We recently received an enquiry from a member who was looking at entering into an enterprise agreement for its Brisbane employee base. In particular, the member was concerned about how that agreement would affect any overlapping project-specific enterprise agreements that it already had in place or may put in place in the future. As a result of this enquiry, we issued this Industry Release to demonstrate how members may deal with this situation by incorporating carve out clauses in its main geographical and/or divisional enterprise agreements.

An employer may make a baseline enterprise agreement that covers a significant number of its employees (i.e. on a geographical basis), which would be the default enterprise agreement that employees would fall under:

  1. if they were not already covered by a specific project enterprise agreement; or
  2. at the conclusion of each of those project enterprise agreements.

A sample carve out clause in the baseline agreement may look like the following:

This Agreement applies to the Company in respect of all of its employees in Australia/QLD/Brisbane/etc unless the Company has entered/enters into another registered agreement for a specific site or project, in which case that specific agreement will replace this Agreement for those employees only while working on that site or project.

The ability to incorporate such a clause allows employers an opportunity to have the flexibility to make project-specific agreements.

In John Holland Pty Ltd v Construction, Forestry, Mining and Energy Union [2014] FCA 286, Siopis J of the Federal Court stated at [30] to [36]:

  1. The Fair Work Act 2009 (FW Act) calls on the Fair Work Commission (FWC) to be satisfied that the group of employees covered by the enterprise agreement was fairly chosen (pursuant to section 186(3) of the FW Act. This, therefore, directs the FWC to have regard to the conduct of those persons who made the enterprise agreement and the content of the enterprise agreement.
  1. There is nothing in the language of the FW Act that conditions the FWC’s exercise of power to approve enterprise agreements or that makes it necessary to satisfy the FWC as to the number of employees who will, or may, during the term of an enterprise agreement, be covered by that enterprise agreement. To ask such a question is a misapprehension of the statutory approval task entrusted to the FWC.
  1. Accordingly, the inclusion of a clause which contemplates a potential change in circumstances did not affect the fairness of the criteria chosen to identify the employees who were to be covered by the enterprise agreement.

In summary, the John Holland decision provided clarity and confirmed that an employer may make an enterprise agreement, which contemplates certain exclusions of its workforce, therefore allowing employers the opportunity to make further project-specific enterprise agreements in the future.

Please contact Lauren Howe on 1300 361 099 or [email protected] should you wish to discuss this further or if you require further legal advice.

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