THE Federal Court has overturned a union attempt to dismantle an enterprise agreement reached outside of union influence, representing a positive outcome for a major Australian construction firm.

The agreement was made between three employees and building group John Holland for the construction of a children’s hospital in Perth and featured a clause applying the agreement to all future employees on the project except for those covered by other contracts.

First instance proceedings were launched by the Construction, Forestry, Mining and Energy Union (CFMEU) against John Holland, which planned to fill its skills needs with a permanent workforce of 25 and an unknown number of contractors.

After being approved by a single member of the Fair Work Commission (FWC), the CFMEU successfully appealed the decision before a Full Bench on grounds that the agreement would undermine collective bargaining by other employees, breaching provisions of the Fair Work Act.

However, the Federal Court overturned the Full Bench decision on appeal from John Holland and held that an agreement could not be considered invalid for undermining collective bargaining with Siopic J arguing that:

“There are specific provisions in the Fair Work Act which give Fair Work Australia powers to withhold approval on grounds which reflect conduct inconsistent with [some parts of the Act]. Thus, for example, s 187(2) permits Fair Work Australia to withhold approval for an agreement if approval would not be consistent with, or would undermine, good faith bargaining.

It is significant, therefore, that there is no similar provision permitting Fair Work Australia to withhold approval on the grounds that it is of the view that the approval of the agreement would undermine collective bargaining.”

Speaking to The Australian, AREEA chief executive Steve Knott welcomed the decision as significant for resource employers looking to use non-union agreements.

“The decision will give some comfort to employers who can get on with engaging in legal enterprise bargaining and not be second-guessed by FWC members applying non-legislative considerations to approving their enterprise agreements,” he said.

“I would imagine it might energise more contractors and employers to consider non-union agreements as a real option.

Mr Knott added that the decision reflected continued subjectivity within the Fair Work Commission, underscoring the call for an independent appeals tribunal to balance the Fair Work system.

“This decision rejects an increasing trend by some commission members to engage in frolics on IR policy and non-statutory considerations,” he adds.

“In short, the Federal Court decision highlights that the FWC, at its most senior level, has muffed its role at correctly applying Australia’s workplace legislation.

“FWC members have effectively been told to apply the plain words of the act in its decisions and not to introduce their views on issues such as collective bargaining.

“The establishment of an independent appeals tribunal will balance the impact of inconsistent decisions from within the FWC and ease downward pressures on employers struggling to find a clear and concise expectation for compliance.”

To read the full decision, click here. To speak with an AREEA workplace relations expert about enterprise bargaining outside of union influence, contact your local AREEA office.