ALDI Foods Pty Ltd v Shop, Distributive & Allied Employees Association [2017] HCA 53: Coverage of Enterprise Agreements

Wednesday 6 December 2017 @ 1.29 p.m. | Legal Research

On 6 December 2017 the High Court of Australia handed down judgement in the case of ALDI Foods Pty Ltd v Shop, Distributive & Allied Employees Association [2017] HCA 53. The majority of the High Court allowed in part, this appeal from the Federal Court Judgment of Shop, Distributive & Allied Employees Association v ALDI Foods Pty Ltd [2016] FCAFC 161.


ALDI Foods Pty Ltd (‘the Appellant’) was commencing operations at the Regency Park Distribution Centre ('the centre') in South Australia and sought expressions of interest from their current workforce of employees to transfer to work at the new centre. They received 17 expressions of interest, who all then signed contracts accepting the offer. Along with the contract these employees were all provided with a Notice of Representative Rights (NERR), and a notification that the appellants were going to start bargaining for a site-specific enterprise agreement titled as the ALDI Regency Park Agreement 2015 (‘the Agreement’) to cover the centre. During the voting period, 15 of the 17 transferees voted to approve the Agreement. The appellant then filed an application with the Fair Work Commission in accordance with Section 185 of the Fair Work Act 2009 (Cth) (‘the Act’) to approve the agreement. On 22 September 2015, the Agreement was approved by the Fair Work Commission. The Shop, Distributive & Allied Employers Association (‘the Respondent’) appealed the approval of the agreement which was then heard by the full Bench of the Fair Work Commission (‘FWCFB’) on 20 November 2015.

Federal Court Appeal Decision

The FWCFB dismissed the appeal. After this, the respondent appealed to the Full Court of the Federal Court (‘FCAFC’). The grounds of appeal were:

  • That the agreement was not genuinely entered into by the employees covered by it, because at the time the agreement was made, there were no employees covered, and/or;
  • That the agreement did not meet the ‘better off overall’ test (‘BOOT’) in the Act;
  • That the bargaining process was defective because the NERR was not in accordance with the legislative requirement.  

A majority of the FCAFC overturned the approval of the agreement by the FWCFB, finding that for an employee to be eligible for voting to approve an enterprise agreement, they must be employed by the employer in question at the time the agreement is made. The judgement found that because of this, employees who have signed a contract with the employer to commence work shortly will not be covered, even though they already are engaged in employment with that employer.

Regarding the requirements of the BOOT, the FWCFB was held to have incorrectly construed Clause 13 of the Agreement to fulfil the BOOT, which stated that if any employee felt that their entitlements were less than those provided by the referencing award, then the employee could request a comparison and if the entitlements were not equal to what was payable under the award then ALDI would make up the difference in payment. The FCAFC instead found that an agreement would not fulfill the requirements of the BOOT if it was not more than equal to the award entitlement.

High Court Decision

The High Court found that the FCAFC erred in its determination of the coverage of employees issue, but decided the issue of the BOOT correctly. The Court found that the SDA’s argument did not stand with the plain and ordinary meaning of the relevant provisions of the Act regarding coverage (Section 172(2) and (4)). The Court held that the question of coverage should be whether the agreement covers all employees who may in future have the terms and conditions of their jobs regulated by it, and this was held to be a natural and ordinary use of language to speak of the employees ‘who will be covered’.  The Court stated:

“The error in the Full Court stemmed principally from a failure to come to grips with the terms of s 172. In addition, the coverage issue is a matter of public importance which should not be allowed to stand wrongly decided merely because of an ill-advised and plainly erroneous concession upon a matter of law by a party to the proceeding. Accordingly, the SDA's application for the revocation of the grant of special leave should be refused.” [90]

Regarding the issue of the BOOT, the High Court held that the majority of the FCAFC was correct to identify a jurisdictional error in the conclusion of the FWC. It found that the BOOT expressly required that employees be better off under the agreement, compared to the award, and the comparison clause is only to ensure that an employee can make a request for payments to be equalised as between the Agreement and an award. The High Court stated:

“Whether the Full Bench was satisfied that an employee was better off overall under the Agreement than under the award required an evaluative assessment after consideration of the provisions of the award and the Agreement that may have been more beneficial to employees and those that may have been less beneficial.” [99]


The Court ordered the following:

  • A write of certiorari be issued to quash the decision of the FWCFB;
  • A writ of mandamus be issued requiring the FWCFB to determine according to law whether the Regency Park Agreement passes the BOOT as set out in the Act.

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ALDI Foods Pty Limited v Shop, Distributive & Allied Employees Association [2017] HCA 53.

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