial review.
Full Court of the Federal Court
The Full Court found that, for an employee to be eligible for voting to approve an enterprise agreement, they must be employed by the employer in question in the enterprise covered by the agreement at the time the agreement was made.
The Full Court held that persons who will become covered by the agreement only at some time in the future are not ‘covered by the agreement’ when they agreed to it, as is required by the Fair Work Act 2009 (Cth). As such, “there were no employees actually ‘covered by’ the Regency Park Agreement at the time it was made, at the time of the application to the Commission, or at the time the agreement was approved.” The Full Court further stated that, “at the relevant times, there were no employees actually in the positions. The 17 employees were then occupying other positions in other enterprises which were within the coverage of other enterprise agreements”.1
As a result of the Full Court’s decision, Aldi could not enter into an enterprise agreement to cover a new region it was in the process of establishing with a number of existing employees who had accepted offers to work in that new region before they were actually working in that region.
High Court decision
The High Court overturned the decision of the Full Court on the coverage issue.
The High Court held that an employer can enter into an enterprise agreement with existing employees to cover a new enterprise that it is establishing, without needing to wait until those employees are actually working in that enterprise to vote on the agreement.
Was the Aldi Agreement a non-greenfields agreement?
Section 172(2)(b) provides that a greenfields agreement is an agreement that satisfies two criteria:
- it relates to a genuine new enterprise that the employer or employers are establishing or propose to establish, and
- the employer has not employed any of the persons who will be necessary for the normal conduct of that enterprise.
An agreement that is not a greenfields agreement is made upon approval by the employees who will be covered by the agreement.
The SDA argued that the proposed enterprise agreement was a greenfield agreement because the employees who were already working for Aldi in other regions were not actually doing the work under the proposed agreement and, therefore, Aldi did not at that time, employ any of the person who would be necessary for the conduct of the enterprise.
The High Court did not accept the SDA’s argument. It stated:
“… a non-greenfields enterprise agreement can be made with two or more employees, so long as they are the only employees employed at the time of the vote who are to be covered by the agreement. It does not matter that the agreement may, in due course, come to apply to more employees.”
The High Court also dealt with an argument relating to the BOOT which had been the subject of argument before the Full Bench of the Commission and the Full Court of the Federal Court. That matter has been remitted to the Full Bench of the Commission to finalise.
1 Shop, Distributive and Allied Employees Association v Aldi Foods Pty Ltd (2016) 245 FCR 155, 184, .
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