A five member bench of Fair Work Australia (FWA) has set aside a decision to approve an agreement containing an opt-out provision, on the basis that the group of employees was not “fairly chosen’’ as it was not distinct, and the opt-out provision undermined the objectives of the Fair Work Act 2009 (Cth) (FW Act).

An employer applied to FWA to have an agreement approved containing an “opt-out” clause which permitted employees to elect in writing not to be covered by the agreement. FWA concluded that it was bound by an earlier decision of a Full Bench and approved the agreement after the employer provided undertakings. The union appealed to a five member Full Bench.

The Full Bench held that the group of employees covered by the agreement was not fairly chosen as the opt-out provision:

  • meant that the group of employees was not geographically, operationally or organisationally “distinct”;
  • undermined “bargaining certainty”, because “employees who elect to opt out … will no longer be covered … and may take protected action” to effectively ‘terminate’ the agreement before its nominal expiry date, contrary to the requirement of “mutual consent”;
  • undermined the “clear legislative preference” for collective bargaining, by facilitating an “outcome whereby an agreement only covers one employee”; and
  • introduced a “degree of flexibility not contemplated” by the FW Act and “without the legislative protections afforded to individual flexibility arrangements”.

CFMEU v Queensland Bulk Handling Pty Ltd [2012] FWAFB 7551