Enterprise agreements

An enterprise agreement is a formal employment agreement negotiated between an employer and its employees (or their representatives). The agreement must be registered with the Fair Work Commission and meet the minimum standard of pay in the Award. It can exclude various Award conditions as long as employees are better off under the agreement than the Award.

You can create individual enterprise agreements with different terms and conditions for different groups of employees, but you must group them fairly according to geographical, operational or organisational characteristics. Only one agreement can apply to an employee at any time.

BenefitsDrawbacks
  • Set out employment terms for specific types of work or locations
  • Include initiatives such as multi-skilling or productivity requirements
  • Create common conditions for your employees, even if different Awards apply to them
  • Give you certainty of costs because you know what the wage increases will be
  • Prevent employees taking protected industrial action for the life of the agreement
  • Simplify administration and payroll by rolling allowances or penalties into a single hourly rate
  • Be written in plain language so your employees can understand it.
  • Result in additional costs and complexity, especially if it doesn’t meet your business and employees’ needs
  • Result in higher costs and benefits as employees must be ‘better off’ than under the Award
  • Need to be renegotiated every four years
  • Lead to an expectation of increased benefits or wage increases at each negotiation.

Enterprise bargaining

The enterprise bargaining process for making an agreement involves strict processes, paperwork and timeframes.

If you want to initiate the bargaining process, you must issue your employees a Notice of Representational Rights, which notifies them that you want to make an agreement. It also gives them the opportunity to represent themselves or nominate another person or a union to represent them.

If employees want to initiate bargaining, they have to contact the Fair Work Commission to issue an order to the employer about bargaining for a new agreement.

When a bargaining process is initiated it doesn’t necessarily mean agreement will be reached or you must agree to specific terms proposed.

Before an agreement can be voted on, there must be a minimum 21-day bargaining period. Before voting takes place, you must issue various notices and ensure employees can access and understand the content of the agreement.

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