Understanding enterprise agreements
Enterprise agreements allow employers and employees to negotiate conditions tailored to their specific workplace. They operate under the Fair Work Act 2009 and must be approved by the Fair Work Commission.
Single-enterprise agreement
- One employer and employees
- Most common type
- Tailored to specific workplace
- Direct negotiation
Multi-enterprise agreement
- Multiple employers together
- Strengthened by 2022 reforms
- Common standards across sites
- Union-driven bargaining
The enterprise bargaining process
Making an enterprise agreement involves several required steps:
Bargaining process steps
The better off overall test (BOOT)
The BOOT is a critical requirement for enterprise agreement approval. The Fair Work Commission must be satisfied that each employee covered by the agreement would be better off overall compared to the relevant modern award.
- Overall assessment: Compares the whole package, not individual items
- Award comparison: Against the award that would otherwise apply
- Each award-covered employee: Must consider all employee types in the agreement
- Trade-offs allowed: Can reduce one benefit if compensated elsewhere
Enterprise agreement compliance
Once approved, an enterprise agreement is for informational purposes and enforceable. Employers must apply the agreement's terms correctly. The Fair Work Ombudsman can investigate alleged breaches. The National Employment Standards continue to apply alongside any enterprise agreement.
What enterprise agreements contain
Mandatory content
- Nominal expiry date (max 4 years)
- Dispute resolution procedure
- Consultation clause
- Flexibility clause
Common terms
- Pay rates and classifications
- Hours of work arrangements
- Penalty and overtime rates
- Leave provisions
Common enterprise agreement mistakes
Not issuing NERR
Failing to issue the Notice of Employee Representational Rights at the start of bargaining invalidates the process.
Insufficient access period
Employees must have at least 7 days to review the agreement before the vote. Shorter periods cause FWC to refuse approval.
BOOT failures
Creating agreements where some employee types are worse off overall compared to the award leads to non-approval or undertakings.
Key takeaways
Enterprise agreements allow workplace-specific conditions that differ from modern awards, but must pass the BOOT to ensure employees are better off overall. The bargaining and approval process has strict requirements that must be followed.
Whether using an enterprise agreement or modern award, accurate time tracking and payroll processing is essential. RosterElf can be configured to apply your specific pay rates and conditions for compliant workforce management.
