Enterprise Bargaining

An enterprise agreement is a contract between one or more employers and their employees. Setting out the terms and conditions of employment, enterprise agreements covering the minimum conditions of employment which are contained in an award (or several awards) that applies to the employees of the business and can also cover employees which would otherwise not be subject to the terms of an award.

As well as explaining how the enterprise agreement is expected to work, these are some of the terms negotiated:

• Terms and conditions of employment governing each employer’s relationship with the group of employees including wage and conditions.
• Rules governing each employer’s connection with any employee organisations (such as a trade union).
• Pay deductions for any reason authorised by an employee covered by an enterprise agreement.
• Dispute resolution procedures that authorise either the Fair Work Commission or an independent person to settle disputes about any matters under the agreement.
• Expiry date for the agreement (no longer than four years from the date approved by the Fair Work Commission)
• A flexibility provision.
• A consultation provision which requires the employer to engage with employees about any essential workplace changes likely to significantly impact them and allow them to participate in such consultation.

Employers making the agreement must give their employees notice of their right to have the agreement negotiated by employees and their bargaining representatives such as a union. The enterprise agreement can subsequently be bargained, in which case all parties must participate in good faith. After bargaining, a copy of the agreement is given to employees, and they are asked to vote on it.

When a majority of the employees sign it, the agreement is considered made. If the agreement is a multi-enterprise agreement and a majority of the employees of each employer do not approve of it, it will only apply to those employers of whom a majority of employees did approve of it.

The next step is that the Fair Work Commission must then approve the enterprise agreements and it must pass a Better Off Overall Test, also known as a BOOT, before it can be approved. 

An enterprise agreement can only contain “permitted matters.” These include deductions from wages, minimum pay, rates of pay, matters relating to the relationship between the employers and employee organisations, and how the agreement will operate. If both a modern award and an enterprise agreement apply to an employee’s employment, the enterprise agreement will override the provisions of the award.

An enterprise agreement can supplement the National Employment Standards, however, it can’t provide less than what those standards provide.
Enterprise agreements have to include flexibility terms which allows a group of employees to negotiate the enterprise agreement with their employer and enter into an individual flexibility arrangement.

If an employee is covered by both an enterprise agreement and a modern award, the base rate of pay under the enterprise agreement must be at least equal to that under the modern award.

Citation Legal speak the language of industrial relations and employment law. We’ll guide your business through state or territory laws and their impact on your enterprise agreement. For example, in New South Wales an enterprise agreement can be approved by the Industrial Relations Commission after being agreed between the employers and employees to whom it will apply. Overall, the rules for what can be included in an enterprise agreement are much less prescriptive than under the national system.

An enterprise agreement or EBA agreement:

• Is specific terms and conditions agreed upon between an employer and employee (single-enterprise agreement) or between a group of employers and their employees (multi-enterprise agreement).
• Is negotiated between employers and employees and approved by the Fair Work Commission, provided they pass the BOOT.
• Can be briefer than awards and, subject to the BOOT, they can also vary the application of an award to a specific business.

A modern award:

• Comes with general terms applying to an entire industry, occupation or profession.
• Sets detailed minimum standards that apply throughout the industry covered.
• Begins with consultation and are then set by the Fair Work Commission.

1. Single-enterprise agreements are made between one individual employer and their employees.
2. Multi-enterprise agreements are created between a group of employees and multiple employers. These can be most relevant when multiple employers operate in the same workspace, business or building.
3. Greenfields agreements are made between employers and a union in a new workplace, a ‘greenfields agreement’ is made before the employer has employed anyone.