Shop, Distributive & Allied Employees Association v ALDI Foods Pty Ltd [2016] FCAFC 161
This case confirms that an employer establishing a new business cannot circumvent the statutory requirements attending the entry into a greenfields enterprise agreement by entering into an ordinary enterprise agreement with staff employed elsewhere. Under the Fair Work Act 2009 (Cth), an employer who proposes to establish a new business activity, but has not yet employed anyone, may enter into a greenfields enterprise agreement. The greenfields enterprise agreement will then govern the terms and conditions of the employment of prospective employees. There are various procedural and substantive requirements that a greenfields agreement must satisfy before it can be approved by the industrial umpire. These requirements differ from those applicable to ordinary enterprise agreements. The requirements include an obligation to negotiate the terms and conditions of the agreement with an employee organisation (such as a trade union) and a requirement that the agreement pass a distinct “better off overall test”.
ALDI Foods Pty Limited (“ALDI”), which is part of an international supermarket chain, was in the course of establishing a new region of supermarkets in South Australia. ALDI canvassed its existing staff, employed in other regions of South Australia, for expressions of interest in working in the new region. ALDI made offers of employment to a number of staff and proposed to enter into an ordinary enterprise agreement with them. The enterprise agreement was initially approved by the employees and the industrial umpire (the Fair Work Commission).
The Shop, Distributive & Allied Employees Association (“SDA”) appealed this decision to the Full Federal Court. One of the questions put to the Court was whether a greenfields agreement should have been made instead of an ordinary enterprise agreement because the employees who purported to approve of the agreement would not be covered by the agreement until sometime in the future. The majority of the judges in the Full Federal Court held that as no employees would be covered by the agreement at the time it was to be made, ALDI should have entered into a greenfields agreement with an employee organisation.