A recent Fair Work Commission decision reminds employers to closely follow the content, approval and lodgement requirements when making an enterprise agreement.

Enterprise bargaining can be a stressful and time-consuming process for employers. When the employees vote in favour of a proposed enterprise agreement, it’s tempting for the employer to breathe a sigh of relief. However the hard work isn’t over yet.

Before the Fair Work Commission can approve an enterprise agreement it must be satisfied that all of the requirements for making an agreement have been met. Even if the employees and the relevant union(s) support the agreement, errors in the agreement-making process can prove fatal.

This was the recent experience of a technology company in CEPU v Mirait Technologies Australia Pty Ltd (C2015/4054).

The case concerned an appeal by the Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia against the Commission’s decision to approve Mirait Technologies Australia’s enterprise agreement. The union argued that the Commission should not have approved the enterprise agreement because the enterprise agreement was not genuinely agreed to by the employees.

The agreement had been approved by a majority of Mirait Technologies’ employees. However, the problem for Mirait Technologies was that it had submitted two statutory declarations in support of its proposed agreement that were inconsistent. The Full Bench held that these inconsistencies meant the Commission could not be satisfied that employees had received a copy of the proposed agreement before it was put to a vote, that the agreement had been properly explained to them, and that they had properly informed about the voting process.

The Full Bench granted the appeal, with the result being that Mirait Technologies is now likely to have to begin the voting process for its proposed agreement again.

Lessons for employers

Understandably because of the cost involved, some employers attempt to negotiate and adopt enterprise agreements directly with their staff (or with the benefit of an external advisor who is not legally trained).

However we are frequently required to assist such employers when their proposed agreement is rejected by the Commission, despite the agreement having the support of the employees (and often the union!), because:

  • the agreement contains clauses which are contrary to the requirements of the Fair Work Act 2009 (Cth);
  • the agreement does not meet the better off overall test;
  • the employer failed to take all of the necessary pre-approval steps in the required timeframes; or 
  • the employer did not correctly complete the material to be submitted to the Commission with the agreement.

A rejected agreement will often require the employer to start the voting, and sometimes the bargaining, process all over again. This can be embarrassing, frustrating and time-consuming. In a workplace with a high level of industrial conflict, it could give a union the opportunity it needs to attempt to renegotiate a contentious clause in an agreement.

Mirait Technologies’s experience is a timely reminder that employers must ensure they follow the necessary steps before submitting an agreement to their employees and then the Commission.

Employers should consider obtaining professional advice in this regard, even if they are negotiating the content of an agreement directly with employees or the relevant unions.