What is a Greenfields Agreement?

Articles > Contracts

What is a Greenfields Agreement?

July 24, 2021         Liv Chum

A greenfields agreement refers to an enterprise agreement that is related to genuine new enterprises before employees are employed. This enterprise agreement is unique as it is negotiated between the two parties:

  1.  The employer and 
  2. The employee association (eg.trade unions)  

This agreement can be both a single or multi- enterprise agreement. 

Rules related to a Greenfields Agreement 

The rules which govern if a business is eligible for a greenfields agreement are found under the Fair Work Act 2009 (Cth). Under the act, a business is only eligible if:

  1. The business is a genuine new enterprise – This has to be a new business, activity or undertaking. This business cannot be a business that already exists. 
  2. Employers have  not employed anyone – No one is to be officially employed to assist in the operation of the enterprise before the agreement is made. 
  3. Work has not gone beyond ‘preparatory work’- If anything beyond preparatory work has commenced before the greenfields agreement is made, this would not satisfy the ‘genuine new enterprise’ component of a greenfields agreement 
  4. The association it is bargaining with is appropriate – The association must be relevant to the industry of the business

How to attain a Greenfields Agreement?

To make a Greensfield agreement:

  1. As an employer, you must bargain with a relevant union 
    • NOTE: The negotiation that takes place must be done in good faith 
  2. The Fair Work Commission must approve the Greenfields agreement you have negotiated 

Is it worthwhile to have a Greenfields Agreement?

Whilst a Greenfields agreement is optional, it can serve as a major advantage to employers and employees as it provides a newfound flexibility with the conditions of employees. As a result, if you want flexibility with your future employees’ circumstances, a greenfield agreement is the way to go. Not only will a Greenfields agreement cover conditions such as pay, but it will also assist your business and future employees in any distinctive circumstances that may not be accounted for by your typical employment awards. However, if flexibility in your employees’ pays and conditions are not necessary, it may not be worthwhile for you. 

In Summary 

A Greenfields agreement is a unique enterprise agreement that can serve as a major benefit for your employees if you are starting a genuine new enterprise. Whilst it is optional, it is an appealing enterprise agreement due to the flexibility which it provides when it comes to employee conditions. If you have any further questions related to a Greenfields agreement or other forms of enterprise agreement, contact one of our lawyers now at 1300 337 997. 

About Liv Chum

Liv is one of OpenLegal's paralegals. Liv is a passionate student of the law, with a real interest in the way that business and legal requirements intersect.