What is an Enterprise Agreement?

What is Enterprise Bargaining?

Enterprise bargaining is a legislated process of negotiation that occurs between the employer, employees and their bargaining representatives (usually a Trade Union) with the specific goal of creating an enterprise agreement. 

The duration of Enterprise Agreements varies from between one to four years. Enterprise Agreements are usually renegotiated prior to their expiration date. For example, on the 5th September 2016, our Secretary Diana Asmar renegotiated the Victorian Public (Health Sector Health Professionals, Health and Allied Services, Managers and Administrative Officers) Enterprise Agreement 2011-2016 with the Victorian Hospital Industry Association (representing Victorian Public Hospitals). It was agreed that the Enterprise Agreement would be a four year stand-alone agreement, which expires on September 30, 2020. Once established, Enterprise Agreements are legally binding on employers and employees. Most Enterprise Agreements can be found on the Fairwork Commissions website.

History of Enterprise Agreements

Enterprise Bargaining Agreements were first introduced in Australia under the Prices and incomes Accord in 1991 (Mark VII). They later became the centrepiece of the Australian industrial relations system when the Accord was next revised in 1993 (Mark VIII). This ended nearly a century of centralised wage-fixing based industrial relations. On 1 July 2009, the various types of collective and individual workplace agreements that existed under the previous workplace relations system were replaced by a single type of agreement called an 'enterprise agreement'.

What is an Enterprise Agreement?

Put simply, it is an agreement between one or more employers and their employees. Enterprise agreements are negotiated by the parties through collective bargaining in good faith, primarily at the enterprise level. Under the Fair Work Act (2009), an enterprise can mean any kind of business, activity, project or undertaking.

An enterprise agreement can be seen as a workplace rule book that sets out the conditions of employment, including pay and leave entitlements, disciplinary processes and the roles and responsibilities on employees and their employer.

How is an Enterprise Agreement made?

The Fair Work Act (2009) provides a clear and flexible structure to guide employers and employee representatives (usually Trade Unions) about how the parties must conduct the negotiation process. For example, the Fair Work Act (2009) includes rules about bargaining (in good faith), the content of enterprise agreements, and how an agreement is made and approved.

In order to begin the process, an employer must inform their employees of their right to be represented by a bargaining representative (for example, a Trade Union). This must happen as soon as possible, and not later than 14 days after the notification time for the agreement. The notification should be given to all workers that will be covered by the enterprise agreement.

Employers that are creating a Greenfield agreement (please refer to the Greenfields agreement subtitle) must give written notice to each employee organisation that is a bargaining representative for the proposed agreement. The notification must include the start date of the six month negotiation period for the Greenfields agreement.

Who can be a Bargaining Representative?

A bargaining representative can be a person or organisation that each party involved in the enterprise agreement may appoint to represent them during the bargaining process. The Fair Work Act 2009 identifies the following as bargaining representatives:

  • An employer that will be covered by the agreement;
  • A trade union who has a member that would be covered by the agreement (unless the member has specified in writing that he or she does not wish to be represented by the trade union, or has appointed someone else);
  • A trade union who is entitled to represent one or more employees who will be covered by a Greenfields agreement;
  • A trade union that has applied to the Fair Work Commission for a low paid authorisation that relates to the agreement; and
  • A person specified in writing as their bargaining representative by either an employer or employee who would be covered by the agreement.
  • If an employee is a member of a trade union, the default bargaining representative is their trade union unless the employee appoints another person.

What types of Enterprise Agreements are there?

Under the Fair Work Act 2009, the following enterprise agreements can be negotiated:

Single-enterprise agreement

A single-enterprise agreement is usually negotiated by an employer and workers that are employed at the time the agreement is being formulated, including workers that will be covered by the agreement. The Fair Work Act (2009) defines single interest employers as “employers that are in a joint venture or common enterprise or are related corporations”. 

Single interest employers can also be employers authorised as single interest employers by the Fair Work Commission-these employers are usually classified as franchisees. Finally, the Minister for Employment has the authority to declare other employers as “single interest employers”.

Multi-enterprise agreement

A Multi-Enterprise Agreement (MEA) is made between two or more employers (that are not all single interest employers) and employees employed at the time the agreement is made and who will be covered by the agreement. An example of a MEA is the Victorian Public (Health Sector Health Professionals, Health and Allied Services, Managers and Administrative Officers) Enterprise Agreement 2011-2016.

Greenfields agreement

A Greenfields agreement is an enterprise agreement that is made between a union and a new employer that does not yet have employees. This can either be a single enterprise agreement or a multi-enterprise agreement. The parties to a Greenfields agreement are the employer (or employers in a Multi Enterprise Greenfields agreement) and one or more relevant employee associations (usually a trade union).

What’s the Difference between a Modern Award and an Enterprise Agreement?

Although Modern Awards cover minimum pay and conditions for a particular industry, enterprise agreements can cover specific arrangements for a particular organisation.

In general, conditions and entitlements that can be found within a particular Award are also the minimum standard in an Enterprise Agreement. Awards and Enterprise agreements cannot offer less than is specified within the base standards stipulated by the National Employment Standards.

A registered agreement sets out the terms and conditions of employment between employees and their employers!