Enterprise bargaining refers to the negotiation process between employers and employees which involves their respective bargaining representatives. The ultimate aim of these negotiations is to establish an enterprise agreement. This process is governed by the provisions of the Fair Work Act 2009. The legislation outlines the legal requirements of parties negotiating a bargaining agreement. It details the specific content that can be included, as well as what is needed for your agreement to be established and then approved.
Enterprise Agreements
Most enterprise bargaining negotiations will generally result in the creation of an enterprise agreement. These agreements are formed between a national system employer (an employer who is bound by the Fair Work Act laws) and their employees. The Fair Work Act does not allow for an enterprise agreement to be made with one individual employee. Enterprise agreements are negotiated by the parties in good faith through collective bargaining.
The parties must follow the rules of bargaining throughout the negotiation process. If a majority of workers want to collectively bargain, their employer is obliged to do so. Employers also need to notify their employees of their right to choose bargaining representatives and provide a statement of this information. In addition, the principle of good faith requires that both parties engage in meetings at reasonable times and share information in a timely manner.
There are three types of enterprise agreements that parties can form:
- Single Enterprise → 1 employer and their employees
- Multi Enterprise → 2 or more employers and their employees
- Greenfields Agreement → Between a union and new employer, who does not have employees yet
What must be included in an Enterprise Agreement?
- Nominal Expiry Date (which is no longer than 4 years from date of approval)
- Dispute Settlement Procedure
- Flexibility Term
- Consultation Term
Approval Process
Provided the essential terms above have been included, the Fair Work Commissioner will then conduct a “Better Off Overall Test” prior to approval. This essentially tests whether your enterprise bargaining agreement is better overall for employees, in comparison to the relevant industry award and the National Employment Standards. If this is shown to be the case, your agreement can be legally approved.
It is vital for both employers and employees to be aware of any active enterprise agreements when entering into an employee contract. Legally, an employee contract cannot provide for less than the minimum requirement set out in the National Employment Standards, industry awards and enterprise agreements. It would be wise to have a contracts lawyer review your employee contract to advise whether the necessary legal standards have been met.
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