Enterprise Agreements

Enterprise Agreements

The Fair Work Act 2009 (Cth) provides for employers and employees to enter into enterprise agreements that provide for the terms and conditions of the national system employees building on both the National Employment Standards and modern awards.

If an enterprise agreement applies to an employee, a modern award no longer applies [s 57].

Enterprise agreements can cover things that are not covered by, or that complement, the National Employment Standards [s 55]. The objectives of the laws are [s 171]:

to provide a simple, flexible and fair framework that allows collective bargaining in good faith for agreements that deliver productivity benefits, and
enable the Fair Work Commission to facilitate good faith bargaining and the making of enterprise agreements through:
- making bargaining orders
- dealing with disputes where the bargaining representative requests assistance, and
- ensuring that applications to the Fair Work Commission for approval of enterprise agreements are dealt with without delay.

The Fair Work Act 2009 (Cth) provides for a range of enterprise agreements, including:

Single-enterprise agreements
Multi-enterprise agreements, including:
- Supported bargaining agreements,
- Single interest employer agreements,
- Cooperative workplace agreements, and
- Greenfields agreements (these agreements relate to a genuinely new enterprise where there are no existing employees)

If an enterprise agreement is made, a bargaining representative must apply to the Fair Work Commission to for approval of the agreement [s 185(1)]. The Commission must be satisfied, among other things, that [s 186 (2)]:

the agreement has been genuinely agreed to by the employees covered by the agreement,
each employer in a multi-enterprise agreement has genuinely agreed and no person coerced or threatened to coerce any of the employers,
the terms do not contravene section 55 (which deals with the interaction between the NES and enterprise agreements), and
the agreement passes the better off overall test (unless it is otherwise in the public interest to approve the agreement under section 189).

Each enterprise agreement must have a nominal expiry date of not more than 4 years and a term relating to the independent resolution of disputes [s 186(5) and (6)].

Genuine agreement

The Fair Work Commission must take into account the statement of principles made under section 188B in determining whether it is satisfied that an enterprise agreement has been genuinely agreed to by the employees [s 188]. The Fair Work (Statement of Principles on Genuine Agreement) Instrument 2023 deals with:

informing employees of bargaining for a proposed agreement,
informing employees of their right to be represented by a bargaining representative,
providing employees with a reasonable opportunity to consider a proposed agreement,
explaining to employees the terms and effect of a proposed agreement,
providing employees with a reasonable opportunity to have a vote on a proposed agreement in a free and informed manner, including informing employees of the time, place and method of voting,
and any other prescribed or relevant matters.

Better off overall test

An enterprise agreement (that is not a greenfields agreement) passes the better off overall test if the Fair Work Commission is satisfied, at the test time, that each reasonably foreseeable employee, would be better off overall if the agreement applied to the employee than if the relevant modern award applied [s 193(1)]. Individual flexibility agreements are to be disregarded [s 193(2)].

The Fair Work Commission must undertake a global assessment of whether each employee concerned would be better off having regard to [s 193A(2)]:

terms that would be more beneficial, and
terms that would be less beneficial

The Fair Work Commission must give consideration to any views relating to whether the agreement passes the test expressed by the employer and employees or bargaining representatives but must give primary consideration to any common views among the employer and employee bargaining representatives [s 193A(3)].

If there is concern that agreement does not meet the better off overall test, the Fair Work Commission may, after seeking the views of the parties, amend the agreement to address the concern [s 191A].

The Fair Work Commission may only have regard to reasonably foreseeable patterns, kinds of work or types of employment [s 193A(6)]. If certain patterns, kinds of work or types of employment arise that were not foreseen and had regard to, then an employer or employee may apply for a reconsideration of the test [s 227A].

Bargaining disputes

Where certain dispute resolution process requirements have been met and there is no reasonable prospect of an agreement being reached, an application to the Fair Work Commission may be made for an intractable bargaining declaration [s 235]. Once an intractable bargaining declaration has been made, the Commission must then make an intractable bargaining determination as quickly as possible [s 269].

Enterprise Agreements : Last Revised: Tue Jun 6th 2023
The content of the Law Handbook is made available as a public service for information purposes only and should not be relied upon as a substitute for legal advice. See Disclaimer for details. For free and confidential legal advice in South Australia call 1300 366 424.

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