What You Need to Know About Enterprise Agreements

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  • What is an enterprise agreement?

    An enterprise agreement is an agreement made between one or more employers and their employees about certain matters. An enterprise agreement will generally set terms and conditions of employment (such as wages) of employees for up to 4 years.

    There are two main types of enterprise agreements that can be made under the Fair Work Act (FW Act):

    Single-enterprise agreement

    Single-enterprise agreements can be made with an employer, or 2 or more employers that are ‘single interest employers’ (for example, the employers are engaged in a joint venture or are related bodies corporate), and their employees.

    For example, an independent supermarket may negotiate with employees and form a single-enterprise agreement. If the supermarket is in a joint venture with a bottle-shop, then both employers may form a single-enterprise agreement with their collective employees.

    (See section 172(2) of the FW Act).

    Multi-enterprise agreement

    Multi-enterprise agreements can be made with two or more employers who are not ‘single interest employers’.

    For example, a number of mining companies may form a multi-enterprise agreement with all of their collective employees working on the same mining project/site.

    (See section 172(3) of the FW Act).

    Greenfields agreement

    Greenfields agreements refer to agreements (single-enterprise or multi-enterprise) which, at the time when they are made, the employer(s) have not yet employed any of the people who will be covered by the agreement.

    (See section 172(4) of the FW Act).

  • What can and cannot be included in enterprise agreements?

    Section 172(1) of the FW Act states that enterprise agreements can contain ‘permitted matters’ including:

    1. matters relating to the employer-employee relationship, such as wages and allowances, leave and leave arrangements, and staffing levels;
    2. matters relating to the employer-union relationship, such as union involvement in dispute resolution procedures;
    3. terms about authorised deductions of wages; and
    4. how the enterprise agreement will operate.

    However, enterprise agreements cannot contain terms including:

    1. terms that exclude the National Employment Standards;
    2. discriminatory terms (which are terms that discriminate against an employee due to age, gender, race or other characteristics, and the discrimination is not permissible under section 195(2) of the FW Act);
    3. objectionable terms (which include terms that require or permit a contravention of the FW Act’s general protections provisions);
    4. unlawful terms (which include discriminatory and objectionable terms mentioned above).
  • What are the benefits of enterprise agreements?

    Enterprise agreements allow employers and employees to collectively agree to ‘customise’ employment entitlements, within the confines of what the Fair Work Commission will approve. Where an employer’s business operates differently in key aspects to an applicable modern award, an enterprise agreement can provide a major benefit to the employer and its employees, being the ability to customise employment conditions as suitable.

    Other benefits of enterprise bargaining can include:

    1. clarity regarding employment entitlements, particularly where different employees are covered by different awards;
    2. greater flexibility regarding hours and rosters;
    3. improved service delivery for better client satisfaction;
    4. better procedures for dispute resolution; and
    5. improved harmony between employers and employees who have genuinely reached agreement.
  • How is an enterprise agreement made?

    Below is a diagram depicting in simple terms how an enterprise agreement is made.

  • When will an enterprise agreement be approved by the Fair Work Commission?

    To approve an enterprise agreement, the Commission must be satisfied that (among other things):

    1. the agreement has been genuinely agreed to by employees covered by the agreement (section 186(2));
    2. that employees covered by the agreement are better off overall with entitlements under that agreement than an applicable modern award (section 193(1));
    3. the agreement does not include any unlawful terms (section 186(4));
    4. the group of employees covered by the agreement were ‘fairly chosen’ (section 186(3));
    5. the agreement contains a nominal expiry date of no more than 4 years from date of approval (section 186(5)); and
    6. the agreement contains a dispute resolution procedure (section 186(6)).
  • Why contact us to assist?

    As above, the provisions of the FW Act which regulate enterprise agreements are very complex. As a first step, the team of employment law solicitors at Atkinson Vinden Lawyers can assist employers by discussing their business needs and providing advice whether an enterprise agreement is the right solution to accommodate those needs.

    If an enterprise agreement is suitable, then we can assist the employer with each step in the process. Those steps include initially creating the proposed agreement, to assisting with bargaining with employees, and representing the employer in the Commission to seek approval of the agreement.

    The Commission requires that each enterprise agreement meets the conditions under the FW Act before it is approved. Those conditions are applied strictly. Our firm’s employment law team can assist employers to follow the proper process and increase chances of obtaining the Commission’s approval.

    Most recently, we assisted an employer by providing advice on a proposed enterprise agreement and amendments to be made to the agreement prior to seeking the Commission’s approval. The employees were covered by the Building and Construction General On-site Award 2010. The agreement was successfully approved by the Commission and is now in operation.

Atkinson Vinden Lawyers has an experienced employment law team. Call us today and we can discuss how we can assist you.