Tag: Fair Work Commission

Enterprise Agreements Part 3: Negotiation

Enterprise Agreement Negotiation - IR Simplified

Enterprise Agreement Negotiation - IR Simplified
Photo Credit: Complete Interior Design via Compfight cc

This is part 3 in a series on enterprise agreements.

You can find the lead post in the series here.

Part 1: Enterprise Agreements Part 1: What Are They? we discussed what enterprise agreements are, how they differ from Modern Awards and talked about what can and cannot be in one.

Part 2: Enterprise Agreements Part 2 – Planning was a discussion around the planning that should happen behind the scenes of the enterprise agreement.

In this episode, we will talk a little more about what happens during the negotiation phase of enterprise agreement negotiations.

So, without further ado, here we go.

Make It Happen

After giving is some serious thought and more than a little bit of prior planning, you have decided that an enterprise agreement will be a good thing for the future growth of your business.

What’s got you confused is how you make it happen.

Do you just give your staff the agreement that you prepared earlier and wait for a yay or nay from them?

Or, do you give them a blank sheet of paper and get them to write down their wish list, picking and choosing what you want to put into it?

Whilst the process of negotiating an enterprise agreement is relatively easy, there are certain things that need to be done, and in the right order, otherwise you may have some explaining to do when you seek approval from the Fair Work Commission.

Notice Of Employee Representational Rights.

Before you can start bargaining for the enterprise agreement, you need to let your staff know that it is happening. This is where the Notice of Employee Representational Rights comes in.

Schedule 2.1 of the Fair Work Regulations 2009 specifies the content that the notice should have.
It is also worth noting that the notice of employee representational rights should be just that, and not have anything else attached to it, either in the email notification or when/if the notice is placed on a notice board.


How often should you meet to negotiate the agreement?
Where should you meet?

The frequency of meetings is entirely up to you, though in the interests of workplace harmony, I would be inclined to say that you should meet as often as you can, for as long as it takes to get a document that all parties are happy with.

Sure, these meetings can be a hassle and pain in the proverbial. Though think of it this way. A little bit of discomfort now will prevent the whole lot of disruptions that come from protected industrial action.

As for the location, well that is entirely up to you. If you have a boardroom not being used, that is a good enough spot.

Though, if you are negotiating with a union, they will request some sort of ‘neutral’ location claiming that negotiating at the workplace gives the company a ‘home ground advantage’.

Bargaining In ‘Good Faith’

Those who are involved in the bargaining for a new enterprise agreement, including bargaining representatives, are required to bargain in good faith.

The following are the requirements that a bargaining representative for a proposed enterprise agreement must meet to be considered as bargaining in good faith:

  • Attending, and participating in, meetings
  • Disclosing relevant information (other than confidential or commercially sensitive information) in a timely manner
  • Responding to proposals made by other bargaining representatives for the agreement in a timely manner
  • Giving genuine consideration to the proposals of other bargaining representatives for the agreement, and giving reasons for the bargaining representative’s responses to those proposals
  • Refraining from capricious or unfair conduct that undermines freedom of association or collective bargaining
  • Recognising and bargaining with the other bargaining representatives for the agreement.

It should be noted that the good faith bargaining requirements do not require a bargaining representative to, a) make concessions during bargaining for the agreement or, b) reach agreement on the terms that are to be included in the agreement.


Once all the bargaining reps have agreed on the content in the agreement, and a draft has been prepared, the following steps need to be taken to ensure that it is valid.

  • Explanation of the terms of the agreement, and the impact that those terms will have
    The explanation must be in a way that is appropriate for the audience.
  • Vote on the agreement
    This cannot occur until after 21 days have passed since the notice of employee representational rights was issued.
    Those voting also must have been given access to the draft agreement for seven (7) days prior to the vote.

The employer must also notify employees of:

  • The time when the vote will take place
  • The location where the vote will take place
  • The voting method that will be used

For a single enterprise agreement to be made, a successful vote needs to occur. This is achieved when a majority of the employees of the employer who cast a valid vote endorse the agreement.

Fair Work Commission approval

This is the final step in having the draft agreement recognised and registered as an approved agreement.

Once the agreement has been made via a successful vote, a bargaining representative for the agreement must apply to the Commission for approval of the agreement. The application must be lodged with the Commission within 14 days of the agreement being made.

When the Fair Work Commission approves an agreement they take into account the following points.

  • the agreement has been made with the genuine agreement of those involved
  • the agreement passes the better off overall test
  • the agreement does not include any unlawful terms or designated outworker terms
  • the group of employees covered by the agreement was fairly chosen
  • the agreement specifies a date as its nominal expiry date (not more than 4 years after the date of Commission approval)
  • the agreement provides a dispute settlement procedure
  • the agreement includes a flexibility clause and a consultation clause.

If there are concerns about any of the above points, the Commission may seek an undertaking from the employer to rectify any issues.

The next article in this series covers protected industrial action. How to minimise the chance of it, how it happens, and why a protected action ballot should be seen as a god thing for businesses.

Once it is published, you will find that article here: Enterprise Agreement – Protected Industrial Action

Enterprise Agreements Part 1: What Are They?

Enterprise Agreements. What Are They? | IRSimplified.com.auThis is part 1 in a series on enterprise agreements.

You can find the first post in the series here.

With regards to the Fair Work Act 2009, an enterprise agreement is an agreement on certain employment conditions between an employer and their employee(s).

Enterprise Agreements can be between:
a) An employer and group of employees;
b) More than one employer and group of employees;
c) One of more employers and one of more unions for a genuine new enterprise (Greenfields Agreement)

Modern Awards v Enterprise Agreements

A Modern Award covers specific employees within a particular industry.

An Enterprise Agreement covers employees of a particular employer(s).

Enterprise Agreements can bundle a number of different Modern Awards that apply to a workplace into the one document. Once the Enterprise Agreement has been approved, the Modern Award(s) no longer apply.

However, the wages and conditions cannot make an employee ‘worse off’ when compared to the relevant Modern Award.


For an Enterprise Agreement to be approved by the Fair Work Commission, it must pass the Better Off Overall Test (BOOT).

Let’s say you want to avoid the confusion of when to pay penalty rates, you could roll those rates into the standard hourly or annualised salary.

For example, your staff have a standard rate of $27.00 per hour for a 38 hr week Monday to Friday, working an additional Saturday a month for 6 hrs.

Their normal weekly wage would be $1026.00 rising to $1323.00 when working the additional Saturday.

The new agreed wage could be $27.86 per hour flat rate, which would bring their weekly wage up to $1100.50.

To pass BOOT, the employee would need to get a wage over the 4 week period which is equal to or better than $4401.00 ($1026.00 x 3 + $1323). Over a 4 week period on the new rate, the employee would earn $4402.00.

This means that they are better off, and the rolled up rate would be acceptable.

Unlawful Content

An Enterprise Agreement cannot include unlawful content.

Some examples are:

  • A discriminatory term
  • An objectionable term
  • A term that would enable an employee or employer to ‘opt out’ of coverage of the agreement
  • A term that confers an entitlement or remedy in relation to unfair dismissal before the employee has completed the minimum employment period
  • A term that excludes, or modifies, the application of unfair dismissal provisions in a way that is detrimental to, or in relation to, a person
  • A term that is inconsistent with the industrial action provisions
  • A term that provides for an entitlement to right of entry that is not in accordance with Part 3-4 of theFair Work Act 2009, or,
  • A term that provides for the exercise of a State or Territory OHS right other than in accordance with Part 3-4 (which deals with right of entry).

From 01 January 2014, an enterprise agreement cannot include a term that requires superannuation contributions for default fund employees to be made to a superannuation fund, unless that fund:

  • Offers a MySuper product
  • Is an exempt public sector scheme, or
  • Is a fund of which a relevant employee is a defined benefit member.


While the Fair Work Act says that an enterprise agreement cannot have a nominal expiry date of more than 4 years from the day it was approved by the Fair Work Commission. The enterprise agreement will remain in force until it is superseded by a new enterprise agreement, or an application for it’s termination has been approved.


For an Enterprise Agreement to be approved the FWC must be satisfied that:

  • the agreement has been made with the genuine agreement of those involved
  • the agreement passes the better off overall test and does not include any unlawful terms or designated outworker terms
  • the group of employees covered by the agreement was fairly chosen
  • the agreement specifies a date as its nominal expiry date (not more than four years after the date of Commission approval)
  • the agreement provides a dispute settlement procedure
  • the agreement includes a flexibility clause and a consultation clause.


The Fair Work Commission may approve an Enterprise Agreement that does not meet the requirements of the Fair Work Act 2009, if the employer agrees to enter into certain undertakings that will alleviate the concerns.

The views of each bargaining representative will be sought, and once the FWC is satisfied that the effect of accepting the undertaking is not likely to cause financial detriment to any employee and result in substantial changes to the agreement, it may be approved.

Episode 40 IR Simplified Podcast. Small Business Fair Dismissal Code

Episode 40 IR Simplified Podcast Small Business Fair Dismissal Code
Episode 40 IR Simplified Podcast
Small Business Fair Dismissal Code

Today’s episode of the IR Simplified podcast is about the small business fair dismissal code.

I talk about what it is, who it applies to, and how to use it.

Remember to check out Industrial Relations Today, and add your name to the mailing list to be one of the first to know what’s happening and when.

The coming webinars that will be hosted by IR Simplified can be found here.

You can find a list of all the training packages that IR Simplified has by going to IRSimplified.com.au/training

Get more information on the Understanding Industrial Relations course, or the new one, Mastering Industrial Relations.

And finally, don’t be the only one who hasn’t subscribed to the IR Simplified newsletter.

You can do that by heading here.

[iframe style=”border:none” src=”http://html5-player.libsyn.com/embed/episode/id/3711976/height/100/width/480/thumbnail/no/theme/legacy” height=”100″ width=”480″ scrolling=”no” allowfullscreen webkitallowfullscreen mozallowfullscreen oallowfullscreen msallowfullscreen]
Check out this episode!