Fair Work Act amendments remove union sign off for greenfields agreements

It’s been an interesting few weeks in the employment law world. We’ve had the 7/11 expose, a member of the Fair Work Commission on 4 Corners and last week, the Senate passed changes to the Fair Work Act 2009. One of the most significant amendments will change the way greenfields enterprise agreements are negotiated and approved.

Historically, a greenfields agreement could only be submitted to the Fair Work Commission for approval if it had been signed off by the relevant union negotiating its terms. Subject to their obligations to bargain in good faith, this gave the unions control over when (or, if at all) a proposed agreement could go before the Commission for approval.

For many companies, this was a highly frustrating part of the process. Greenfields agreements are often developed in advance of a company hiring employees to work on a project so that they can get an accurate picture of how much their venture will cost before things kick off. With union negotiations delaying the approval of an agreement, entire projects could get delayed causing cost blow-outs .

Under the new laws, employers entering into negotiations with a union will be able to put the union on notice that they are beginning a ‘negotiation period’ of six months. If, at the conclusion of the six months, the employer and the union have not agreed on the terms of a greenfields agreement, the employer will have the option of making an application to the Commission for approval of the agreement without the sign off of the union.

Effectively, the changes mean that when a union and an employer can’t agree on the terms of a greenfields agreement after six months of bargaining, the employer can take the agreement to the Commission for approval anyway, and the Commission will decide if it passes the better off overall test (BOOT).

Under the new laws, an additional requirement has been added to the approval process before an agreement can be given the rubber stamp: in addition to passing the BOOT, the Commission must also be satisfied that the greenfields agreement provides for pay and conditions that are consistent with prevailing standards within the relevant industry for equivalent work. This condition is not applied to enterprise agreements that follow the traditional route for approval.

 Photography / john skewes

Photography / john skewes

The new laws are designed to avoid bargaining deadlocks and prevent unions from having any power of veto over agreements. Both the federal government and members of the resources industry have publicly voiced their support for the changes, labelling them as vital for the commencement of new projects and future investment.

However, their enthusiasm for the changes is not be shared by all. Union officials have aired concerns that the changes will have the effect of discouraging employers from negotiating while they wait out the six month period until their agreement can be taken to the Commission. They are also concerned that by removing union sign off as a barrier to Commission approval, there is no incentive for employers to bargain whatsoever.

Furthermore, the protection of employee rights, which is the mainstay of the union movement, will be handed over to the Commission who need only ensure that agreements meet prevailing standards, not exceed or improve upon prevailing standards, thus supressing the ability of unions to progress the pay and conditions for employees in their respective industries. 

We will be watching eagerly as the first of these greenfields agreements makes it’s way to the Commission.