Opting out of agreements by employees permitted: FB of FWA

Cases

Opting out of agreements by employees permitted: FB of FWA

A majority of a Full Bench of Fair Work Australia has found that opt-out clauses in an enterprise agreement are valid under the Fair Work Act 2009, as long as employees have a choice and do not make any other agreements that override the original agreement.

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A majority of a Full Bench of Fair Work Australia has found that opt-out clauses in an enterprise agreement are valid under the Fair Work Act 2009, as long as employees have a choice and do not make any other agreements that override the original agreement.
 
 
In the original decision, Cmr Roe said that in order to approve the agreement he would accept an undertaking that the opt-out clause would not apply and that the employer, Newlands, would neither request nor accept any such election [not to be covered].
 
However, Newlands would only offer an undertaking that any worker who opted out would be better off overall for the purpose of the BOOT.
 
Cmr Roe said ss53, 54, 256A(2) and 186(3) of the Fair Work Act described how employees were covered by agreements and do not provide for opting out.
 
Full Bench — majority
 
The majority — Senior Deputy President Hamberger and Deputy President McCarthy — overturned Commissioner the commissioner’s decision:
‘We consider that the approach the Commissioner took in finding that the “opt out” clause was “invalid” involved a misunderstanding of his role. His role was to consider first whether he had a valid application. In considering whether there was a valid application or not he needed to consider whether the Agreement was properly made. In considering whether the Agreement was properly made he needed to consider whether a majority of valid votes were cast …
 
If those answers are positive then an agreement has been made with employees who will be covered by the Agreement. Those matters are not questions that need to be, or indeed should be, re-examined by considering whether the employees were fairly chosen. Whether the employees were fairly chosen or not is an issue to be examined once the conditions precedent to there being a valid application have been met ...
 
The workforce to be covered by the Agreement is already in place and has been involved the making of the Agreement. That some individuals who voted for the Agreement and who would be covered by it when it comes into operation may at a later stage elect not to be covered by the Agreement does not alter this fact.
 
Each case must be assessed on its particular circumstances …’
Commissioner Blair — dissent
 
Commissioner Blair concluded that the legislation did not permit opting out:
‘… there is no issue on the part of the Tribunal that the majority of employees cast a valid vote for the agreement. However, the Tribunal accepts that what was before Commissioner Roe, was not in fact a valid agreement. It was not a valid agreement because of the provision of the “opt out” clause, as it is referred to, identified in the majority decision and in the submissions of the parties.
 
It is the Tribunal’s view that section 170 does provide for a discretion, for an employee/employer to make an enterprise agreement.
 
What is not discretionary, in the Tribunal’s view, is what section 172(2)(a), section 181(1) and section 182(1) speak of, that is employees that “will” be covered in the agreement (or proposed agreement).
 
In looking at the word “will”, the Tribunal takes the view that the word “will” has the same standing as the word “shall”. It is not optional as the word “may”. “May” only appears in section 172 in the context of the parties “may” make an agreement. Having made the agreement and there being a vote on the agreement, the word “will” then comes into force …’
 
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