Enterprise agreements

The workplace relations system under the Fair Work Act 2009 (the Act) has collective bargaining in good faith as a central element. Collective bargaining is based at the level of an enterprise.

Modern awards cover a whole industry or occupation and only provide a safety net of minimum pay rates and employment conditions. Enterprise agreements can be tailored to meet the needs of particular enterprises and must include various mandatory terms.

The enterprise bargaining process is underpinned by the law of ‘good faith bargaining', which is enforceable by the Fair Work Commission (FWC). FWC is ultimately responsible for approving enterprise agreements.

Master Builders can assist you to prepare an enterprise agreement covering all key conditions and terms, that provide benefits  for both the employer and the employees. If an employer is currently party to a typical union pattern agreement, this does not preclude them from drafting an alternative agreement with substantial changes (if the changes are supported by sound reasoning and enterprise-specific requirements).

The below summary is intended as a guide only; members should contact Master Builders for specific advice and enquiries.

Different types of enterprise agreements

There are three different types of enterprise agreements under the Act. There is no distinction between union and non-union agreements.

The types of agreements include:

  • Single enterprise agreements
  • Multi-enterprise agreements
  • Greenfield agreements (single or multi-enterprise).

Single enterprise agreements

Single enterprise agreements are made between a group of employees and an employer or two or more employers that are ‘single interest’ employers. Single interest employers are usually employers who are engaged in a joint venture or common enterprise.

It is unlikely that ‘builders’ as a group would be considered as ‘single interest employers’. The category is most likely to apply to employers who receive a common source of funding, do not compete with each other and which conduct their workplace relations activities through a central body (for example a public hospital).

Multi-employer agreements are likely to be more applicable to building projects involving more than one employer and joint ventures that are not separately incorporated. Employers who wish to bargain together for a single enterprise agreement must apply to FWC for a single interest employer authorisation.

Multi-enterprise agreements

Multi-enterprise agreements are collective agreements made between two or more employers and groups of their employees. Employers must voluntarily agree to bargain together for a multi-enterprise agreement, with the exception of the low-paid bargaining stream.

Greenfield agreements

Greenfield agreements can only be made for a genuine new enterprise, before the employer has engaged any employees who will be covered by the enterprise agreement. Greenfield agreements are made between employer(s) and union(s) that are entitled to represent the majority of employees to be covered by the Greenfield agreement.

Bargaining representative

An employee who will be covered by a proposed enterprise agreement (other than a Greenfield agreement) may appoint a bargaining representative. ‘Bargaining representatives’ include a union or any individual who an employee has appointed as their representative. The employee’s bargaining representative must be independent – that is free from control and improper influence by the employer or another bargaining representative.

If the employee is a member of a union that is entitled to represent the interests of the employee and the employee does not appoint another bargaining representative, the union automatically becomes the representative for that employee.

An employer may also elect to be represented by a bargaining representative.

Good faith bargaining

Bargaining representatives must comply with various good faith bargaining requirements when negotiating an enterprise agreement (other than a Greenfield agreement). These requirements do not apply to the process of varying or terminating an enterprise agreement.

The good faith bargaining requirements imposed on all bargaining representatives include:

  • 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 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
  • Recognising and bargaining with the other bargaining representatives for the agreement
  • Refraining from capricious or unfair conduct that undermines freedom of association or collective bargaining.

If one party believes another party is not bargaining in good faith, the first party may apply to FWC for a bargaining order. If the application is successful, FWC has the authority to issue an order for the parties to take specific action, for example, to meet at least three times in four weeks.

Employers should do their utmost to ensure that they do not breach the good faith bargaining requirements in the Act, to avoid potential financial penalties and to avoid an arbitrated outcome being imposed on them.

Read more about the bargaining process.