Enterprise Bargaining: A Way to Achieve Operational Flexibility

An enterprise agreement is an agreement made at the enterprise level covering one or more employers and their employees that sets out the minimum terms and conditions of employment. It must comply with the requirements of the Fair Work Act 2009 (Cth) (‘FW Act’) including the Better Off Overall Test (‘BOOT Test’) and can operate for a period of up to four years from the date of approval.

The two main types of enterprise agreements under the FW Act are single-enterprise agreements and multi-enterprise agreements.

A single-enterprise agreement is made by, an employer, or two or more employers that are single-interest employers, and their employees who are employed at the time the agreement is made and who will fall within the coverage of the agreement. The most common type of enterprise agreement is between a single employer and their employees.

A multi-enterprise agreement is made by two or more employers and their employees who are employed at the time the agreement is made and who will fall within the coverage of the agreement. Bargaining for a multi-enterprise agreement occurs where two or more employers voluntarily agree to bargain together.

It is possible to have a greenfields agreement relating to a genuine new enterprise. This is made at the time when, an employer, or two or more employers, have not yet employed any persons who will be necessary for the normal conduct of the enterprise and who will be covered by the agreement. These can be a single-enterprise agreement or multi-enterprise agreement. As there are no employees, a greenfields agreement must be made with one or more relevant unions.

There are a number of stages to the bargaining process with some differences depending on the type of enterprise agreement. It generally involves the employer issuing a bargaining notice, the bargaining representatives engaging in good faith bargaining, reaching an agreement (which in the case of a non-greenfields agreement requires a vote of employees), lodging the enterprise agreement including associated documentation with the Fair Work Commission (‘FWC’) and awaiting approval.

Enterprise bargaining allows the negotiation of specific terms and conditions of employment for an enterprise within the minimum requirements of the FW Act. An enterprise agreement is particularly useful to obtain operational flexibility when the applicable modern award is too restrictive.