In the workplace, there are many different types of employment agreements between an employer and an employee. The range of these agreements allow for greater flexibility in terms of working conditions, salaries, working hours etc. which can allow employers and employees to establish arrangements that mutually benefit them.

An enterprise agreement can be distinguished from a modern award in that these agreements specify the working conditions tailored to one workplace while awards refer to the minimum working conditions for an entire industry. As such, when an enterprise agreement is entered into at a workplace, a modern award cannot apply since this workplace has opted to arrange for unique working conditions.

Note: the law regarding outworkers under the modern award still applies to workplaces under an enterprise agreement. To find out about outworkers and the obligations of retailers and suppliers in the retail industry see: “I am a supplier in the NSW Clothing Industry

Types of agreements

Essentially, there are 3 types of enterprise agreements that can be entered into between employers, employees and unions:

  • Single enterprise agreements which are between an employer and a group of employees;
  • Multi enterprise agreements which are between 2 or more employers and a group of employees;
  • Greenfields agreements which are between 1 or more employers and 1 or more unions.

Agreements can be made on a range of different matters but it is imperative that all negotiations be made in good faith. It is common for agreements to include terms about:

  • The relationship between employer(s) and employees;
  • The relationship between the employer and unions;
  • How the agreement will function;
  • Working conditions and matters relating to pay;
  • Penalty rates and overtime;
  • Allowances;
  • Standard hours of work; and
  • Leave entitlements.

There are also a range of terms that are mandatory and must be included in an enterprise agreement. These include:

  • A term relating to dispute resolution which allows for disputes to be heard by the Fair Work Commission;
  • An flexibility term under which an employee and employer can negotiate for individual working conditions for a particular employee;
  • The expiry date of the agreement; and
  • Explanation of all the terms that the agreement covers.

Under the Fair Work Act 2009 there are also terms that cannot be included within an enterprise agreement. These include:

  • Terms that have a discriminatory effect on parties;
  • Terms that allow employees to “opt out” of the agreement;
  • Terms that breach the protections given under the Act;
  • Terms that require bargaining fees;
  • Terms that do not comply with unfair dismissal rules;
  • Terms that change industrial relation laws; and
  • Terms that displace right of entry rules of the Act.

Conclusion

Enterprise agreements may be useful to enter into since they can be tailored to suit the specific needs of employers, employees and unions. However, before entering into such an agreement it may be useful to seek legal advice in relation to the options that are available to you.

If you would like more information on enterprise agreements, please see: http://www.fairwork.gov.au/employment/agreements/pages/default

Lachlan McKnight

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