Industry groups, Government to intervene in Wooloworths Fair Work fight

The Federal Government, the Australian Industry Group and the Australian Chamber of Commerce and Industry will intervene and support Woolworths in its appeal against a Fair Work Australia decision to reject a workplace agreement between the supermarket giant and the shop assistants union.

Woolworths appeal against the decision will be heard tomorrow by the Full Bench of Fair Work Australia.

The case is seen as important test of whether Fair Work will force employers to include provisions for compulsory arbitration in enterprise agreements.

The dispute Woolworths and Fair Work Australia concerns an agreement between the Shop Distributive and Allied Employees Association and Woolworths covering workers at a distribution centre in the Melbourne suburb of Mulgrave.

Under the process for dispute resolution, the agreement states that either the union or the employer can refer a dispute to Fair Work Australia for conciliation. However, a dispute could not be referred to Fair Work Australia for arbitration unless both sides agreed.

But Fair Work Australia Commissioner Greg Smith described the agreement as working as though either side held a “power of veto to the matter being settled” and rejected the agreement on the basis that it did not comply with the new Fair Work Act.

Central to Smith’s decision is a section of the Fair Work Act which states that Fair Work Australia can only approve an agreement that “provides a procedure that requires or allows FWA, or another person who is independent of the employers, employees or employee organisations covered by the agreement, to settle disputes”.

Woolworths essentially argued that an agreement does not need a clause that “requires” FWA to arbitrate disputes, but rather that an agreement needs a clause that “allows” FWA to become involved.

Smith disagreed. “[The Act] must be read as creating an obligation to include a procedure that either requires or allows Fair Work Australia or another independent person to settle disputes. “

However, Smith’s decision has been heavily criticised by IR lawyers and employer groups.

“Ai Group will argue that employers and employees need to maintain the right to choose whether or not they want to grant compulsory arbitration powers in their enterprise agreements,” chief executive Heather Ridout said yesterday.

“Ai Group is strongly opposed to this interpretation of the Act and believes that it is entirely legitimate for agreements to restrict arbitration to circumstances where all parties have to agree to it.

“Unless Commissioner Smith’s decision is overturned on appeal, the validity of hundreds of already approved enterprise agreements which contain dispute settling procedures like those in the rejected Woolworths agreement, is in doubt.”

A spokesman for Workplace Minister Julia Gillard said she will also intervene in the case in support of Woolworths. 

IR lawyer Peter Vitale says he will be “surprised” if the decision was upheld.

Industrial relations, Managing People, Woolworths, Fair Work Australia