Restructuring bargaining arrangements: what is the role, if any, for scope orders?

The scope of an enterprise agreement is of the utmost importance to its making and practical operation: it determines which employees are to be covered by the agreement, and who is entitled to vote in a ballot for its approval. Just like any other term of the agreement, its scope is a matter for negotiation between the parties, subject only to the requirement that the group of employees to be covered by the agreement be ‘fairly chosen’.[1] 

There is no presumption that existing scope arrangements be retained and no limitation on the capacity of parties to pursue coverage arrangements that suit their needs. The Fair Work Act 2009 (FW Act) does, however, recognise that negotiating parties may disagree about the scope of a proposed agreement and accordingly makes provision for the resolution of disputes about this issue through the making of ‘scope orders’ (SOs or Order) by the Fair Work Commission (FWC or Commission), for a ‘scope order’.

The Commission’s role in determining applications for SOs, and the effect of such orders on the bargaining process, are complex and the subject of considerable debate. That said, formal applications for SOs are quite rare, and the jurisprudence in relation to them is not fully developed.  

Hence this Insight. The majority decision of a Full Bench in CEPU v Utilities Management Pty Ltd (Utilities Management)[2] examines a number of key issues in relation to the making of SOs and points to some potentially interesting impacts upon the capacity of businesses to restructure their bargaining arrangements. The fact that there is a powerful dissent in this case means that the key issues and competing considerations are well framed.

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