As an employer, you may have heard of enterprise bargaining agreements (EBAs) and are wondering if they are right for your business. An EBA is an agreement between employers and employees to vary the terms of a modern award. In the absence of an EBA, a modern award will outline the rights and responsibilities of you and your employees for the particular industry it covers. Nevertheless, an EBA can be tailored to suit your company’s needs, largely because either you or your employees can begin the process of introducing an EBA through collective bargaining. This article will outline the key features of each type of EBA.
Why Should I Use an Enterprise Agreement?
There are several advantages for employers and employees looking to enter into an EBA. Namely, you can spend less time and energy interpreting and applying complex modern awards. As mentioned above, modern awards are industry-specific and apply to most businesses within a particular industry. Since the terms of a modern award will, therefore, be quite general, your company might benefit from having more specific and clearer terms of employment.
In addition, you can tailor an enterprise agreement to best suit the needs of your business and your employees, taking into account the unique aspects of how your business operates.
Single Enterprise Agreements
A single enterprise agreement can be created by two or more employers who share a single interest. To create a single enterprise agreement, all the employers wishing to join the agreement need to receive authorisation from the FWC that they are single-interest employers. For example, this could be employers in related corporations or who are involved in a joint venture. A joint venture is where two or more parties work together to accomplish a task or project. These employers can come together to negotiate an agreement with their collective employees.
For example, although franchisees may operate as separate businesses, they may have a common interest when dealing with their employees. A well-performing franchise will ensure that franchisees are not in competition with each other. To achieve this, the franchisee could negotiate a single enterprise agreement. Another way to determine if employers have a ‘single interest’ is if they receive the same source of funding.
Continue reading this article below the formMulti-Enterprise Agreements
A multi-enterprise agreement is created by two or more employers as well as the employees of those different enterprises. These agreements differ from single enterprise agreements in that you and the other employers do not need to prove that they have a single interest in the bargaining process. You will, however, need to agree to bargain together. This can be common for projects where multiple organisations are involved, for example, in construction.
Greenfields Agreements
A greenfields agreement is a specific category of enterprise agreement that is only available to a genuine new enterprise. The key features of a greenfields agreement are that:
- you need to make the enterprise agreement with a specific union before any employees are officially employed;
- the agreement relates to a genuine new enterprise that you are establishing or proposing to establish, such as a new project or business;
- you have not employed any workers who will be necessary for the normal conduct of your new enterprise; and
- these workers will be covered by the agreement.
A greenfields agreement can simultaneously be a single enterprise agreement and a multi-enterprise agreement. The usual parties who participate in the bargaining process for a greenfields agreement are the employer(s) and an employee association such as a trade union.
Ultimately, a greenfields agreement provides you with the flexibility to decide your future employees’ circumstances, especially in the instances where your unique circumstances might not be covered by a typical employment award. However, you should note that a greenfields agreement exists for a maximum of four years. After this period, your employees and the relevant unions are free to negotiate new terms and conditions for their employment.
Supported Bargaining Stream
Following the Fair Work Legislation Amendment (Secure Jobs, Better Pay) Act 2022, the FWC reformed the existing low-paid bargaining stream into the supported bargaining stream. This new stream sees the FWC provide support in facilitating bargaining in traditionally low-paying industries such as aged care and disability care.
Employers or employee groups may apply to the FWC for a ‘supported bargaining authorisation’ on the basis of comparable groups of employees and employers in the relevant industry. Following an application, the FWC will have to turn its mind as to whether it is appropriate for there to be collective bargaining. Such factors include:
- sector pay and conditions;
- the common interests of employers; and
- whether these can be easily identified.
As an employer, understand your essential employment obligations with this free LegalVision factsheet.
Key Terms in an EBA
You must include five key terms in your EBA. These are:
- an expiry date for the EBA no longer than four years from the date the FWC approves the EBA;
- a dispute resolution procedure that allows for either the FWC or an independent third party to settle disputes relating to the terms of a modern award or national employment standards;
- a term to allow individual employees to make an individual flexibility agreement (IFA) with their employer. An IFA varies the terms of the EBA according to that single employee’s specific needs;
- a consultation term that requires that employers consult employees regarding any major workplace changes and employees have representation in that consultation process; and
- a delegates’ rights terms that provide for the exercise of rights for workplace delegates.
Key Takeaways
The three key types of enterprise bargaining agreements are:
- single enterprise agreements;
- multi-enterprise agreements; and
- greenfield agreements.
Before establishing an enterprise agreement, you will need to determine which type of enterprise agreement is most suitable for you. This can depend on the number of employers involved in the agreement, the purpose of the agreement or the structure of your business. It is important to note that the FWC needs to approve the enterprise agreement before it can commence operation.
If you want to find out more about enterprise agreements, 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.
We appreciate your feedback – your submission has been successfully received.
