• Enterprise bargaining is the process of negotiation, generally between the employer, employees and their bargaining representatives with the goal of making an enterprise agreement.
  • Most Australian workplaces are governed by a new system created by the Fair Work Act 2009.
  • There are three types of enterprise agreements: single-enterprise agreements, multi-enterprise agreements and greenfield agreements.

Under the national workplace relations system there are two categories of agreements: enterprise agreements and agreement-based transitional instruments. In order to make an Enterprise Agreement under the Fair Work Act 2009 (‘the Act’) certain steps must be taken to ensure the agreement is valid and enforceable.

Enterprise Agreement

An enterprise agreement is between one or more national system employers and their employees, as specified in the agreement. The parties negotiate the agreement through collective bargaining in good faith, particularly at the enterprise level.

Single-enterprise agreement: A single employer can make a single enterprise agreement with its employees who will be covered by the agreement. In certain circumstances two or more employers can make a single enterprise agreement – to do so they must be related corporations, conduct a joint venture or common enterprise, or have a single interest authorisation from the Fair Work Commission (FWC).

Multi-enterprise agreement: If two or more employers can’t satisfy the definition of a single interest employer they can make a multi-enterprise agreement. An employer who is covered by a multi-enterprise agreement may at any time opt out of the multi-enterprise agreement by making a single-enterprise agreement.

One or more employers may be able to make a greenfield agreement for a genuine new enterprise or group of enterprises. You must make such agreements with unions, though not necessarily every union who may have a potential interest.

Bargaining Representatives

An employer must notify their employees that they have the right to be represented by a bargaining representative. This must occur as soon as possible, and not later than 14 days after the notification time for the agreement.

Generally speaking, for employees that are a part of a trade union, their default bargaining representative is their trade union, unless they advise otherwise in writing. Employees may select anyone as their bargaining representative, even themselves. 

It is important to note that any elected bargaining representative organisation must declare any financial benefits they may receive from the proposed agreement in a disclosure document. These organisations include:

  • employers;
  • employer organisations; and 
  • unions.

Financial benefits also extend to related parties, which must also be declared.

Good Faith Bargaining

If an employee elects a bargaining representative, the employer and the bargaining representative must bargain in good faith.

The following are the good faith bargaining requirements that a bargaining representative for a proposed enterprise agreement must meet:

  • attending, and participating in, meetings at reasonable times.
  • disclosing relevant information (other than confidential or commercially sensitive information) in a timely manner.
  • responding to proposals made by other bargaining representatives for the agreement in a timely manner.
  • giving genuine consideration to the proposals of other bargaining representatives for the agreement, and giving reasons for the bargaining representative’s responses to those proposals.
  • refraining from capricious or unfair conduct that undermines freedom of association or collective bargaining.
  • recognising and bargaining with the other bargaining representatives for the agreement.

The good faith bargaining requirements do not require a bargaining representative to:

  • make concessions during bargaining for the agreement; or
  • reach agreement on the terms that the agreement will include.

Please note that there are strict time requirements for the bargaining process.

Bargaining Agents

LegalVision recommends that when an employer’s company engages in Good Faith Bargaining with a Union, they appoint a bargaining agent. There are a number of advantages; the most important will be to ensure that you properly engage in good faith bargaining. This reduces the likelihood of good faith bargaining orders being made against your company.

Key Considerations

  • Which type of enterprise agreement best suits your employees?
  • Have you taken the pre-approval steps in making the enterprise agreement?
  • Have you followed the approval process by Fair Work Australia for Enterprise Agreements?

Required Documents

You require the following documentation to seek the approval from your employees:

  • Notice of Employee Representation Rights.
  • How and When for Approval Statement.
  • Letter appointing a Bargaining Agent (if appropriate).
  • Employee Representation Election Form.
  • Form F16 – Application for Approval of an Enterprise Agreement.
  • Form F17 – Employer Declaration in Support of Application for Approval of an Enterprise Agreement.
  • Proposed Enterprise Agreement.

Pre-Approval Steps for Members

You must ensure that:

  • each of your employees must receive a copy of the Notice of Representation Rights (no exceptions). The employee vote to approve the agreement must not occur until at least 22 days after the day on which employees were given a copy of the Notice of Employee Representation Rights.
  • during the period 7 days prior to the employee vote to approve the agreement, the terms of the agreement, and the effect of those terms, must be explained to your employees.
  • you must ensure that the explanation of the Agreement is provided in an appropriate manner (eg appropriate for young employees or employees from culturally diverse backgrounds).

7 Day Period

At the commencement of the 7 day period prior to the employee vote to approve the agreement, you are required to provide your employees with copies of the following:

  • the proposed Enterprise Agreement.
  • any other material incorporated by reference in the agreement.

You must also notify each employee of the:

  • date, time and place where the vote will occur;
  • voting method that will be used.

Employee Representation

Please note that after your employees have been provided with a copy of the Notice of Employee Representation Rights, your employees will have 14 days to nominate a bargaining representative.

Any union who has a member that would be covered by the agreement has the right to participate in the negotiation of your agreement through Good Faith Bargaining. Where an employee is a union member and does not wish to be represented by a Union can revoke the Unions rights.

Frequently Asked Questions About Enterprise Bargaining

Q: What is the difference between enterprise agreements and modern awards?

A: Enterprise agreements include specific conditions for one workplace. Modern awards are a safety net of minimum conditions for a whole industry or type of job. When a workplace has an enterprise agreement, the modern award does not apply. However, the pay rate in the enterprise agreement cannot be less than the pay rate in the modern award. Any terms about outworkers in the modern award also still apply.

Q: What is the Better Off Overall Test?

A: Before approving an enterprise agreement, Fair Work Commission must ensure the agreement passes the Better Off Overall Test. This test ensures that the agreement does not, or would not result, on balance, in a reduction in the overall terms and conditions of employment of the employees when compared to the Electrical, Electronic and Communications Contracting Industry Award 2010.

Q: What happens if the parties are unable to reach agreement?

A: Where parties are unable to reach agreement on the terms and conditions of a proposed enterprise agreement, a bargaining representative can make an application to the Fair Work Commission requesting assistance. If the Fair Work Commission sees fit, they will issue a bargaining order. Such an order involves the actions they require to be taken and the actions that are not to be taken, in order to promote fair and efficient bargaining. For this to occur, the Fair Work Commission must be satisfied that the concern flagged with them has also been raised with the relevant bargaining representative.

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