Enterprise Bargaining Agreements
From ADA HR Advisory Service
Understanding the agreement or award that underpins employment conditions is an important aspect of the employment relationship that should be known and understood in some detail. While somewhat similar in nature, enterprise bargaining agreements (enterprise agreements) differ from awards in their construction and application. This article seeks to explore what an enterprise agreement is, the benefits of having an enterprise agreement, and how recent changes to the Fair Work Amendment Bill influence such agreements.
Understanding enterprise agreements
Enterprise agreements resemble some similarities to modern awards, however, they will apply only to a specific business or businesses. Enterprise agreements often contain terms and conditions that differ from the primary award and should be read carefully to be understood. Enterprise agreements generally replace any applicable modern awards or may incorporate relevant terms. The Fair Work Act 2009 provides provisions under which enterprise agreements can be formed and stipulates that employers, employees, and their bargaining representatives should be involved in the process of bargaining for enterprise agreements. Further, essential terms that must be included in enterprise agreements include:
- a nominal expiry date for the agreement
- a flexibility term that allows for the making of individual flexibility arrangements (IFAs) for the purpose of meeting the genuine needs of the employer and employees. These are arrangements between an employer and an individual employee that vary the operation of the enterprise agreement in relation to the employee
- a dispute settlement procedure, which must authorise either the Fair Work Commission or someone else that is independent of those covered by the agreement to settle disputes about any matters under the agreement in relation to terms of a modern award or the National Employment Standards ('NES')
- a consultation term, which requires the employer to consult their employees about any major workplace changes that are likely to have a significant effect on them. This clause must also allows the employees to have representation in that consultation
Generally, enterprise agreements will include the abovementioned essential terms in addition to provisions regarding various matters, such as rates of pay and employment conditions. Enterprise agreements must not include anything unlawful such as discriminatory provisions.
Benefits of an enterprise agreement
Enterprise agreements may be viewed as a favourable mechanism from the perspective of both employers and employees. From an employer’s perspective, enterprise agreements may be viewed positively due to their ability to tailor employment terms and conditions that suit the business’s needs. This may be with respect to rostering, loaded rates of pay, and hours of work as included in the agreement. Other advantages may include the reduced likelihood of industrial action, particularly where trade unions have been involved in the bargaining process, and wage growth certainty where annual increases are forecasted and specified in the enterprise agreement.
From an employee perspective, advantages of enterprise agreements may include assurance that employment terms and conditions have been supported and improved through the bargaining process.
Recent changes impacting enterprise agreements
As noted, the Fair Work Act dictates the formation and process that underpins enterprise bargaining. In line with the Secure Jobs, Better Pay Bill which has recently passed parliament, the Bill introduces various amendments to the Fair Work Act including those specifically related to enterprise agreements. A general summary of changes includes the sunsetting of zombie (lapsed) enterprise agreements, changes to the enterprise agreement pre-approval
process, the Fair Work Commission’s ability to issue an intractable bargaining declaration, supported bargaining, and changes to the better-off overall test.
To understand and ensure compliance with the intricacies of amendments to the Fair Work Act, particularly in relation to changes that impact enterprise agreements, employers (and employees) should contact the telephone advisory line.
For more information on enterprise agreements or legislative changes to the Fair Work Act impacting enterprise bargaining, please call the ADA HR Advisory Service on 1300 232 462.