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Court, Employment Law

Bargaining Under the Fair Work Act

On 6 December 2017, the High Court of Australia (HCA) gave an English lesson regarding the language and grammar used in the Fair Work Act (FWA) in the following two cases:

  1. Esso Australia Pty Ltd v Australia Workers Union (AWU); and
  2. Aldi Foods Pty Ltd v Shop Distributive & Allied Employees Association.

Regarding Esso v AWU

The AWU took industrial action against Esso in the course of bargaining in which the AWU claimed that such industrial action was protected.

Esso successfully obtained an order from the Fair Work Commission (FWC) declaring that part of the action was not protected due to the AWU breaching court orders.

The question for the HCA was that if party had breached orders in the past, does this preclude them from claiming protection under the FWA.

The HCA considered the language in the FWA, and by majority, held that the terminology within the FWA regarding breaches was put in present tense. However, this does not mean that a breach must  occur concurrently with the protected industrial action, present tense meant that the breach had to have occurred in relation to the same subject matter in dispute. Therefore, if a breach of orders occurred previously, but was over the same subject in dispute, the once protected industrial action may not be protected even though the relevant order was no longer in operation.

Regarding Aldi Foods v Shop, Distribution & Allied Employees Association (SDA)

Aldi was in the process of establishing a new distribution centre where is sough expressions of interest from potential employees to work in the centre. Seventeen employees accepted offers of employment prior to the distribution centre being completed.

Aldi then negotiated enterprise agreements with those 17 employees before the construction was complete.

The SDA contended that Aldi should have made a ‘Greenfields Agreement’ instead of and Enterprise Agreement with the 17 employees.

The HCA focussed on when an enterprise agreement ‘covers’ and employee, and when it ‘applies’ to an employee under the FWA.

The HCA held that once the enterprise agreement was made, the employees that had made it were accurately described as being ‘covered’ by it, even though it would not actually ‘apply’ to them until they started word at the new distribution centre.

The HCA stated: ‘a non-greenfields agreement can be made with two or more employees, so long as they are the only employees employed at the time of the vote who are to be covered by the agreement. It does not matter that the agreement may, in due course, come to apple to many more employees’.


From a bargaining perspective, there is now a stronger incentive for parties to seek FWC or Court orders (e.g. orders to stop industrial action or good faith bargaining orders) as any breach of such orders will prevent the taking of protected industrial action.

Employees also have greater flexibility in reaching agreements for new enterprises where existing employees will later be employed in that new enterprise.

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