Greenfields agreement

See Fair Work Act 2009 ss.172(4), 178B

A greenfields agreement is an enterprise agreement relating to a genuine new enterprise (including a new business, activity, project or undertaking) which is made at a time when the employer or employers have not yet employed any of the persons who will be necessary for the normal conduct of the enterprise and who will be covered by the agreement.[1]

When referring to a location, greenfields relates to a location for a business where there has not previously been any building, or relating to any enterprise which is becoming active in a market where there has been little or no previous activity.

An employer, or 2 or more employers that are single interest employers, may make a single-enterprise greenfields agreement with 1 or more relevant unions if:

• the agreement relates to a genuine new enterprise that the employer or employers are establishing or propose to establish, and
• the employer or employers have not employed any of the persons who will be necessary for the normal conduct of that enterprise and will be covered by the agreement.

If a proposed single-enterprise agreement is a greenfields agreement, an employer that is a bargaining representative for the agreement may give written notice:

• to each union that is a bargaining representative for the agreement, and
• stating that the period of 6 months beginning on a specified day is the notified negotiation period for the agreement.

The specified day must be later than:

• if only 1 union is a bargaining representative for the agreement – the day on which the employer gave the notice to the union, or
• if 2 or more unions are bargaining representatives for the agreement – the last day on which the employer gave the notice to any of those unions.

Multiple employers – agreement to giving of notice

If 2 or more employers are bargaining representatives for the agreement, the notice has no effect unless the other employer or employers agree to the giving of the notice.

Two or more employers that are not all single interest employers may make a multi-enterprise greenfields agreement with 1 or more relevant unions if:

• the agreement relates to a genuine new enterprise that the employers are establishing or propose to establish, and
• the employers have not employed any of the persons who will be necessary for the normal conduct of that enterprise and will be covered by the agreement.

Before approving a greenfields agreement, the Commission must be satisfied that:

• the relevant union(s) that will be covered by the agreement (as a group) are entitled to represent the industrial interests of a majority of employees who will be covered by the agreement, and
• it is in the public interest to approve the enterprise agreement.[5]

See Fair Work Act s.255(A)

If a proposed single-enterprise agreement is a greenfields agreement and there has been a notified negotiation period for the agreement which has ended:

• then the following provisions of the Fair Work Act do not apply in relation to the agreement at any time after the end of the notified negotiation period:
  • section 228 (which deals with good faith bargaining requirements)
  • sections 229 and 230 (which deal with bargaining orders)
  • sections 234 and 235 (which deal with serious breach declarations)
  • section 240 (which deals with bargaining disputes), and
• a bargaining order that relates to the agreement ceases to have effect at the end of the notified negotiation period.

Note: The provision relating to bargaining orders has effect despite anything in section 232 (which deals with the operation of bargaining orders).

Related information

• Additional requirements for greenfields agreements
• Good faith bargaining requirements
• Bargaining orders
• Serious breach declarations
• Bargaining disputes

Agreement a single-enterprise greenfields agreement

Genuine new enterprise and existing employees

National Union of Workers (NSW) v HP Distribution Pty Ltd [2013] FCA 139 (4 February 2013).

The Woolworths Ltd group of companies established a subsidiary (HP Distribution) to arrange for the distribution of goods for three of its significant business units from one distribution centre, in a manner that had never previously been undertaken. Prior to employing staff to work at the site, HP Distribution entered into an enterprise agreement with the SDA. The Commission approved the agreement at first instance as a ‘greenfields agreement’.

The NUW appealed to the Full Bench of the Commission, arguing that the Commission made an error in finding that the agreement was a greenfields agreement because the agreement did not meet the statutory criteria. The NUW submitted that the distribution centres to be covered by the agreement were already carrying out distribution functions prior to the agreement being made and that people who became employees of HP Distribution were already working as storepersons at this time. After hearing fresh evidence and submissions from the NUW and further evidence from the other parties (including that staff working at the site were casual labour hire staff not intended to be covered by the agreement and that one of the distribution centres was only being prepared for future work) the Full Bench affirmed the Commission's initial decision.

The NUW commenced proceedings in the Federal Court seeking review of the Full Bench's decision.

The Court was satisfied that the business, activity, project or undertaking established at the distribution centre was genuinely new and different from an existing enterprise. The statutory criteria in s 172(2)(b) of the Fair Work Act envisaged that a holding company (Woolworths) may do significant preparatory work to establish or propose to establish a genuine new enterprise that it intends will be conducted by a subsidiary that will be incorporated shortly before a greenfields agreement is made with a relevant union.

The Court upheld the Commission's decision to approve the enterprise agreement as a greenfields agreement.

Genuine new enterprise and existing employees

Re John Holland Pty Ltd [2011] FWAA 5724 (Ryan C, 16 September 2011).

An application was made for approval of an enterprise agreement known as the Abigroup, John Holland and the Australian Workers’ Union - Regional Rail Link Footscray to Sunshine Project Agreement 2011-2015. The CFMEU, the RTBU and the AMWU wrote to the Commission seeking to intervene in the matter. The agreement was made at a time when John Holland and Abigroup acting as a joint venture had tendered for work on the Regional Rail Link Project. The tender had not been awarded at the date of the making of the agreement.

The challenge by the CFMEU was that John Holland and Abigroup as joint venturers could not meet the test in s.172(3)(b)(i) because there was not a genuine new enterprise that the employers were establishing or proposing to establish. The CFMEU submitted that the joint venturers would only commence a genuine new enterprise if and when their tender was successful.

The Commission noted that the size and complexity of some tenders means that tenderers need to make substantial commitments in time, money, staff and other resources to submit a tender. On that basis, the Commission was satisfied that the joint venturers were establishing, or proposing to establish, a genuine new enterprise and that the agreement related to that genuine new enterprise.

The CFMEU, the RTBU and the AMWU also challenged the application for approval on the basis that the agreement could not be a greenfields agreement because the employers have employed persons who will be necessary for normal conduct of the enterprise and who will be covered by the agreement.

The Commission was satisfied that neither of the employers had employed any of the persons who would be necessary for the normal conduct of the enterprise and who would be covered by the agreement. The Commission drew a distinction between employees who were indispensable to the normal conduct of the enterprise and existing employees who may have skills which might lead to them subsequently being employed in the enterprise. The agreement was approved.

Agreement NOT a single-enterprise greenfields agreement

NOT a genuine new enterprise

Applications by CPB Contractors Pty Limited & John Holland Pty Ltd [2019] FWC 1122 (Gostencnik DP, 21 February 2019).

The West Gate Tunnel Project is a major Victorian infrastructure project being undertaken in partnership between the Victorian Government and one of the world’s largest toll-road operators, Transurban. CPB Contractors Pty Ltd and John Holland Pty Ltd (collectively ‘Joint Venture Partners’) were announced as the preferred tenderer in April 2017 and confirmed as the winning bidder in December 2017.

Since being announced as preferred tenderer and thereafter being confirmed as the winning bidder, the Joint Venture Partners sought to negotiate and make greenfields agreements to cover the works for which they were engaged to perform. Whilst the proposed greenfields agreements were being negotiated, the Joint Venture Partners and several of their subcontractors undertook design work, geological testing, service relocations and other works.

On 9 November 2018 the Joint Venture Partners applied to the Commission for the approval of the West Gate Tunnel Project (Tunnelling) Greenfields Agreement 2018 and the West Gate Tunnel Project (Civil Surface Works) Greenfields Agreement 2018 (collectively ‘the Agreements’). The unions involved opposed the approval of the Agreements.

After consideration the Commission found that by 9 November 2018 the delivery of the package of works that the Joint Venture Partners had been contracted to design and construct had well and truly commenced, in both a design and construction sense.

The Commission found that the actual activity undertaken by the Joint Venture Partners was undertaken for the purpose delivering the package of works they were contracted to deliver, and for commercial reward. The enterprise was established.

The Commission concluded that as at 9 November 2018, the Joint Venture Partners were not establishing or proposing to establish a genuine new enterprise to which the Agreements related. The applications were dismissed.

Employees necessary for normal conduct of enterprise employed

Tutt Bryant Group Limited T/A Tutt Bryant Heavy Lift and Shift [2014] FWC 1119 (Gostencnik DP, 14 February 2014).

See also Tutt Bryant Group Limited T/A Tutt Bryant Heavy Lift and Shift [2014] FWCFB 4342 (Acton SDP, McCarthy DP, Cloghan C, 1 July 2014).

TBG made a greenfields agreement with the AWU and the AMWU in respect of a new project or undertaking (the AMC Project).

In October 2013, before the greenfields agreement was made, a number of persons were given letters from TBG containing an offer of employment for work at the AMC Project. Between 18 and 25 November 2013, 6 of these persons commenced employment with TBG at another site. The 6 employees commenced work at the AMC Project on 5 December 2013, after the greenfields agreement had been made.

The Commission found that whilst an employer may take preparatory steps to ensure that the new enterprise is successful, including identifying and even securing sources of labour, if a person is employed in any capacity by the employer and it is known that employee will be necessary for the usual conduct of the new enterprise and will be covered by the agreement, the employer cannot make a greenfields agreement.

TBG appealed to the Full Bench. The Full Bench held that TBG failed to establish any appellable error of law in the Commission's decision at first instance. Permission to appeal was refused and the appeal was subsequently dismissed.

NOT a genuine new enterprise

Construction, Forestry, Maritime, Mining and Energy Union v CPB Contractors Pty Ltd and The Australian Workers’ Union [2018] FWCFB 3702 (Hamberger SDP, Gostencnik DP, Harper-Greenwell C, 22 June 2018).

Decision at first instance [2018] FWCA 1187 (McKinnon C, 22 June 2018).

At first instance the Commission approved the CPB Contractors (Victoria) Civil Framework Agreement 2017 (Agreement) made by CPB Contractors P/L (CPB), formed after the merger of the construction divisions of Leighton Contractors Pty Ltd and Thiess Pty Ltd, and the Australian Workers' Union.

CPB said that its new workforce would undertake a defined subset of general award-covered civil construction and water industry works on Victorian projects, rather than relying chiefly on third party contractors. It maintained the Agreement would therefore cover a genuinely new enterprise, despite the company's involvement in a similar civil construction and water works business.

The Construction, Forestry, Maritime, Mining and Energy Union (CFMMEU) opposed the approval of the Agreement. The CFMMEU was not a bargaining representative but was permitted to make submissions and appear at the appeal hearing.

The question on appeal was whether enterprise was a genuine new enterprise. The Full Bench found that the evidence supported that the enterprise existed at the time the Agreement was made. It was not a genuine new enterprise. The Full Bench held that the jurisdictional fact in s.172(2)(b)(i) of the Fair Work Act was not made out. The appeal was upheld and the approval decision quashed. The application to approve the Agreement was dismissed.