Enterprise agreement vs award

If an enterprise agreement applies to an employee, the modern award does not apply to them, even if it would otherwise cover them (Fair Work Commission). Employees with neither an award nor an agreement get the national minimum wage and the NES. For applying an award day to day, see modern award compliance. This guide covers employers in the national workplace relations system.

1. Start bargaining. The employer agrees to bargain, or employees can apply to the Commission for a majority support determination if the employer won’t.
2. Give the NERR. For a single-enterprise agreement, give the Notice of Employee Representational Rights (s 173) to every employee the agreement will cover, no more than 14 days after bargaining starts.
3. Bargain and draft. Bargaining representatives must bargain in good faith. Include the required terms, such as a nominal expiry date and, for votes requested from 1 July 2024, a delegates’ rights term.
4. Run the access period. For at least 7 clear days before the vote, employees must have the agreement, any incorporated material and details of how, where and when to vote. Explain the terms and their effect.
5. Hold the vote. You can’t request the vote until 21 days after the last NERR was given. The agreement is made when a majority of employees who cast a valid vote approve it (s 182).
6. Apply for approval on Form F16 within 14 days. The agreement has no effect until the Commission approves it, and the Commission may ask for undertakings to fix minor issues.

For agreements with a notification time on or after 6 June 2023, the Commission applies a Statement of Principles on Genuine Agreement. The voters must have a sufficient interest in the agreement and be sufficiently representative of who it covers.

The BOOT is a global assessment, not a line-by-line comparison. An agreement can reduce some award benefits if other benefits more than make up for them. Individual flexibility arrangements made under the award are disregarded.

For agreements made on or after 6 June 2023, s 193A requires the Commission to consider only patterns or kinds of work and types of employment that are reasonably foreseeable when the agreement is made, and to give primary consideration to any common view of the bargaining representatives. The Commission can also amend an agreement that doesn’t pass, and reconsider an approved agreement if circumstances weren’t properly considered or have changed.

The Commission’s list of common BOOT defects includes omitted casual and part-time overtime and minimum engagements, allowances, overtime and shift penalties, annual leave cashing-out safeguards and junior or apprentice rates. It considers every award entitlement, even ones your business doesn’t use today, such as weekend rates.

• Single-enterprise: one employer, or related employers such as a joint venture, related bodies corporate or franchisees of the same franchisor.
• Supported bargaining: a Commission authorisation that helps low-paid employees bargain across several employers.
• Single interest employer: for employers with clearly identifiable common interests, under a Commission authorisation.
• Cooperative workplaces: any other multi-enterprise agreement that employers agree to bargain for voluntarily.
• Greenfields: signed by the employer and one or more relevant unions before the employees it will cover are employed.

From 27 February 2024, an employer can move from a supported bargaining or single interest employer agreement to a single-enterprise agreement before it reaches its nominal expiry date, with written agreement from the relevant unions or a voting request order (types of agreement).

• Consider it when award rosters, penalty structures or classifications don’t fit how you operate, when you want one set of conditions across several award-covered roles, or when you want pay certainty over several years.
• Stay on the award when it already fits, your workforce is small or changes often, or you can’t commit to rebargaining every few years.
• Cost it first: model the agreement against award costs for each realistic roster, because the BOOT is assessed on reasonably foreseeable patterns of work. The hiring cost calculator helps with per-employee on-costs.

An agreement must state a nominal expiry date no more than 4 years after approval (s 186(5)). After that date the agreement continues to apply until replaced or terminated, and the NES still applies where an agreement term is less generous.

• Termination by agreement: the employer and covered employees agree, a majority of valid votes approve, and the Commission must approve the termination (Form F24).
• Termination on application: after the nominal expiry date an employer, employee or union covered by the agreement can apply (Form F24B). The Commission must terminate it if that isn’t contrary to the public interest and is appropriate in all the circumstances, including the views of those covered and the likely effect on them (s 226).

When an agreement ends, minimum pay and conditions are set by the modern award that covers the employees, or by a replacement agreement. Old pre-2010 agreements (zombie agreements) automatically terminated on 7 December 2023 unless the Commission extended them, so check whether any legacy instrument still applies to your staff (Fair Work Commission).