You have recently set up your business and you’re ready to take on new employees. You now need an Employment Agreement. Or is it an Enterprise Agreement? Or both?

There is a lot of confusion around whether business owners need an Enterprise Agreement, Employment Agreement of both. In the article below I’m going to break down the differences between an Enterprise Agreement and an Employment Agreement and lay out the circumstances where you would need either one.

Enterprise Agreement

An Enterprise Agreement is an optional binding instrument you can choose to make between yourself and your employees which sets out their terms and conditions of employment. The Fair Work Commission must be satisfied that the enterprise agreement meets all legislative requirements in the Fair Work Act before approving it.

This includes that it passes the ‘better off overall test’ (BOOT). This test requires that each of your employees who are covered by the agreement are better off overall than under the relevant modern award.

You can use an Enterprise Agreement to set out the minimum employment conditions that apply to:

  • Your business or businesses;
  • Your employees.

Using an Enterprise Agreement means that the award no longer applies. But there are still requirements you must meet such as:

  •       Your Enterprise Agreement must not pay less than the award;
  •       You must meet National Employment Standards.

An Enterprise Agreement is optional, but can make your business an attractive alternative if you set minimum standards that are more desireable for employees than your competitors.

Employment Agreement

Unlike an Enterprise Agreement, an Employment Agreement is compulsory. You must have established, ann Employment Agreement between you and your employees. A Full Time Employment Agreement (Long Form) or Casual Employment Agreement gives you the capacity to layout clear expectations and responsibilities for your new full-time or casual employees.

Employment Agreements often covers legal provisions such as remuneration, bonus, share scheme, expenses, motor vehicle benefits and many more. Your Full Time Employment Agreementmust comply with the current Fair Work Act 2009 (Cth) and the National Employment Standards (NES).

Employment Agreement’s cover:

  • Position, duties, and working hours;
  • Employee obligations;
  • Term of employment;
  • Remuneration, bonus, share scheme, superannuation;
  • Probation period, notice period, leave and termination provisions;
  • Expenses, motor vehicle benefits;
  • Policies and procedures;
  • Confidentiality provision;
  • Non-compete provisions;
  • Non-solicit provisions;
  • Intellectual property provision; and
  • Severability, variation, jurisdiction.

What To Do Next

Now that you know the differences between an Employment Agreement and an Enterprise Agreement, you can easily create an Employee Agreement through LawPath or get a fixed fee quote from one of Lawpath’s network of employment lawyers if you need advice on how to create an Enterprise Agreement.

“Unsure where to start? Contact a LawPath consultant on 1800LAWPATH to learn more about customising legal documents, obtaining a fixed-fee quote from our network of 600+ expert lawyers or any other legal needs.”

Rhys Diab

Rhys is a Paralegal at LawPath in their content team. Pursuing his interest in digital marketing and commercial law, he has completed a law degree at the University of New South Wales and is involved in online media.