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A Single Enterprise Agreement is a negotiated agreement between an employer and two or more employees. Such an agreement is beneficial because it can be less complex than the applicable Award, reducing the need for more administrative staff. 

However, the Fair Work Commission must approve the agreement before it comes into effect as it alters the terms and conditions from the applicable Award. This article will take you through seven steps that an employer must take to create a Single Enterprise Agreement.

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Step 1 – Preparation

When preparing to enter a single enterprise agreement, you must consider your employees’ individual needs and circumstances, including how you will communicate with them throughout the bargaining process.

Notably, the Fair Work Commission requires that you act fairly as an employer. Therefore, you must communicate with your employees appropriately and respectfully. You may need to provide copies of your conversations with employees to do so.

When determining the best way to communicate with your employees, you should consider the needs of the most vulnerable, such as your newer employees or those who speak English as a second language.

Before you begin bargaining your enterprise agreement, you should notify your employees that you intend to prepare one. Doing this provides them with enough time to consider their needs in the bargaining phase.

Step 2 – Start Bargaining

You may begin the bargaining process by drafting the terms of the agreement or by appointing a representative (such as an Industrial Officer) to assist. 

You are then required to notify all the relevant employees within 14 days that bargaining has begun by providing a Notice of Employee Representational Rights. This notice lets your employees know that a bargaining representative can represent them. If you fail to provide this notice in its proper form or to all employees within 14 days, the Fair Work Commission cannot approve your agreement. 

You must bargain with your employees (or your bargaining representatives if either of you chooses to appoint one) in good faith. For example, this may involve meeting to discuss the proposed terms and genuinely considering and responding to the proposal presented by the other party.

Step 3 – Draft the Terms

When drafting the agreement, it is also important to remember that its terms should not disadvantage your employees. Indeed, you cannot draft terms that make your employees worse off when compared to the National Employment Standards (NES). Ultimately, the terms of an Enterprise Agreement should make the employee better off under your agreement than they would be under their applicable Award. 

By law, you must draft several terms into the agreement, including:

  • coverage which sets out the name of the employer and employee, the work that the employee will perform and the work location;
  • a consultation which sets out the requirement to consult with employees about significant workplace changes and alterations to their ordinary hours of work;
  • disputes which set out the procedure for settling disputes;
  • flexibility which sets out your ability to make individual flexibility arrangements with an employee to vary the agreement; and
  • nominal expiry date, which must be no more than four years after the date the Agreement has been approved.

Additionally, you should also draft terms relating to::

  • definitions;
  • hours of work;
  • classification structure;
  • rates of pay;
  • penalty and overtime rates;
  • allowances;
  • breaks; and
  • deductions authorised by an employee.

Step 4 – Prepare to Vote

After drafting the terms of your agreement, you must take a number of steps before putting the vote to your employees. You must:

  • notify your employees of where and when the vote will be;
  • notify your employees of how they can vote;
  • ensure you give your employees a copy of the agreement;
  • ensure you give your employees any other material the Agreement references (such as an OH&S policy, for example); and
  • ensure you explain the terms of the agreement to your employees.

When explaining the terms to your employees, you must describe the steps taken to explain the terms and effects of the agreement to the employees. You will need to lodge copies of this information to the Fair Work Commission, who will confirm that your employees understand the terms of the agreement and how it will impact them. 

Step 5 – Vote on the Agreement

Once you have let your employees know the details of the vote, you must then conduct the vote following the specific procedure. When conducting the vote, you must record:

  • dates of the voting;
  • number of employees covered by the Agreement at the time of the vote;
  • number of employees who cast a valid vote; and
  • number of employees who voted in favour of the Agreement. 

You must provide each of these details to the Commission when making your application, so it is important that you do it correctly. You can proceed to lodge the Agreement with the Commission for approval if most employees who cast a valid vote, voted in its favour.  

Step 6 – Lodge the Agreement

Importantly, you need to lodge the Agreement within 14 days of the majority of your employees voting to approve the Agreement along with the following documents: 

  • application for approval of an Enterprise Agreement (Form F16);
  • Statutory Declaration from you as the employer in support of an application for approval of an Enterprise Agreement (Form F17); and
  • a copy of the Agreement signed by you and your employee representative, including the signature page. This page must include the name, address and explanation of the authority of each person signing the Agreement.

You will be able to lodge the Agreement online via the relevant Commission office.

Step 7 – Approval of your Agreement

A Member of the Fair Work Commission will assess your agreement against the requirements of the Fair Work Act.

The Member must be satisfied with the following:

  • all the above requirements have been met;
  • your employees have openly accepted the Agreement;
  • the terms of the Agreement do not go against the NES;
  • your employees will be “better off” under your Agreement compared to their applicable Award;
  • the Agreement does not include any unlawful or designated outworker terms;
  • the nominal expiry date is no more than four years after the date of approval;
  • the bargaining occurred with good faith; and
  • the Agreement includes disputes, flexibility and consultation terms.

 The Member may require more information or seek to clarify specific points of the application or the Agreement. If there are no objections to the approval of the Agreement, a copy of the Member’s approval decision will be posted on the Fair Work Commission website and emailed to the parties.

The Agreement will come into effect seven days after approval.

Key Takeaways

The Fair Work Commission must approve an Enterprise Agreement before it comes into effect, making it important that you correctly follow all the relevant steps. To prepare a Single Enterprise Agreement, you must:

  • prepare for bargaining;
  • commence the bargaining process;
  • draft the terms of the Agreement;
  • prepare your employees to vote;
  • conduct a vote; 
  • lodge the Agreement; and
  • have the Agreement approved.

If you need assistance developing an Enterprise Agreement, our experienced employment lawyers can assist as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents. Call us today on 1300 544 755 or visit our membership page.

Frequently Asked Questions

What is an enterprise agreement?

An enterprise agreement varies the terms of modern awards in a way that benefits you and your employees. These agreements replace modern awards. However, the provisions in an Enterprise Agreement cannot be ‘worse’ than the National Employment Standards or the applicable Award.

How do I make an enterprise agreement?

To prepare an Enterprise Agreement, you must first prepare for bargaining, commence the bargaining process and draft the terms of the Agreement. You will then need to prepare your employees to vote on the Agreement. If successful, you can then lodge the Agreement and await approval from the Fair Work Commission.

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