When an Approved Enterprise Agreement Doesn’t Hold Up
A recent Fair Work Commission Full Bench (FWCFB) decision serves as a stark warning to employers: even an approved enterprise agreement can be overturned if the bargaining process is not fair and representative.
In Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union v Sublime Infrastructure Pty Ltd & Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia [2024] FWCFB 432, the Sublime Infrastructure Pty Ltd and CEPU – Plumbing Division NSW Branch Mechanical (Sheetmetal) Enterprise Agreement 2023-2027 was quashed on appeal.
The reason? Only two employees participated in bargaining and voting, despite the agreement applying to a much larger workforce. Shortly after its approval, 29 additional employees—who had no opportunity to bargain or vote—were automatically covered by the agreement.
Why Was the Agreement Overturned?
The Sublime Agreement was originally approved by the Fair Work Commission (FWC) based on a declaration by the employer. However, it later came to light that only two employees were involved in the entire bargaining and voting process, despite the agreement eventually covering a significantly larger workforce.
The Australian Manufacturing Workers’ Union (AMWU) appealed the approval, arguing that the agreement failed to meet the ‘genuine agreement’ requirements under Section 188 of the Fair Work Act 2009 (Cth). This section mandates that employees who approve an enterprise agreement must:
- Have a sufficient interest in its terms
- Are sufficiently representative of the workforce it will cover
The FWCFB ruled in favor of the appeal, finding that the two employees who voted were not truly representative of the workforce. The agreement was not a genuine reflection of enterprise bargaining and should not have been approved in the first place.
Key Takeaways for Employers: Ensuring Fair and Representative Bargaining
This decision reinforces that enterprise bargaining is not just a formality. It must be conducted in good faith, involve all affected employees, and ensure transparency throughout the process. Employers who attempt to rush negotiations or limit bargaining to a small group to fast-track approval risk having their agreements challenged and overturned.
To comply with the Fair Work Act, employers should follow these key principles:
1. Notify All Affected Employees at the Start of Bargaining
At the beginning of negotiations, employers must issue a Notice of Employee Representational Rights (NERR) to all employees who will be covered by the agreement. This ensures that every affected worker is aware of the process and can choose to be represented.
2. Involve a Representative Workforce in Bargaining
Enterprise agreements must not be negotiated by a small, unrepresentative group of employees. Employers should include a cross-section of employees across different roles, employment types, and levels of seniority, and ensure that all workers who will ultimately be covered by the agreement have a chance to participate in bargaining discussions.
Bargaining with only a handful of employees who do not represent the majority of the workforce raises serious compliance risks.
3. Be Transparent About Agreement Terms
Employees covered by an enterprise agreement must be fully informed of the terms before voting and have a meaningful opportunity to ask questions and seek clarification. Employers must avoid situations where workers unknowingly enter into agreements that affect their pay and conditions without a proper understanding of the terms.
4. Avoid Procedural Shortcuts
Trying to limit bargaining participation or push through an agreement with minimal employee involvement may backfire. The FWCFB has made it clear: agreements reached through an unfair or unrepresentative process will likely be challenged and revoked.
The Legal Risks of Ignoring Fair Bargaining
The FWCFB’s decision to quash the Sublime Agreement is a clear reminder that non-compliance with bargaining obligations can have serious legal and financial consequences. Employers should consider the risks of an overturned agreement, including:
- Delays in implementing workplace conditions – If an agreement is revoked, employers must start the bargaining process over, which can take months.
- Disruptions to workforce relations – Employees may lose trust in the employer’s bargaining approach, leading to increased union involvement or industrial action.
- Legal and financial costs – Appealing or defending an enterprise agreement in the Fair Work Commission or courts can be costly and time-consuming.
The best way to avoid these risks is to ensure that enterprise bargaining processes fully comply with Fair Work requirements from the outset.
Final Thoughts
Enterprise agreements must be built on fairness, transparency, and good faith negotiations. The FWCFB’s ruling in the Sublime case confirms that agreements negotiated by an unrepresentative group of employees will not withstand legal scrutiny.
Employers should take proactive steps to ensure that their bargaining processes align with the Fair Work Act 2009 (Cth), avoiding costly appeals and legal disputes.
Need help managing Enterprise Agreements? At IRiQ Law, we provide:
✔ Legal guidance on enterprise bargaining and Fair Work compliance
✔ Support in drafting and negotiating enterprise agreements
✔ Representation in Fair Work Commission appeals and disputes
Contact us today.
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