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Enterprise agreements benchbook

An overview of legal procedure & case law

Scope – who will be covered?

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Table of contents

On this page

  • Introduction
  • Meaning of 'fairly chosen'
  • Case examples
  • Exclusions
  • Effect of individual agreements on bargaining
  • References

 

Introduction

See Fair Work Act 2009 ss.186(3)–(3A)

The group of employees to be covered by a proposed agreement is chosen when the employer and the employee bargaining representatives agree on a particular scope or the bargaining representatives commence bargaining on a shared assumption as to scope.[1]

The group of employees to be covered by a proposed agreement (ie the scope of the agreement) will typically be chosen at or shortly after the commencement of bargaining. If there is disagreement between bargaining representatives on the scope of the agreement, then the scope itself will become a matter for bargaining.[2]

Before approving an agreement, the Fair Work Commission must be satisfied that the group of employees the agreement covers was fairly chosen.[3]

Meaning of 'fairly chosen'

Whilst the Commission's decision as to whether or not the group of employees covered by the agreement was fairly chosen involves a degree of subjectivity or value judgement,[4] in circumstances where an agreement does not cover all of the employees of the employer(s) covered by the agreement, the Commission must consider whether the group of employees covered by the agreement is:

  • geographically
  • operationally, or
  • organisationally distinct.

Geographical distinctness is concerned with the geographical separateness of the employer's various worksites or work locations, rather than a separation of workplaces within the same worksite.[5]

Factors to be considered

Generally, the selection of the group of employees to be covered by an agreement on some objective basis (as opposed to an arbitrary or subjective basis) is likely to point to a conclusion that the group was fairly chosen.[6]

However, depending on the circumstances of the particular case, there may be more than one way of fairly choosing the group of employees to be covered by a proposed enterprise agreement.[7] Different scope provisions may be equally described as fair in the sense that no obvious unfairness arises from their application.

The role of the Commission is not to determine the scope of the agreement, but rather to guard against unfairness by being satisfied that the group can be described, in all the circumstances as fairly chosen.[8]

When determining whether a group of employees has been fairly chosen, the Commission may have regard to matters such as:

  • the way in which the employer has chosen to organise its enterprise, and
  • whether it is reasonable for the excluded employees to be covered by the enterprise agreement, having regard to the nature of the work they perform and the organisational and operational relationship between them and the employees who will be covered by the enterprise agreement.

If a group of employees covered by the agreement are geographically, operationally or organisationally distinct, this would point in favour of a finding that the group of employees was fairly chosen. However, whether or not the group of employees covered by the agreement is geographically, operationally or organisationally distinct is not decisive, rather it is a matter to be given due weight, having regard to all other relevant considerations.[9]

An illustrative example is provided in the Explanatory Memorandum:[10]

A single employer operates five organisationally distinct units within its enterprise. The employer makes an agreement with all of the employees in two organisationally distinct units, as well as ten employees who are the only non-union members within … another organisational unit that has a total of 30 employees. The Commission is required to decide whether the group of employees covered by the agreement is fairly chosen.

In this example, the group of employees covered by the agreement is likely to be unfair, particularly as the employees were unfairly chosen.

Related information

  • Types of agreement
  • Coverage of agreements
  • Scope orders

Case examples

Employees fairly chosen

3 distinct occupational groups of employees

Re ALDI Foods Pty Ltd [2013] FWC 3495 (Boulton J, 3 June 2013).

An application was made for the approval of three single-enterprise agreements, the Minchinbury Agreement 2012, the Stapylton Agreement 2012 and the Derrimut Agreement 2012. The SDA supported the approval of each agreement. The NUW-NSW and the TWU-NSW opposed the approval of the Minchinbury Agreement. The TWU opposed the approval of the Derrimut Agreement and the Stapylton Agreement.

The objections of the TWU-NSW and NUW-NSW were mainly raised in relation to the Minchinbury Agreement, however they are also relevant to the consideration of the Stapylton Agreement and the Derrimut Agreement as all the Agreements had similar terms and conditions. It was recognised that there was sufficient commonality between the provisions of the Agreements such that if any of the objections and concerns raised prevented approval of the Minchinbury Agreement, the Commission would be bound to consider them in relation to the other agreements.

The TWU-NSW submitted that the group of employees covered by the Minchinbury Agreement was not fairly chosen. The agreement applied to three distinct occupational groups of employees: store employees, warehouse employees and transport operators. The agreement provided for some common provisions applicable to all employees (clauses 1-32) and then provided specific sets of conditions for store employees, warehouse employees and transport operators (Schedules 1-8).

Having regard to all the submissions and material, the Commission came to the conclusion that the group of employees covered by the Minchinbury Agreement was fairly chosen. The group of employees was operationally and organisationally distinct. The group was also geographically distinct from other ALDI employees in similar classifications in that they worked in ALDI’s Minchinbury Region. The selection of the group was not based on employee characteristics such as date of employment, age or gender, and was not arbitrary or discriminatory.

The Commission found that merely because it is asserted that some of the transport employees or their union might have priorities which differ from other ALDI employees or other unions involved in the bargaining process, or that those employees might have done better in negotiations for a separate agreement, does not of itself warrant a conclusion that the group of employees was not fairly chosen or that the selection of the group had the effect of undermining collective bargaining. Agreements approved.

Construction, Forestry, Mining and Energy Union v John Holland Pty Ltd

Construction, Forestry, Mining and Energy Union v John Holland Pty Ltd [2015] FCAFC 16 (24 February 2015).

John Holland Pty Ltd (the employer) made an application for approval of an enterprise agreement that, at the time of the application, would have covered only three employees. It contained a coverage term that specified that the agreement covered all employees of the employer, but did not cover employees covered by a project or site-specific agreement.

At first instance, the Commission approved the enterprise agreement. The CFMEU appealed that decision and the appeal was upheld by the Full Bench. In upholding the appeal, the Full Bench concluded that the group of employees was not fairly chosen, on the basis that:

  • it would not be possible to identify with any certainty the group of employees to be covered by the agreement, and
  • the 3 employees had bargained for an agreement which could potentially cover a very broad number of employees in future, and could potentially undermine those employees' rights to collectively bargain.

The employer applied to Federal Court, seeking judicial review of the Full Bench's decision. The Federal Court determined that the Full Bench had fallen into error in interpreting the relevant provisions of the Fair Work Act.

The Court took the view that, in determining if a group of employees was fairly chosen, 'the question is whether the parties that made the agreement acted fairly in choosing those employees to be covered by the agreement. The question of fairness of choice arises because those employees who are ‘chosen’ to be covered by the agreement will, ex hypothesi, be the better off overall than those employees who were not ‘chosen’ to be covered by the agreement'.

The Court also stated that the words 'was fairly chosen' should not be construed as meaning 'was chosen in a manner which would not undermine collective bargaining'. Accordingly, the Federal Court quashed the decision of the Full Bench.

The CFMEU then appealed to the Full Court of the Federal Court which upheld the decision of the Primary Judge and dismissed the appeal.

Re Stadium Australia Operations Pty Ltd T/A ANZ Stadium

Re Stadium Australia Operations Pty Ltd T/A ANZ Stadium [2010] FWAA 3758 (Lawler VP, 26 May 2010).

Stadium Australia (the employer) made an application for approval of an enterprise agreement covering casual employees who undertook hospitality, retail, customer service and food and beverage activities. Food and beverage staff comprised three quarters of the employees covered, with the remaining staff being customer service orientated.

A number of customer service employees objected to the approval of the enterprise agreement. They submitted that the agreement would result in their pay decreasing compared to existing pay levels, while food and beverage employees received pay increases. They argued that they were subject to the 'tyranny of the majority' in the sense that, even if all customer service staff voted no, the composition of the workforce was such that food and beverage staff were in a position to approve the agreement.

The Commission determined that the group chosen consisted of a series of operationally distinct subgroups all of whom work at the one geographical location. The Commission was not persuaded that the group covered was chosen with the intent of prejudicing customer service staff and therefore was satisfied that the group of employees had been fairly chosen.

The Commission stated that the appropriate remedy for the customer service staff, if they were being unfairly disadvantaged, was to apply for a scope order. The Commission noted that this was 'cold comfort’ to the customer service employees in this particular case, as scope orders are only available before an enterprise agreement has been made.

Cimeco Pty Ltd v Construction, Forestry, Mining and Energy Union

Cimeco Pty Ltd v Construction, Forestry, Mining and Energy Union [2012] FWAFB 2206 (Ross J, Hamilton DP, Spencer C, 12 April 2012), [(2012) 219 IR 139].

Cimeco made an application for the approval of the Cimeco Pty Ltd Midwest and Goldfields Regional Construction Projects Agreement 2011. The employees covered by the agreement were persons employed by Cimeco engaged to perform construction project works in a geographically distinct area. The geographically distinct area concerned was part of the Midwest and Goldfields Regions of Western Australia.

The Commission held that the practice of Cimeco was to deploy employees from site to site, finding that Cimeco wished to operate on both a site specific basis, and on a geographical basis. Given the history and practices of Cimeco, and their custom and practices for resource project construction work, the Commission considered that for Cimeco to make an agreement of a geographical nature, it should include a much more representative group of existing employees for that group to be regarded as fairly chosen. The Commission, at first instance, refused the application to approve the agreement.

On appeal the Full Bench considered the term ‘fairly chosen’ in detail and ultimately found that the first instance decision was erroneous. The Full Bench stated that whether or not the group of employees covered by the agreement is geographically, operationally or organisationally distinct is not decisive, rather it is a matter to be given due weight, having regard to all other relevant considerations. The other relevant considerations will vary from case to case.

The Full Bench also stated that, when considering the issue, it is not only the interests of employees who will be covered that are relevant, but also the interests of employees who are excluded from coverage.

Ultimately, the Full Bench determined that the Commission had fallen into error by concluding that, in order to be fairly chosen, the group should have been a much more representative group of existing employees. The Full Bench considered that the Commission should have focused on the group of employees that were covered by the agreement at the time of the vote, rather than to look at a ‘future likelihood’.

The application for approval was remitted to a Commission member for determination.

Exclusions

Enterprise agreement will not apply to employees covered by individual agreements

If an employee is covered by an individual agreement made under previous laws, such as an Australian Workplace Agreement (AWA) or an Individual Transitional Employment Agreement (ITEA), then that individual agreement will continue to apply to them.[11] While such an individual agreement applies to an employee, or the employer in relation to the employee, an enterprise agreement does not apply to them.[12]

For an enterprise agreement to apply to the employee, it will be necessary for the individual agreement to be terminated or conditionally terminated.

Effect of individual agreements on bargaining

Certain employees may be covered by an individual agreement made under previous legislative schemes, such as an Australian Workplace Agreement (AWA) or an Individual Transitional Employment Agreement (ITEA).

As all individual agreements made under the Workplace Relations Act 1996 (Cth) (and preserved individual State agreements) have passed their nominal expiry date, an employee who is covered by an individual agreement will be eligible to be represented in bargaining for the proposed enterprise agreement (and to vote on the proposed enterprise agreement).

However, for an enterprise agreement to apply to the employee, it will be necessary for the individual agreement to be terminated or conditionally terminated.

Related information

  • Termination of individual agreements

References

[1] Re ANZ Stadium Casual Employees Enterprise Agreement 2009 [2010] FWAA 3758 (Lawler VP, 26 May 2010) at para. 28.

[2] Ibid., at para. 29.

[3] Aerocare Flight Support Pty Ltd t/a Aerocare Flight Support v Transport Workers' Union of Australia; Australian Municipal, Administrative, Clerical and Services Union [2017] FWCFB 5826 (Hatcher VP, Binet DP, Cambridge C, 27 November 2017).

[4] Cimeco Pty Ltd v Construction, Forestry, Mining and Energy Union [2012] FWAFB 2206 (Ross J, Hamilton DP, Spencer C, 12 April 2012) at para. 8.

[5] The Australian Workers' Union v BP Refinery (Kwinana) Pty Ltd [2014] FWCFB 1476 (Catanzariti VP, Lawler VP, Lewin C, 3 April 2014) at para. 13.

[6] Cimeco Pty Ltd v Construction, Forestry, Mining and Energy Union [2012] FWAFB 2206 (Ross J, Hamilton DP, Spencer C, 12 April 2012) at para. 16.

[7] The Australian Workers' Union v BP Refinery (Kwinana) Pty Ltd [2014] FWCFB 1476 (Catanzariti VP, Lawler VP, Lewin C, 3 April 2014) at para. 14.

[8] Construction, Forestry, Mining and Energy Union v ResCo Training and Labour Pty Ltd [2012] FWAFB 8461 (Watson VP, Hamilton DP, Simpson C, 17 October 2012) at para. 35.

[9] Cimeco Pty Ltd v Construction, Forestry, Mining and Energy Union [2012] FWAFB 2206 (Ross J, Hamilton DP, Spencer C, 12 April 2012) at paras 19–20.

[10] Explanatory Memorandum to Fair Work Bill 2008 at para. 778.

[11] Transitional Act Sch 3, Item 3.

[12] Transitional Act Sch 3, Item 30.

Updated time

Last updated

24 May 2019

 

 

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      • Partial work bans
      • Unprotected industrial action – payments
      • Standing down employees
    • Suspension or termination of protected industrial action
      • Powers of the Commission
        • When the Commission may suspend or terminate
        • When the Commission must suspend or terminate
          • Threats to persons or the economy
          • Suspending industrial action
        • Requirements relating to a period of suspension
      • Powers of the Minister
    • Enforcement
    • Appeals
  • JobKeeper benchbook
    • Glossary
    • Introduction
      • Provisions of the Fair Work Act
    • JobKeeper enabling directions – general
      • Service & entitlement accrual
      • When a JobKeeper enabling direction will have no effect
      • Stand downs that are not jobkeeper enabling stand downs
      • Employee requests
    • Jobkeeper enabling stand down directions – entitled employers
      • Directions about duties & location of work
    • Jobkeeper enabling directions – legacy employers
      • Jobkeeper enabling stand down directions – legacy employers
      • Directions about duties & location of work – legacy employers
      • Termination of a jobkeeper enabling direction – legacy employers
    • Agreements about days or times of work
      • Agreements about days or times of work – entitled employers
      • Agreements about days or times of work – legacy employers
      • Termination of an agreement about days or times of work
    • Employer payment obligations
      • Wage condition
      • Minimum payment guarantee
      • Hourly rate of pay guarantee
    • Agreements about annual leave
    • Protections
    • Disputes we cannot assist with
    • Applications to deal with a dispute
      • Who can make an application
      • Responding to an application
      • Objecting to an application
      • Discontinuing an application
    • Commission process
      • General information
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      • Procedural issues
    • Evidence
    • Outcomes
      • Contravening an order
      • Appeals
      • Role of the Court
    • Attachments
    • Attachment 5 – provisions that continue to apply
  • Modern Awards Review 2012
    • Introduction
      • Modern Awards Review 2012
  • Sir Richard Kirby Archives
    • Home
    • Sir Richard Kirby
    • About the Archives
    • Cases
      • Case
      • The Honourable Justice Henry Bournes Higgins (1851–1929)
    • Centenary
    • Exhibitions
      • Exhibition launch: The history of the Australian minimum wage
      • Guide – Opening Exhibition
      • International Industrial Dispute Resolution Conference
        • Speaker – Justice Alan Boulton AO
        • Speaker – Mr Arthur F Rosenfeld
        • Speaker – Mr Craig Smith
        • Speaker – Mr James Wilson
        • Speaker – Mr Kieran Mulvey
        • Speaker – Mr Peter Anderson
        • Speaker – Ms Ginette Brazeau
        • Speaker – Ms Nerine Kahn
        • Speaker – Ms Rita Donaghy CBE
        • Speaker – Ms Sharan Burrow
        • Speaker – Senator Guy Barnett
        • Speaker – The Hon. Julia Gillard
      • The Journey
        • Court
          • Early years
          • New court
            • Profile of Justice O'Connor
            • First registration of an industrial organisation
          • Judges & conciliators
          • The Boilermakers' Case
            • The dispute & appeals
        • Commission
          • Post Boilermakers 1956-1973
          • Hawke & Keating governments
            • Industrial Relations Court
          • Howard Government
        • Fair Work Australia
          • The Fair Work system
          • About Fair Work Australia
          • Transition
          • Fair Work timeline
      • The history of the Australian minimum wage
        • The Great Strikes
        • The first minimum wage: The Victorian minimum wage
        • The Harvester Decision
        • The impact of the Great Depression
        • Working it out: Cost of living versus capacity to pay
        • The removal of award rate discrimination
        • The wage explosion & economic crisis
        • The modern era: The development of a modern minimum wage
      • Treasures of the archives
        • Launch speech?Treasures of the Archives
        • 1. Professor Isaac
        • 2. Register of organisations
        • 3. Perlman letters
        • 4. Sir Richard Kirby photograph
        • 5. Oral history program
        • 6. AIRC sign
        • 7. Folder of wage decisions
        • 8. Centenary exhibition
        • 9. Women's exhibition poster
        • 10. Isaac letters
    • The modern era
    • Past Presidents
    • Past Members
      • Past Members 1956 to present
      • Past Members to 1956
  • Unfair dismissals benchbook
    • Overview of unfair dismissal
    • Glossary & naming conventions
    • Coverage for unfair dismissal
      • Who is protected from unfair dismissal?
      • People excluded from national unfair dismissal laws
        • Independent contractors
        • Labour hire workers
        • Vocational placements & volunteers
        • Public sector employment
      • Constitutional corporations
      • High income threshold
      • Modern award coverage
      • Application of an enterprise agreement
      • What is the minimum period of employment?
        • How do you calculate the minimum period of employment?
        • What is continuous service?
        • What is an excluded period?
      • Bankruptcy
      • Insolvency
    • What is dismissal?
      • When does a dismissal take effect?
      • Terminated at the employer's initiative
      • Forced resignation
      • Demotion
      • Contract for a specified period of time
      • Contract for a specified task
      • Contract for a specified season
      • Training arrangement
      • What is a transfer of employment?
      • Periods of service as a casual employee
      • What is a genuine redundancy?
        • Job no longer required – operational requirements
        • Consultation obligations
        • Redeployment
      • What is the Small Business Fair Dismissal Code?
    • What makes a dismissal unfair?
      • Valid reason relating to capacity or conduct
        • Capacity
        • Conduct
      • Notification of reason for dismissal
      • Opportunity to respond
      • Unreasonable refusal of a support person
      • Warnings – unsatisfactory performance
      • Size of employer's enterprise and human resources specialists
      • Other relevant matters
    • Making an application
      • Application fee
      • Timeframe for lodgment
      • Extension of time for lodging an application
      • Who is the employer?
      • Multiple actions
      • Discontinuing an application
    • Objecting to an application
    • Commission process
      • Conciliation
      • Hearings and conferences
      • Preparing for hearings and conferences
      • Representation by lawyers and paid agents
      • Rescheduling or adjourning matters
      • Bias
    • Remedies
      • Reinstatement
        • Order for reinstatement cannot be subject to conditions
        • Order to maintain continuity
        • Order to restore lost pay
      • Compensation
        • Calculating compensation
        • Mitigation
        • Remuneration
        • Other relevant matters
        • Compensation cap
        • Instalments
    • Dismissing an application
    • Evidence
    • Costs
      • Costs against representatives
      • Security for costs
    • Appeals
      • Staying decisions
    • Role of the Court
  • Waltzing Matilda and the Sunshine Harvester Factory
    • Introduction
    • The book
      • Book launch
    • The film
      • Film launch
    • Historical material
      • 38 Hour Week Wage Principle [1983]
      • 40 Hour Week Case [1947]
      • 44 Hour Week Case [1927]
      • Apprenticeship indentures
      • Australian Minimum Wage and fitter (trades) rate since 1906
      • Boot Trades Case
      • Careers in Bootmaking and Boot Repairing
      • Cattle Industry Case 1966
      • Commercial Printing Case [1936]
      • Commonwealth Conciliation and Arbitration Act 1904
      • Cost of living newspaper articles from the early 1900s
      • Debates
      • Equal Pay Case 1969
      • Equal Pay Case 1972
      • Fruit Pickers Case
      • Gas Employees Case
      • Graph of Australian Minimum Wage since 1906
      • Harvester Case
      • Historic case judgments on the Fair Work Commission's website
      • Kingston's evidence
      • Linesmen's Case
      • Maternity Leave Case [1979]
      • Metal trades base level minimum wages [1967–2015]
      • Methods of wage adjustment
        • Establishing an Australian Minimum Wage 1907?1922
          • The origins of the Australian minimum wage
          • The 'needs' principle and 'capacity to pay'
          • Women's wages
          • First indexation decision
        • Quarterly indexation 1922–1953
        • The Great Depression 1931
        • Prosperity loadings 1937
        • World War II 1939–1945
        • The post-war period: 1953–1965 basic wage inquiries
        • The total wage 1966–1967
        • Removal of discrimination in award rates
        • Reintroduction of quarterly wage indexation 1975–1978
        • Six monthly wage indexation 1978–1981
        • Wage explosion 1981–1982
        • Reforming awards and work and management practices 1987–1991
        • Six monthly wage indexation 1983–1987
        • Enterprise bargaining and a minimum wage safety net 1991–1996
        • Statutory adjustments
        • The minimum wage in real terms
      • Mrs Beeton's cookbook
      • Paternity Leave Case [1990]
      • Personal/Carer's Leave Test Case [1995]
      • Piddington report
      • Re Bagshaw [1907]
      • Significant cases on the Fair Work Commission's website
      • Statistics for the purpose of comparison with the Australian minimum wage
      • The Amalgamated Society of Engineers v. The Adelaide Steam-ship Company Limited and Others
      • The Australian minimum wage from 1906
      • The Federated Marine Stewards and Pantrymen's Association v. The Commonwealth Steamship Owners' Association and Others
      • The Victorian minimum wage 1896
        • Legislative Council Second Reading Speech to the Factories and Shops Bill 1896
      • The first Award: 1906 Steam-ship Crew
      • 100 years of the minimum wage—Statistical comparison
    • US, UK and Australian minimum wage systems
    • Mrs Beeton's cookbook
    • Glossary
    • Related sites
    • Educational materials
  • AWRS First Findings report

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