What’s a Greenfields Agreement?

When starting a new business venture, you may desire flexibility in what your future employee’s pay and conditions are. A greenfields agreement gives you this flexibility and can be established while you are creating your new enterprise. Read on to find out all you need to know about greenfields agreement.

Table of Contents

What is a Greenfields Agreement?

A greenfields agreement is a enterprise agreement that is created before a new employer has any employees. They can cover a single business or multiple businesses and are negotiated with employee associations such as unions. Like other enterprise agreements they must satisfy the ‘better off overall test’, so that your employees are better off having the agreement as compared to the respective employment award.

What Are the Requirements of a Greenfields Agreement?

To be eligible for a greenfields agreement your business must meet the requirements of the Fair Work Act. Firstly, you must be a ‘genuinely new enterprise’, so you are unable to create one if resurrecting a former business. Secondly, the enterprise must currently not employ anyone. Therefore, employees can only start working after the commencement of the agreement. Thirdly, a greenfields agreement must be made with an employee association that covers the industry that the business is in. Fourthly, a greenfields agreement must be made in the ‘public interest’. You will also have to meet the requirements of an enterprise agreement, which includes terms regarding dispute resolution, an expiry date for the agreement and other matters as required by the Fair Work Commission. Keep in mind, that you have to a minimum of ten employees to have an enterprise agreement.

How Do I Make One?

To make one, you will need to undergo negotiations with the respective union that will cover the industry that your new enterprise will be in. You will have to conduct these negotiations in ‘good faith’ in order to reach an agreement with the employee association. You also will require the approval of the The Fair Work Commission to form a greenfields agreement. Furthermore, you will be unable to employ people on the agreement until the Fair Work Commission approves it. Given the complexity of forming one, it is advisable to have an employment lawyer to assist you.

When Is It Appropriate to Have a Greenfields Agreement?

It is appropriate to have one, when you desire flexibility in the terms and conditions for your new employees. This is particularly important if your business has unique circumstances that cannot be appropriately covered by the respective Modern Award. On the other hand, it may not be worth the effort if you do not require flexibility for your employees’ pay and conditions.

Conclusion

Thus, now you know about greenfields agreements and what they can do for your business. Remember that they are optional, and that you may decide it is better for your employees to be covered by existing employment awards such as a Modern Award.

Unsure where to start? Contact a LawPath consultant on 1800 529 728 to learn more about customising legal documents and obtaining a fixed-fee quote from Australia’s largest legal marketplace

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