What Is An Enterprise Agreement?

Articles > Employment

What Is An Enterprise Bargaining Agreement?

June 23, 2021         openlegal

An enterprise bargaining agreement is a contract which alters employment terms and conditions between the employer and employee/s. 

Unlike a modern award, an enterprise bargaining agreement is a registered agreement where employee wages and working conditions are negotiated between the employer, the employee and bargaining representatives. 

The negotiation stage is referred to as ‘collective bargaining in good faith’. In this stage, representatives should:

  • Disclose relevant information in a timely manner 
  • Attend and participate in meetings 
  • Consider and respond to requests made by others
  • Provide sufficient reasoning for proposals 
  • Respond in a timely manner
  • Not purposely prevent the bargaining process from progressing 
  • Act in a reasonable manner 

Parties involved in the process for a proposed enterprise agreement include the employer, employees and their potential bargaining representatives. A bargaining representative is a person or organisation appointed by each party to represent them throughout the bargaining process. 

Subject to the Fair Work Act 2009 the following can be bargaining representatives:

  • A trade union
  • Someone who will be covered by the Enterprise Bargaining Agreement 
  • The employee 

Once an agreement has been negotiated, all employees are provided with a draft Enterprise Bargaining Agreement. It will then be submitted to a vote by the employees who are subject to the contract. The vote must be conducted at least 21 days from the date employees were informed of their right to a bargaining representative. 

What Are The Types Of Enterprise Bargaining Agreements?

Under the Fair Work Act, there are several enterprise agreements that may be used, including single-enterprise agreements, multi-enterprise agreements or a greenfields agreement. A single-enterprise agreement is made between a single employer and employees, who are employed at the time the agreement is made. A multi-enterprise agreement is made between two or more employers and employees who are employed at the time the agreement is made. A greenfields agreement is an enterprise agreement that is made in relation to a new enterprise of the employer or employers before any employees are employed. 

What Is An Enterprise Bargaining Agreement?

There are various terms which must which must be included in an enterprise agreement, including:

  • A nominal expiry date for the agreement up to four years from the date which the Fair Work Commission approves the agreement 
  • A dispute resolution process. The process must enable either the Fair Work Commission or a party that is independent of those covered by the agreement to resolve disputes related to any matters under the agreement
  • A term which affords parties flexibility for the purpose of meeting the genuine needs of the employer and employees. Individual Flexibility Arrangements (‘IFAs’) are between the employer and an individual employee, allowing a varied operation of the enterprise agreement 
  • A consultation term. Where there are material changes in the workplace likely to have a significant effect on the employee, the employer must first consult their employees. When no consultation term is included, the model consultation term will apply.

What Cannot Be Included In An Enterprise Agreement?

Unlawful terms cannot be incorporated in an enterprise agreement and include any terms that are discriminatory, objectionable or inconsistent with the industrial action provisions. Enterprise agreements will be reviewed by the Fair Work Commission for any unlawful content. Those which contain unlawful content will not gain the Fair Work Commission’s approval. 

For example, it would be unlawful for an enterprise bargaining agreement to leave an employee’s pay worse than what is stipulated by their modern award. Such a term could not be included in an enterprise bargaining agreement.

Why Do Employers Have Enterprise Bargaining Agreements?

There are a number of benefits conferred by an enterprise bargaining agreement such as:

  • Simplicity: Using a shareholder agreement allows for multiple, confusing awards to be replaced with a single, well written agreement
  • Flexibility: Shareholder agreements can also be a means of increasing flexibility as they allow for flexible rosters and working hours, job sharing, career breaks and altered working arrangements for those who have family/carer responsibilities
  • Efficiency: Having a set rate of pay enables management to better forecast costs of labour 
  • Broader job classification 
  • Improved processes in relation to employee grievances 

Key Takeaways

An enterprise bargaining agreement can be useful in encouraging productivity, efficiency, improved processes and greater flexibility for employees and employers. There are a number of factors that must be considered in the creation of an enterprise bargaining agreement, such as the type of agreement that should be used, who can represent each party and what cannot be included in the document. 

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