Alda V SDA – Enterprise Agreement Decision

The High Court has upheld (in part) Aldi’s appeal in its long running dispute with the SDA regarding the approval of an enterprise agreement[1].

The High Court has confirmed the Fair Work Commission’s decision was lawful when it approved an enterprise agreement that had been made with existing employees working in another area of the business, but who had not yet started to work as employees in a new enterprise. The Unions argued this should have been made as a greenfields agreement that required it to be made with the Union.

The High Court disagreed however that the enterprise agreement passed the better off overall test and that task has been remitted to the Commission to be done again.

Background

In 2015, Aldi was establishing a distribution centre at Regency Park, South Australia. Rather than negotiating a greenfields agreement[2] with the SDA, Aldi negotiated an enterprise agreement for the distribution centre with seventeen existing employees who did not work at the new undertaking, but who had accepted offers of employment agreeing to work at the distribution centre once it opened. Some of these employees did not live in South Australia. The distribution centre was still under construction when a majority of these employees voted to approve the agreement.

Implications

In allowing Aldi’s appeal (in part), the High Court has confirmed that it is lawful for an employer to enter into an enterprise agreement with existing employees in circumstances where the enterprise agreement does not yet apply to the employees or cover the work the employees are doing at the time they vote for the agreement.

This decision will have significant implications for employers who want to avoid entering into greenfields agreements with relevant unions. As a result, it is expected that unions will demand an amendment to the Fair Work Act 2009 to address what they will consider an unintended consequence of the legislation.

[1] Aldi Foods Pty Ltd v SDA and Anor [2017] HCA 53

[2] A greenfields agreement is an enterprise agreement for a genuine new enterprise (or proposed new enterprise)