There are a few types of employment agreements, and it can be tricky to understand the differences! Under the Fair Work Act 2009 (Cth) (the Act), there are essentially three types of enterprise agreements that can be made. These are single-enterprise agreements, multi-enterprise agreements and greenfields agreements. Before the Act came into effect, other types of employment agreements existed including collective agreements. These types of agreements made before 1 July 2009 continue to operate as normal until they are finished or replaced under the new system.
These types of agreements are generally used when you are a single employer making an agreement with your employees who are currently employed by you and will be subject to the rules and procedures of the agreement you make. This is the most common type of agreement for most businesses. This type of agreement can also be used for what’s called ‘single interest employers.’ This can be two or more employers who are in a joint venture or related companies who have a common goal. It can also be franchisees or other types of employees when authorised by the Fair Work Commission. The agreement is made when it is approved through voting by the majority of the employees who will be covered by the agreement.
This type of enterprise agreement is only used between two or more employers and the employees who will be subject to the agreement. So this does not cover single-interest employers. This type of agreement comes into effect when it has been approved by the majority of the employees of at least one of the employers.
Greenfields agreements are made between an employer and their employees before the business has started and before anyone has been employed. These agreements can come in the form of either of the above agreements but generally it will be an employer and a type of employment association, like a union, that create these agreements.
Greenfields agreements are used particularly in industries like construction. To have these approved the representative for the employees must be entitled to represent the majority of the employees who will be covered by the agreement. It also must be in the public interest and meet the general requirements of the Act, such as complying with the National Employment Standards. The agreement is made when it is signed by each employer and employee association.
All agreements are approved and registered by the Fair Work Commission.
It is important to understand which type of agreement will best benefit your business and your employees to run your business most effectively. If you are a small business owner, you may be better off utilizing the relevant award for your industry. Our article on what to include in your agreement can be found here, which also provides an overview of how your agreement becomes a reality. If you are thinking that one of the above types of agreements will work well for your business, LegalVision’s specialist employment lawyers can assist you in creating an agreement focused on maximising what’s best for you as an employer.