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How Does an Enterprise Agreement Work

An enterprise agreement is a binding contract between an employer and its employees that sets out the terms and conditions of employment. It is an agreement that is negotiated between the employer and the employees, or their representatives, rather than being based on an award or other external source of industrial relations law. In this article, we will discuss how an enterprise agreement works and what it means for both employers and employees.

Who Can Be Covered By an Enterprise Agreement?

An enterprise agreement can cover employees who are employed by the employer, or group of employers, in a single business or an associated entity. The agreement can be made with one or more unions of employees or with the employees themselves who are not members of a union. It must be approved by the Fair Work Commission (FWC) before it can come into effect.

What is Included in an Enterprise Agreement?

An enterprise agreement may include a range of employment matters, such as wages, penalty rates, entitlements, working hours, and dispute resolution procedures. It can also include terms and conditions that are unique to a particular workplace or industry.

Negotiating an Enterprise Agreement

Negotiating an enterprise agreement involves discussions between the employer and employees, or their representatives. The discussions can take place before or after the expiry of an existing agreement. The FWC must be notified of the agreement negotiations and given access to relevant documents.

The bargaining process must be conducted in good faith, and both parties must agree to the terms of the agreement before it is submitted to the FWC for approval. If agreement cannot be reached, either party can apply to the FWC for assistance in resolving the dispute.

Approval Process

Once the agreement has been negotiated and agreed upon, it must be submitted to the FWC for approval. The FWC will review the agreement to ensure it meets the requirements of the Fair Work Act 2009, including that it passes the Better Off Overall Test (BOOT), which ensures that employees are better off under the agreement than they would be under an award.

If the agreement passes the BOOT, the FWC will approve the agreement, and it will come into effect once the parties have taken the necessary steps to implement it.

Benefits of an Enterprise Agreement

An enterprise agreement provides certainty and stability to both employers and employees, as it sets out the terms and conditions of employment for a specific period. It can also provide flexibility, as terms and conditions can be tailored to suit the needs of a particular workplace or industry.

For employers, an enterprise agreement can help promote a positive workplace culture, increase productivity, and reduce turnover. For employees, it can provide job security, fair wages, and better working conditions.

Conclusion

An enterprise agreement is a formal agreement between an employer and employees that sets out the terms and conditions of employment. It is negotiated in good faith and must be approved by the FWC before it can come into effect. An enterprise agreement can provide certainty, stability, and flexibility for both employers and employees, and can help promote a positive workplace culture, increase productivity, and reduce turnover.