As your company grows, your legal needs may become more complicated due to the size of your organisation. The larger number of employees in an enterprise is likely to result in more time spent ensuring that your staff are hired and paid on terms compliant with the Fair Work Act. It can become a nightmare ensuring that all of your staff are being managed appropriately. To run an enterprise more efficiently, you should consider legal options that will reduce the burden on you and HR, and benefit your staff. A good way to do this is to negotiate an Enterprise Agreement.
A number of positions within an enterprise will be subject to an Award. Support staff performing clerical roles (e.g. administrative assistants, receptionists) are a prime example of staff hired by almost all enterprises that will be subject to an Award. An Award will set out the following:
- Minimum pay
- Leave entitlements
- Notification of termination; and
- The conditions for requiring staff to take leave.
You must ensure your employees are hired and paid the correct wage, and overtime or penalty rates in accordance with the terms of the appropriate Award. The minimum requirements of an Award will only be displaced if you have registered an Enterprise Agreement with Fair Work Australia. Enterprise Agreements set the minimum pay and conditions and can never be lower than the applicable Award conditions or minimum wage.
While Awards cater to a wide range of individuals, generally working in small businesses, Enterprise Agreements set the conditions that are better suited to a larger company. An Enterprise Agreement will cover a broadly similar range of requirements for an Award. Once all the stakeholders (your enterprise, staff and/or the relevant union) have agreed to and registered the Enterprise Agreement, it will displace any relevant awards.
The purpose of an Enterprise Agreement is to encourage a better relationship between employers and their staff. By going over and above the requirements of an Award, the employer is facilitating a mutually beneficial relationship that can often result in a more skilled and productive workforce. You can achieve these benefits through incentives such as performance-based pay or additional training. Other methods include a more open platform for discussion among staff, their representatives and you as an employer. By providing this platform and engaging your employees, you’re in a good position to foster a more open relationship.
There are three types of Enterprise Agreements that you can implement:
- Single Enterprise Agreements – between an employer and employees;
- Multi-Enterprise Agreements – multiple employers and employees; and
- Greenfields Agreements – between employers and unions.
Negotiating an Enterprise Agreement
If you think that an Enterprise Agreement can assist with your enterprise’s productivity, then you’re likely to negotiate with your staff. Due to the complexity of the requirements under the Fair Work Act, you should consult an employment law specialist to ensure that before starting the negotiation process, you are fully aware of your obligations. One of the most important requirements of the Fair Work Act is that the parties negotiating an Enterprise Agreement must approach the process in good faith.
Requirements of an Enterprise Agreement
In addition to negotiating in good faith, other requirements include:
- The Enterprise Agreement is not discriminatory to one party;
- A dispute resolution procedure is in place; and
- All minimum protections under the Act are met and no industrial relation laws are altered.
One thing to keep in mind when negotiating the terms of your Enterprise Agreement is that your staff should be “better-off overall” at the end of the bargaining process. This is an objective test that is conducted by the Fair Work Commissioner.
Approval of your Agreement
Once a majority of your staff, or their union, have agreed to the Enterprise Agreement’s terms, you’ll need to register it with the Fair Work Commission (FWC). The FWC must satisfy their own criteria before approving an Enterprise Agreement.
If your Enterprise Agreement has resulted in your staff being better-off overall and exceeds the minimum requirements of employment law, then it’s very likely it’ll be approved. Once approved, you’ll have streamlined the requirements you have to keep track of as an employer, and it should make running your enterprise that little bit more straightforward. If you have any questions or require assistance with drafting your Enterprise Agreement, get in touch with our employment lawyers on 1300 544 755.