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The New World of Enterprise Agreement Making

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Agreement making has long formed an integral part of the workplace relations system providing flexibility to employers and employees in their systems of work.  As part of its ‘Transition to Forward with Fairness’ amendments in March 2008, the government took its first steps to abolish Australian Workplace Agreements and to place a renewed focus on collective bargaining.

The Fair Work Act 2009 sets down the new arrangements for workplace agreement making which will see a renewed focus on good faith bargaining of all interested parties.

What types of agreements will be available

The following types of enterprise agreements are available under the Fair Work Act 2009:

Single-enterprise Agreements

A single employer, or a group of employers with a single interest, may enter into a single-enterprise agreement with a particular group of employees.

Franchisees of the same franchise are specifically able to apply for a single interest employer authorisation from Fair Work Australia to enable these employers to now enter into a single enterprise agreement.

There is no longer a distinction between non-union and union agreements.

Multi-enterprise Agreements

Two or more employers who are not single interest employers may enter into a multi-enterprise agreement with a particular group of employees within each enterprise.

A key difference between multi-enterprise agreements and multiple-business agreements available under WorkChoices is that it will not be necessary to evidence that it is in the public interest for a particular group of businesses to bargain together.

Greenfields Agreements

One or more employers may enter into a greenfields agreement (either with or without a union) in connection with a genuine new enterprise that the employer is proposing to establish, and where no employees necessary for the normal conduct of the business have been employed yet.

In approving a greenfields agreement, Fair Work Australia must be satisfied that any unions covered by the agreement (if relevant) are actually entitled to represent employees covered by the agreement and that the Greenfield agreement is in the public interest.

What will be required to enter into an enterprise agreement?

An enterprise agreement must contain the following terms:

  • The National Employment Standards
  • A nominal expiry date of no later than 4 years
  • A dispute settlement procedure
  • A flexibility term (which may be the model flexibility term) enabling an employer and employee to agree to an arrangement to vary the effect of the agreement to meet the genuine needs of the employer and employee
  • A consultation term (which may be the model consultation term) requiring an employer to consult with employees about major workforce changes which are likely to have a significant impact on employees and
  • No unlawful terms

In order to enter into an enterprise agreement, the following steps must be undertaken:

  • The employer must notify employees of their right to be represented by a bargaining representative, within 14 days of initiating the bargaining process
  • Employees must be provided with a copy of the proposed enterprise agreement, no less that 7 days before the vote
  • The employer must take all reasonable steps to explain the terms of the agreement to employees; specifically those with particular circumstances (ie. you employees) and
  • A majority of employees who cast a valid vote must vote in favour of the collective agreement (or in the case of a greenfields agreement, a representative of the employer and union must sign the agreement)

The enterprise agreement must be lodged with Fair Work Australia (‘FWA’) for approval within 14 days of voting.  In order to gain the approval, the enterprise agreement must meet the ‘better off overall test’ (the ‘BOOT’).

In determining whether an enterprise agreement meets the BOOT, FWA must be satisfied that each employee to be bound by the enterprise agreement will be better of overall than they would be if the relevant modern award applied to the employee.

Where an enterprise agreement does not meet the BOOT, FWA may accept undertakings from the employer so long as the undertakings will not cause financial detriment to any employee or result in substantial changes to the agreement.

An enterprise agreement will commence operation following FWA approval or the date of commencement specified in the enterprise agreement, whichever is the later.

The obligation to bargain in good faith

An employer must not refuse to recognise or bargain with a bargaining agent for a proposed enterprise agreement.  Further, in determining whether to approve an enterprise agreement, FWA must be satisfied that the enterprise agreement is not inconsistent with, and does not undermine good faith bargaining by a bargaining representative.

A bargaining representative who has concerns that another bargaining representative is not meeting good faith bargaining requirements, may apply to FWA for a bargaining order.

A bargaining order may require a bargaining representative to:

  • attend and participate in meetings at reasonable times
  • disclose relevant information (other than confidential or commercially sensitive information)
  • respond to proposals
  • give genuine consideration to proposals and providing reasons for responses to proposals and
  • refrain from capricious or unfair conduct that undermines freedom of association or collective bargaining

Arbitration

FWA is able to arbitrate, or make a workplace determination, in the following circumstances:

1. In the case of an enterprise agreement for low paid workers where:

  • an application for a workplace determination has been made
  • FWA is satisfied that bargaining representatives have made reasonable efforts to agree on the terms of an enterprise agreement and
  • there is no reasonable prospect of agreement being reached or

2.In the case of an enterprise agreement for all other workers, where:

  • a ‘serious breach declaration’ has previously been made by FWA in connection with a bargaining representative’s refusal to bargain in good faith
  • the negotiation period following the making of the ‘serious breach declaration’ has expired and
  • bargaining representatives have not settled all of the matters that were at issue during bargaining for the enterprise agreement

In each case, FWA may only make a workplace determination dealing with core terms of an enterprise agreement as specified in the legislation.

Summary

The introduction of the Fair Work changes has heralded significant changes in workplace agreement making.  With a clear emphasis on ensuring that employees are not just at no disadvantage but actually better off under an enterprise agreement, employers will need to ensure that additional benefits offered to employees are codified within their enterprise agreement.

The requirement to bargain in good faith will considerably enhance existing provisions of the Workplace Relations Act which provide that industrial action may be taken where a party has not genuinely tried to reach agreement.  As such, there will be renewed scope for unions to seek involvement in workplace agreement making.

Employers are able to continue to make workplace agreements under the current regime prior to the Fair Work changes taking effect.  For further information on agreement making under the current or prospective system please contact the MST Workplace Relations Team on 8540 0200.

 

Author: Katie Sweatman