Enterprise Agreements – by Anthony Miller Principal Lawyer
Modern Awards set out the minimum terms and conditions of employment on top of the National Employment Standards. They provide a safety net of minimum pay rates and employment conditions, however there is the ability to ‘contract out’ of the these awards and that ability lies in Enterprise Agreements. Section 172 to 246 of the Fair Work Act 2009 (Cth) comprehensively deal with the mechanisms and rules around entering into an Enterprise Agreement, some of the main points are –
- The Agreement must leave the employee better off overall when compared to the relevant award;
- Once bargaining between the employer and the employee’s representative (often a union) is complete the agreement must be submitted to the employees to vote on;
- It will only be successful if greater than 50% of the employees are in favour;
- If the vote is successful then an Application must be made to the Fair Work Commission for approval;
- They must have an expiry date of 4 years or less.
Give that the Modern Awards provide a fair frame-work for the employment relationship you may ask why would parties go to the trouble of negotiating an Enterprise Agreement? The answer is that it provides flexibility beyond the modern awards. For instance it may benefit the employer as it streamlines the payroll process by not having to calculate all sorts of different allowances and entitlements which may be owing to different types of employees under the award, it also can allow for increase hours of work or work conditions which may not be allowed under the award. For employees the benefits can often be a higher rate of pay in exchange for these altered conditions.