Enterprise bargaining

Overview What is an enterprise agreement?

Enterprise bargaining is the process of negotiation An enterprise agreement is between one or more
generally between the employer, employees and national system employers and their employees, as
their bargaining representatives with the goal of specified in the agreement. Enterprise agreements
making an enterprise agreement. The Fair Work Act are negotiated by the parties through collective
2009 (FW Act) establishes a set of clear rules and bargaining in good faith, primarily at the enterprise
obligations about how this process is to occur, level. Under the FW Act an enterprise can mean any
including rules about bargaining, the content of kind of business, activity, project or undertaking.
enterprise agreements, and how an agreement is
Under the FW Act the following new enterprise
made and approved.
agreements can be made:
What is an agreement? Single-enterprise agreement
A registered agreement sets out the terms and A single-enterprise agreement is made between a
conditions of employment between an employee or single employer (or two or more single interest
group of employees and one or more employers. employers) and employees employed at the time the
Under the national workplace relations system there agreement is made, and who will be covered by the
are two categories of agreements: agreement. Single interest employers are employers
that are in a joint venture or common enterprise or
 enterprise agreements are related corporations. They can also be employers
 agreement-based transitional instruments. authorised as single interest employers by the Fair
Agreement-based transitional instruments include Work Commission, which may be either franchisees
various individual and collective agreements that or other employers where the Minister for
could be made before 1 July 2009 under the former Employment has made a declaration.
Workplace Relations Act 1996. They also include Multi-enterprise agreement
Individual Transitional Employment Agreements A multi-enterprise agreement is made between two
(ITEAs) that were made during the 'bridging period' (1 or more employers (that are not all single interest
July 2009 - 31 December 2009). These agreements employers) and employees employed at the time the
will continue to operate as agreement based agreement is made and who will be covered by the
transitional instruments until terminated or replaced. agreement.
Agreement-based transitional instruments include: Greenfields agreement
 collective agreements A greenfields agreement is an enterprise agreement
 pre-reform certified agreements (that is, that is made in relation to a new enterprise of the
those made before 27 March 2006) employer or employers before any employees are
 preserved individual and collective state employed. This can either be a single enterprise
agreements agreement or a multi-enterprise agreement. The
parties to a greenfields agreement are the employer
 Individual Transitional Employment
(or employers in a multi-enterprise greenfields
Agreements (ITEAs)
agreement) and one or more relevant employee
 Australian Workplace Agreements (AWA). associations (usually a trade union).
For more information on agreement-based
transitional instruments including the variation and
What terms must be included in an
termination of these agreements, go to enterprise agreement?
fairwork.gov.au/agreements An enterprise agreement is an agreement about
permitted matters which are:

Fair Work Infoline: 13 13 94 www.fairwork.gov.au

  terms about the relationship between each What can't be included in an
employer and the employees covered by the
agreement enterprise agreement?
 terms about the relationship between each An enterprise agreement cannot include any unlawful
employer and any employee organisations content.
(for example, a trade union) who will be This includes:
covered by the agreement
 a discriminatory term
 deductions from wages for any purpose
 an objectionable term (which are terms that
authorised by an employee covered by the
require or allow payment of a bargaining
agreement
services fee, or a contravention of the
 how the agreement will operate. general protections provisions of the FW Act)
An enterprise agreement must contain the following  a term that confers an entitlement or remedy
terms: in relation to unfair dismissal before the
 a nominal expiry date for the agreement employee has completed the minimum
which is no longer than four years from the employment period
date the Fair Work Commission approves the  a term that excludes, or modifies, the
agreement application of unfair dismissal provisions in a
 a dispute settlement procedure, which must way that is detrimental to, or in relation to, a
authorise either the Fair Work Commission or person
someone else that is independent of those  a term that is inconsistent with the industrial
covered by the agreement to settle disputes action provisions
about any matters under the agreement in  a term that provides for an entitlement to
relation to terms of a modern award or the right of entry
National Employment Standards (NES)  a term that allows for the exercise of any
 a flexibility term that allows for the making of State or Territory OHS legislative right of
individual flexibility arrangements (IFAs) for entry in a manner different to the rights set
the purpose of meeting the genuine needs of out in the right of entry provisions of the FW
the employer and employees. These are Act
arrangements between an employer and an  a term that allows or requires super
individual employee that vary the operation contributions to be made to funds that do
of the enterprise agreement in relation to the not offer a My Super product or meet certain
employee (see What is an Individual other requirements.
Flexibility Arrangement? below)
The Fair Work Commission will review enterprise
 a consultation term, which requires the
agreements for any unlawful content. The Fair Work
employer to consult their employees about
Commission cannot approve an enterprise
any major workplace changes that are likely
agreement that contains unlawful content.
to have a significant effect on them and
allows the employees to have representation Terms in an enterprise agreement, transitional
in that consultation. If there is no such instruments (award or agreement-based), and
consultation term, the model consultation modern awards cannot exclude the NES, and those
term will apply. that do will have no effect.
You can access the model dispute settlement, Superannuation laws extend choice of
flexibility and consultation terms from the Fair Work superannuation fund to employees under enterprise
Commission website at fwc.gov.au agreements.
The rate of pay for an employee under an enterprise Enterprise agreements made on or after 1 January
agreement cannot be less than the relevant rate of 2021 need to provide employees with a choice of
pay under the modern award that would apply to the superannuation fund. Any restrictions placed on
employee or under a national minimum wage order. employees’ choice of superannuation fund in
enterprise agreements made on or after 1 January
2021 are not enforceable. Failure to pay
superannuation into an employee’s choice of  a person specified in writing as their
superannuation fund may result in employers having bargaining representative by either an
to pay superannuation charges. employer or employee who would be
covered by the agreement.
How is an enterprise agreement
For employees who are a member of a trade union,
made? the default bargaining representative is their trade
The FW Act provides a simple, flexible and fair union unless the employee appoints another person.
framework that assists employers and employees to However, employees can generally appoint whoever
bargain in good faith to make an enterprise they wish as their bargaining representative,
agreement. including themselves.
Employers, employees and their bargaining
representatives are involved in the process of
What if a bargaining representative
bargaining for a proposed enterprise agreement. An benefits?
employer must notify their employees of the right to Organisations that are bargaining representatives
be represented by a bargaining representative during (employers, employer organisations, and unions) for
the bargaining of an enterprise agreement (other a proposed enterprise agreement need to disclose
than a greenfields agreement) as soon as possible, certain financial benefits that they (or certain related
and not later than 14 days after the notification time parties) will (or could) get because of a term of the
for the agreement (usually the start of bargaining). proposed agreement.
The notification should be given to each current
The disclosure must be set out in a document with
employee who will be covered by the enterprise
details of the relevant financial benefit (a ‘disclosure
agreement.
document’). An employer who creates a disclosure
An employer who is making a greenfields agreement document must make it available to their employees.
must give written notice to each employee
A union or employer organisation who creates a
organisation that is a bargaining representative for
disclosure document must give it to the employer,
the proposed agreement. This notice must include
who must then make it available to the employees.
the start date of the six month negotiation period for
the greenfields agreement. In both cases, failing to provide or make the
disclosure document available as required can result
Who can be a bargaining in penalties of up to $16,500 per breach for an
representative? individual and $82,500 per breach for a
company. Penalty amounts are subject to change.
A bargaining representative is a person or
You can check the current maximum penalties at
organisation that each party to the enterprise
fairwork.gov.au/litigation
agreement may appoint to represent them during the
bargaining process. You can access further information from the Fair
Work Commission website at fwc.gov.au
The FW Act identifies the following as bargaining
representatives: What are the requirements of good
 an employer that will be covered by the faith bargaining?
agreement
Bargaining representatives are required to act in
 a trade union who has a member that would good faith in the process of bargaining for a proposed
be covered by the agreement (unless the enterprise agreement.
member has specified in writing that he or
she does not wish to be represented by the The following are the good faith bargaining
trade union, or has appointed someone else) requirements that a bargaining representative must
meet:
 a trade union who is entitled to represent
one or more employees who will be covered  attending and participating in meetings at
by a greenfields agreement reasonable times
 a trade union that has applied to the Fair  disclosing relevant information (other than
Work Commission for a low paid confidential or commercially sensitive
authorisation that relates to the agreement information) in a timely manner
  responding to proposals made by other  they take all reasonable steps to ensure that
bargaining representatives for the agreement the terms of the enterprise agreement, and
in a timely manner the effect of those terms, are explained to
 giving genuine consideration to the proposals the employees, and
made by other bargaining representatives,  the explanation is provided in an appropriate
and giving reasons for any responses to those manner (for example, appropriate for young
proposals employees, employees from culturally
 not behaving in a capricious or unfair way diverse backgrounds or employees who did
that undermines freedom of association or not have a bargaining representative).
collective bargaining Employees must endorse the agreement by voting for
 recognising and bargaining with the other it. The vote cannot occur until at least 21 days from
bargaining representatives for the the date employees were notified of their right to
agreement. have a bargaining representative.
The good faith bargaining requirements do not When is a vote successful?
require a bargaining representative to make
The vote is successful when one of the following
concessions during bargaining for the agreement, or
occurs:
reach agreement on the terms that are to be
included in the agreement.  Single-enterprise agreement – a majority of
the employees of the employer (or
Before the Fair Work Commission approves an
employers if there is more than one single
enterprise agreement, they must be satisfied that
interest employer) who cast a valid vote
approving the agreement would not undermine good
endorse the agreement.
faith bargaining by one or more bargaining
representatives for a proposed enterprise  Multi-enterprise agreement – a majority of
agreement. the employees of at least one of the
employers, who cast a valid vote endorse the
In addition, a bargaining representative of an agreement. A multiple enterprise agreement
employee who will be covered by the agreement only covers employers whose employees
must not engage in pattern bargaining in relation to have voted to approve the agreement.
the agreement. Pattern bargaining is when a Therefore, after the vote the agreement
bargaining representative is representing two or must be varied to remove those employers
more proposed enterprise agreements and seeks whose employees have not voted to approve
common agreement terms with two or more the agreement.
employers. However, it is not pattern bargaining if
the bargaining representative is genuinely trying to There are no employees to vote on a greenfields
reach an agreement. agreement. This type of agreement must be signed
by each employer and each relevant employee
What are the steps to seek approval organisation that it covers.
of an enterprise agreement? Applying for Fair Work Commission
Once bargaining is complete and a draft enterprise
agreement has been made, it must be submitted to a
approval
vote by the employees who will be covered by the The application for a proposed enterprise agreement
agreement. must be lodged with the Fair Work Commission
within 14 days of the agreement being made or
Before a vote can occur for employee approval, the within such further period as the Fair Work
employer must ensure that: Commission allows.
 during the seven day period before voting for The application must be accompanied by:
the agreement, employees are given a copy
of the agreement and any other material  a signed copy of the agreement
incorporated in the enterprise agreement.  any declarations that are required by the Fair
The employer must also notify employees of Work Commission to accompany the
the time and place the vote will occur and application.
the voting method that will be used
To approve an enterprise agreement, the Fair Work An enterprise agreement comes into operation seven
Commission must be satisfied that: days after approval by the Fair Work Commission, or
at a later date as specified in the agreement. From
 the agreement has been genuinely agreed to
this date on, an employee's terms and conditions are
by the employees covered by the agreement
derived from the enterprise agreement.
 in the case of a multi-enterprise agreement,
the agreement has been genuinely agreed to What if there is a bargaining
by each employer covered by the agreement
and that no person coerced, or threatened to dispute?
coerce, any employers to make the Bargaining disputes may arise for a number of
agreement reasons, for example, a party may not be bargaining
in good faith. If there is a bargaining dispute which
 the agreement passes the Better Off Overall
cannot be resolved between the bargaining
Test (BOOT)
representatives, one or more bargaining
 the agreement does not include any unlawful representatives involved may apply to the Fair Work
terms, terms that are inconsistent with the Commission for assistance in resolving a dispute.
NES, or terms about textile, clothing or
footwear (TCF) outworkers Where necessary, the Fair Work Commission may
issue a bargaining order in relation to the proposed
 the group of employees covered by the
agreement. A bargaining order will include the
agreement was fairly chosen
actions that the Fair Work Commission require to be
 the agreement specifies a date as its nominal taken, actions that are not to be taken and other
expiry date (not more than four years after matters that the Fair Work Commission considers
the date of FWC approval) necessary to promote fair and efficient bargaining.
 the agreement provides a dispute settlement
When making a bargaining order, the Fair Work
procedure
Commission must be satisfied that:
 the agreement includes a flexibility clause
and a consultation clause  the applicant has notified the relevant
bargaining representative of their concern
 approval is consistent with good faith
(unless the Fair Work Commission considers
bargaining
it is appropriate that this has not happened)
 for multi-enterprise agreements, only and either:
employers whose employees have approved
o one or more of the relevant bargaining
the agreement are included
representatives for the agreement have
 TCF outworkers do not have detrimental not met the good faith bargaining
terms compared with those under awards or requirements
industrial instruments.
o the bargaining process is not proceeding
Greenfields agreements are approved if the efficiently or fairly because there are
employee organisations covered by the agreement multiple bargaining representatives for
are entitled to represent the interests of a majority of the agreement.
the employees and it is in the public interest.
What if someone contravenes a
If an employer and the employee organisations can't
agree on the terms of a greenfields agreement after bargaining order?
six months of bargaining, the employer can still lodge The Fair Work Ombudsman can investigate
the agreement for approval with the Fair Work contraventions of a good faith bargaining order.
Commission. Where a person contravenes a bargaining order, the
Fair Work Ombudsman may take legal action for
In these circumstances, the Fair Work Commission
penalties of up to $16,500 per breach for an
must be satisfied the agreement:
individual and $82,500 per breach for a company.
 passes the BOOT Penalty amounts are subject to change. You can
 provides for pay and conditions that are check the current maximum penalties at
consistent with the standards of the relevant fairwork.gov.au/litigation
industry.
Alternatively, if a bargaining representative The Fair Work Commission can then help certain low
contravenes one or more bargaining orders, a paid employees and their employers negotiate a
bargaining representative can apply to the Fair Work multi-enterprise agreement and make a
Commission to assist in resolving the dispute. determination in certain circumstances.

What happens if the parties are What is an individual flexibility

unable to reach agreement? arrangement?
Where parties are unable to reach agreement on the While there are no longer statutory individual
terms and conditions of a proposed enterprise contracts under the FW Act, an employee and
agreement, a bargaining representative can make an employer can enter into an individual flexibility
application to the Fair Work Commission requesting arrangement (IFA) which varies the terms and
assistance. conditions of an enterprise agreement in order to
meet the genuine needs of the employee and
The Fair Work Commission can make a workplace
employer.
determination, which prescribes terms and
conditions for those employees to whom it applies. In Every enterprise agreement must contain a term that
addition, if there is a serious and sustained provides for individual flexibility arrangements.
contravention of a bargaining order that has
When an employer and an employee enter into an
significantly undermined bargaining, the Fair Work
IFA, they must ensure that:
Commission can make a serious breach declaration. If
matters are not then settled after 21 days, the Fair  the IFA is genuinely agreed to by the
Work Commission can make a workplace employer and the employee
determination.  it results in the employee being better off
Employees are able to initiate industrial action when overall than the employee would have been
bargaining for a proposed enterprise agreement. if no IFA was made
There are strict rules which govern industrial action  it is signed by both the employer and
under the FW Act, including the rights, employee
responsibilities and obligations of employers,  it is signed by a parent or guardian of the
employees and their organisations. For more employee in the case where the employee is
information, please see our Industrial action fact under 18 years of age
sheet at fairwork.gov.au/factsheets  a copy of the IFA is provided to the employee
within 14 days of agreement.
What assistance is there for low
If an IFA does not adhere to these terms it will still
paid workers? have effect. However, it may be in contravention of
A bargaining representative or a trade union can
the FW Act. There are also strong protections which
apply to the Fair Work Commission to get a low-paid
prevent undue influence or pressure being applied to
bargaining authorisation. The Fair Work Commission
an employee to get them to enter into an IFA.
can institute a low-paid authorisation where it
Penalties of up to $16,500 per breach for an
believes it is in the public interest to do so.
individual and $82,500 per breach for a company may
In deciding this, the Fair Work Commission looks at apply. Penalty amounts are subject to change. You
factors including: can check the current maximum penalties at
fairwork.gov.au/litigation
 whether the employers and their employees
are bargaining for the first time, or if they An IFA can be terminated either by mutual
face difficulties in bargaining agreement in writing between the employer and the
 the current terms and conditions of employee, or by either the employer or employee, by
employment of the employees giving written notice. Modern awards require 13
weeks notice but this may be different in an
 whether it will help identify productivity and
enterprise agreement (but no more than 28 days).
service delivery improvements
 the bargaining strength of the employers and For more information on IFAs, please see our Use of
employees involved. individual flexibility arrangements best practice guide
at fairwork.gov.au/bestpracticeguides
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The Fair Work Ombudsman is committed to providing you with advice that you can Last updated: March 2023
rely on. The information contained in this fact sheet is general in nature. If you are © Copyright Fair Work Ombudsman
unsure about how it applies to your situation you can call our Infoline on 13 13 94
or speak with a union, industry association or a workplace relations professional.