‘Single business’ agreements under WR Act: High Ct ruling

Cases

‘Single business’ agreements under WR Act: High Ct ruling

A number of currently operating agreements made under the predecessor to the Fair Work Act, the Workplace Relations Act, may be invalid following a recent High Court ruling.

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A number of currently operating agreements made under the predecessor to the Fair Work Act 2009, the Workplace Relations Act 1996, may be invalid following a recent High Court ruling.

[Full text of this ruling: Pilbara Iron Company (Services) Pty Ltd v Construction, Forestry, Mining and Energy Union [2012] HCATrans 37 (10 February 2012)]
 
The High Court rejected on an application for special leave to appeal from a decision of the Full Court of the Federal Court.
 
The Full Federal Court had ruled invalid the employee collective agreement covering Pilbara Iron Company (Services) employees — essentially because the employees covered had been selected by the company.

The decision of the Full Court was confirmed.

The legislation in issue
 
The relevant legislation read as follows:
‘WORKPLACE RELATIONS ACT 1996 — SECT 327 Employee collective agreements

An employer may make an agreement (an employee collective agreement) in writing with persons employed at the time in a single business (or part of a single business) of the employer whose employment will, or would but for the operation of an ITEA that has passed its nominal expiry date, be subject to the agreement.’
Full Federal Court decision
 
The Full Federal Court held:
‘The fact that the employees with whom the agreement is made must be employees “in” a single business or part of a single business is the clearest indication that the identification of the part of the single business (if that is the choice made) must be separate from the identification of the persons employed in it … The part must be identifiable by reference to factors other than the employees themselves or the date they acquire that characteristic …’
The Full Court added that if it were possible for an employer to choose any employees it wishes, and to designate them as the employees in part of its single business with whom it wishes to make a collective agreement, the underlying purpose of collective negotiation would be subverted.

Implications for agreements
 
The final submission of counsel for the company points to what employers and employees may perceive is an issue arising from the High Court’s refusal to hear the appeal:
‘… there are 3,000 employees alone caught by the [in issue] HWE agreements and the BHP Billiton agreements before we go to any other industries, and that means that for those 3,000 people, their agreements have evaporated. They do not know it yet, but all that one has to do is test it. Someone has to sue for a benefit given under the agreement at law, and the agreement will be then found to have disappeared for the same reason that ours did. In our respectful submission, that is a matter of great concern in industrial relations, particularly as it does obviously apply in the mining industry.

Our learned friends’ submissions, with respect, do not grapple with the problem created by the requirement for all employees to be covered, either in the part or in the single business. That matter remains, in our respectful submission, as a significant problem. There is no requirement for all employees. The way in which the Full Court approached it, saying that these employees were not in a part of a single business does not actually explain why they are not employees in the single business, if there is no requirement for all. If we are right about that, then the opposite result should apply …’
Fair Work agreements
 
The availability under the Fair Work Act of early intervention by Fair Work Australia in the form of a scope order, together with the positive requirement for Fair Work Australia to be satisfied upon approval of an agreement that the group of employees covered by the agreement was fairly chosen, point to attacks on the validity of Fair Work Act enterprise agreements made on the basis of their scope are unlikely to occur.

 
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