Will your new enterprise agreement pass the test?

WILL YOUR NEW ENTERPRISE AGREEMENT PASS THE TEST?

Employers and their representatives must be careful to follow the new provisions in the Fair Work Act 2009 (Cth) when making and lodging an enterprise agreement, or they risk having their proposed agreements rejected by Fair Work Australia (FWA).

Unfortunately, this has already occurred for numerous employers, including a number of high profile companies. Common challenges that have been identified include:

• failing pre approval requirements;
• failing the no disadvantage test;
• insufficient evidence of steps taken to communicate agreement content to employees; and
• false statutory declarations.

Some examples are as follows.

• In April 2010, McDonald’s Australia’s proposed enterprise agreement was rejected for variety of reasons, which meant that it failed to meet pre-approval requirements and the no disadvantage test. Commissioner McKenna described the proposed agreement as ‘unsatisfactory’ and stated that the 80,000 employees covered by the agreement would be ‘poorly served’ if FWA approved it.
• An IR consulting company had three enterprise agreements rejected in early March 2010. The first agreement was a single enterprise agreement covering eight employers, including Muffin Break and Subway franchisees. The two other agreements were for Muffin Break and Kippa-Ring outlets. Commissioner Gooley found that all three agreements failed the no disadvantage test and were supported by statutory declarations that were ‘not properly witnessed and misleading’.
• Margin Brothers Pty Ltd, which trades as Campbell IGA Friendly Grocer, failed to have its proposed enterprise agreement approved in April 2010 as FWA found that it had provided insufficient evidence of the steps it had taken to explain the contents of the agreement to employees aged under 21.
• Jillcar Pty Ltd, a hotel operator, had its agreement rejected by Senior Deputy President O’Callaghan, as not all of the employees who would have been covered by the agreement at the time of voting, had the opportunity to vote for it.
• Smith & Nephew Pty Ltd failed to have its proposed enterprise agreement approved as the agreement contained clauses imposing duties on employees concerning confidentiality, intellectual property and non-solicitation. Commissioner Gooley held that these clauses were usually included in common law contracts negotiated between employers and prospective employees and that it was not appropriate to include them in an enterprise agreement, where employees had no choice but assume obligations that they might not have otherwise.

Our Employee and Industrial Relations team has acted for clients across various industries who have made enterprise agreements successfully.

If you need further information or assistance regarding bargaining and advice about practical measures to satisfy pre-approval requirements, such as consultation, communication and voting, please contact a member of our Employee and Industrial Relations team.

Contact

Leonard Lozina | Partner
T: 61 2 8233 9617
M: 0417 426 039
E: leonard.lozina@dibbsbarker.com

John Oakes | Partner
T: 61 2 8233 9804
M: 0414 717 042
E: john.oakes@dibbsbarker.com

Paul Almond | Special Counsel
T: 61 2 8233 9735
M: 0413 136 149
E: paul.almond@dibbsbarker.com

Maree Skinner | Special Counsel
T: 61 2 8233 9803
M: 0427 229 971
E: maree.skinner@dibbsbarker.com