Introduction
The Full Court of the Federal Court (Court) has handed down its decision in Construction, Forestry, Mining and Energy Union v John Holland Pty Ltd [2015] FCAFC 16 (24 February 2015) which clarifies the approval process for new enterprise agreements which the Fair Work Commission (Commission) is to perform when considering the fairly chosen requirements under the Fair Work Act 2009 (Cth) (Act).

The Court confirmed the finding of Justice Siopis (Siopis J) that the Full Bench of the Commission (Full Bench) fell into jurisdictional error when it quashed Deputy President McCarthy's approval of John Holland Pty Ltd's (Company) Western Region Agreement Western Australia 2012-2016 (Agreement).

The Court agreed with Siopis J that it is not the task of the Commission to prospectively consider who may be covered by an enterprise agreement when considering the fairly chosen requirements of the Act, but who is employed at the time the agreement is made.

In reaching this decision, the Court has removed the uncertainty as to whether the potential agreement coverage for future employees needs to be considered by the Commission as part of the fairly chosen requirements under the Act. It makes it easier for employers to enter into an agreement with a small number of existing employees that may cover or apply to a much larger group of employees. These agreements have been called 'light brownfields enterprise agreements'.

The Facts
The Company was awarded the head construction contract to build the new children's hospital in Perth, Western Australia (WA). To undertake this project, the Company planned to perform the vast majority of work through subcontractors and to directly employ a small number of employees to carry out the contract.

It was expected that there would be 25 direct employees consisting of labourers, form workers, tow crane operators, riggers and doggers.

On 12 January 2012, the Company met with three employees at a site office to make the agreement (Agreement) pursuant to the Act. The agreement-making process was explained at the meeting and each of the three employees appointed themselves as bargaining representatives for the proposed Agreement.

On 13 February 2012, the three employees voted in favour of the proposed Agreement.

At the time the Agreement was made, the Company was also tendering as head contractor for other government projects in WA. It also employed a broad range of employees nationally in a variety of work classifications, from clerical to construction work.

Importantly, the three employees who voted in favour of the Agreement were the only employees covered by the Agreement and employed by the Company at the time it was made.

The job classifications contained in the Agreement included job classifications in addition to those which covered each of the three employees. Therefore, it was likely that employees not presently covered by the Agreement would be covered at some point in the future.

First Instance Decision
The Company applied for the Agreement to be approved by the Commission on 13 February 2012. On 22 March 2012, Deputy President McCarthy heard the approval application and an objection to approval, which was lodged by the Construction, Forestry, Mining and Energy Union (CFMEU).

Deputy President McCarthy approved the Agreement despite the objection. In considering the fairly chosen requirements, it was held that the employees selected to vote were, at the time the Agreement was made, operationally and geographically distinct. Therefore, at the time the Agreement was made, there were no additional employees within the Company who should have had an opportunity to vote on the Agreement.

This decision was appealed by the CFMEU to the Full Bench.

The Full Bench's Decision
On appeal, the Full Bench quashed the approval decision of Deputy President McCarthy. The key concern for the Full Bench was that the nature of clause 1.2 of the Agreement created "significant doubt [as to whether] it would be possible to make any definitive finding as to the group of employees covered by the agreement for the purposes of [the fairly chosen requirements of the Act]."

The Full Bench further stated that such an assessment could only occur by analysing "how many building and civil construction employees are now covered or may in the future be covered by site-specific agreements. As it is not possible to identify with any certainty the group of employees to be covered by the agreement, it is not possible to be satisfied that the group of [three] employees was fairly chosen as required by [the Act]."

Essentially, the Full Bench was concerned that it was not in a position to know how many employees may be covered by the Agreement in the future thereby undermining those potential future employees' collective bargaining rights under the Act.

Justice Siopis' Decision
Siopis J quashed the Full Bench decision and found that it fell into error when considering what future employees may be covered by the Agreement.

In reaching his decision, Siopis J stated that the Act calls on the Commission to be satisfied that the group of employees covered by the Agreement 'was' fairly chosen. It is of significance that the past tense 'was' is used. This directs the Commission to have regard to the conduct of those persons who made the Agreement and not those who may come within its scope during its nominal life.

Full Court's Decision
Justices Barker, Buchanan and Besanko confirmed Siopis J's decision that the task of the Commission is not to consider who may or will be covered by an agreement. Rather, the Commission must be satisfied that the group was fairly chosen by reference to the operational, organisational and geographical considerations as outlined in the Act.

The Court made it clear (and the parties to the appeal accepted) that there was nothing wrong with a small group of people voting up an enterprise agreement which may, during its nominal life, cover a wider range of employees.
However, the Court rejected the CFMEU's contention that the rights of potential employees may be undermined. The Court emphasised that the Commission must not only consider who was fairly chosen to vote but whether, during the life of the agreement, employees engaged under its terms will be better off overall when compared to the award. If the answer to this question is 'yes' then the alleged undermining of future employee rights is mitigated, and the safety net of the Act and award system is preserved.

Significance for Employers
The decision makes it clear that the question of whether the group of employees chosen to vote was fairly chosen is a consideration which is fixed at the point in time the agreement is made and by reference to the geographical, organisational and operational distinctions outlined in the Act.

The previous case law on point required employers to predict who may or will come within the scope of the agreement. The Court's decision reintroduces certainty in the agreement making process and clarifies how an employer should go about selecting which employees to ballot. This means that 'light brownfields agreements' are a legitimate industrial relations strategy for employers to consider.