Australia: The trouble with Greenfields Agreements: the Fair Work Act Review

Workplace Relations and Employment Update (Australia)
Last Updated: 9 September 2012
Article by Allan Drake-Brockman and Daniel White

A Greenfields Agreement is either a single or multi-enterprise agreement made between one or more unions and an employer, where the agreement relates to a genuine new enterprise and the employer has not employed any of the persons who would be necessary for the normal conduct of the enterprise and who would be covered by the agreement. Enterprise means a business, activity, project or undertaking.

To approve a Greenfields Agreement, Fair Work Australia (FWA) must be satisfied that:

  • The relevant unions that will be covered by the agreement are (taken as a group) entitled to represent the industrial interests of a majority of the employees who will be covered by the agreement, in relation to work to be performed under the agreement; and
  • It is in the public interest to approve the agreement.

When one goes to section 174 of the Fair Work Act 2009 (Cth) (FW Act), you will see that the next section is section 176 and the next section after 176 is section 178. There are no sections 175 and 177.

If the Federal Government follows the recommendations of the recent Fair Work Act Review (Review) and reinstates sections 175 and 177 and the other Greenfields Agreements processes are inserted as recommended by the Review, the combined effect of those provisions will be potent, if not toxic (as some would say).

As set out in the Explanatory Memorandum to the Fair Work Bill 2008, the combined effect of the proposed sections 175 and 177 would have been to impose upon employers seeking a Greenfields Agreement the obligation to notify all unions who may have eligibility to cover employees in any of the vocations to be contained in the Greenfields Agreement, and each of those unions would have been automatically entitled to be bargaining representatives for the agreement.

As a result of representations by employer groups, sections 175 and 177 did not make their way to the FW Act. Employer groups submitted that it would be overly complicated to involve every conceivable union in the making of a Greenfields Agreement. In fact as everyone knows who is experienced in the industrial relations arena, quite often relevant unions will not agree to make a Greenfields Agreement with other unions or be involved in a Greenfields Agreement at all.

Not only would the Review reinsert sections 175 and 177, it has recommended that 'good faith bargaining' obligations should apply to Greenfields Agreements.

Further, the Review has purported to insert a 'safety valve' by recommending that if negotiations for a Greenfields Agreement have failed, the FWA may, on its own motion or in an application by a party, conduct a limited form of arbitration, including 'last offer arbitration', to determine the content of the Greenfields Agreement.

In a perfect world this may seem like a reasonable process, but in the real world of industrial relations, if enacted, the Review recommendations may in the end completely undermine the utility of Greenfields Agreements and could lead to a series of costly and unacceptable stalemates.

A few questions arise.

Under the scheme for Greenfields Agreements, every union will be at the bargaining table, and although it may come as a shock for some, not all unions see eye-to-eye concerning the making of agreements. This can, in turn, give rise to demarcation disputes between unions.

Where a union does not want to be part of a Greenfields Agreement with other unions, it may not be capable of making a Greenfields Agreement alone, because it may not be entitled to represent the industrial interests of a majority of the employees who will be covered by the agreement in relation to work to be performed under the agreement. Where does this leave the Greenfields Agreement process?

If 'good faith bargaining' and a limited form of conciliation is introduced, this will no doubt drag out the process of making a Greenfields Agreement in circumstances where employers may need to proceed to engage employees because of project demands. Could a Greenfields Agreement still be made at that point?

Finally, if enacted, the Review recommendations are at least problematic and at worst may undermine the utility of Greenfields Agreements, leading to a series of costly and unacceptable stalemates. This is an outcome that the Review itself sought to avoid.

© DLA Piper

This publication is intended as a general overview and discussion of the subjects dealt with. It is not intended to be, and should not used as, a substitute for taking legal advice in any specific situation. DLA Piper Australia will accept no responsibility for any actions taken or not taken on the basis of this publication.

DLA Piper Australia is part of DLA Piper, a global law firm, operating through various separate and distinct legal entities. For further information, please refer to

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