Changes to Enterprise Bargaining in Australia

From 6 June 2023 onwards, significant changes have been made to enterprise agreements and bargaining methods by the Fair Work Commission (FWC). Before identifying the changes, it is imperative to understand what these types of agreements are and whether you are subject to these changes.

In a nutshell, our employment framework in Australia consists of:

1. The national minimum wage ($21.38 per hour);
2. The National Employment Standards, which sets out the standards for all works under the national workplace relations systems;
3. Modern awards; and
4. Enterprise agreements

Enterprise Agreements

An enterprise agreement is an employment agreement between one or more employers and their employees. Each party negotiate the terms of the agreement through collective bargaining in good faith. These types of agreements replace any modern awards that may be applicable and act as the base terms and conditions of employment for the employees. For enterprise agreements, there are 3 streams to consider:

1. Single-enterprise Agreement – made between one or more employers that share a single interest in a group of employees. This type of agreement requires a determination by the FWC to confirm that the relevant entities are single-interest employers.
2. Multi-enterprise Agreement – made between two or more employers and employees of those different enterprises. These agreements do not require authorisation by the FWC.
3. Greenfield Agreement – a type of agreement that is only available for new enterprises and made before any employees are employed. This can occur in a single-interest or a multi-interest method.

The above agreements will generally contain the basic terms in an employment agreement, such as pay rates, penalty rates, overtime pay, entitlements, hours of work, and other terms relevant to the operation of the agreement. However, these agreements are thoroughly regulated under the FWC, which means mandatory terms must be added such as coverage term explanation, dispute resolution procedures, and potential consultation terms between employers and employees.

Enterprise Bargaining?

The ‘bargaining’ aspect of an enterprise agreement allows a representative to take part in the bargaining of the employment contract. This representative of the employee must be independent and cannot be influenced/controlled by the employee’s employer, or another representative. In a single or multi-enterprise agreement, both the employer and employee can be bargaining representatives or can appoint someone to do so. In cases where an employee is in a union, that union will act as the bargaining representative.

What are the changes to EA’s?

The following changes were enacted after 6 June 2023:

• amendments to the ‘better off overall test’ (BOOT);
• requirement of a Statement of principles to be considered in determining whether an EA is genuine or not; and
• changes to the multi-enterprise bargaining stream

The new changes to the BOOT states that ALL EA’s must pass the BOOT test. The terms and conditions must make the employee better off than the relevant award that is considered. If the employees are not considered to be better off overall, the FWC will not approve the EA. As such, previously lodged EA’s will also need to pass the BOOT concerns. Furthermore, the FWC will require an additional Statement of principles to be considered which contains 20 set principles that the employer’s should follow and be reflected on the EA to which the employee ‘genuinely agreed’. The new Legislative Instrument can be found on the FWC website.

The biggest change involves the addition of new bargaining streams being available for multi-enterprise agreements. Prior to 6 June 2023, single-enterprise agreements were vastly popular due to its practicality. Therefore, to make the multi-enterprise agreements more viable for employers and employees, the FWC introduced three new separate streams for multi-enterprise agreements. These are outlined below:

1. Supported bargaining – replacement for the “Low Paid” stream. This stream has been widened to encourage greater uptake. Industries relevant to this stream is aged care, disability care, and early childhood education and care.
2. Single interest bargaining – where FWC is satisfied that the employers have identifiable common interests (typically franchisees) to be covered by the same EA.
3. Cooperative workplace bargaining – specifically where two or more employers agree to bargain together for employees.

The above changes allow greater opportunities for multiple employers to be pulled into bargaining agreements regardless of other employer consent. In addition to this, employees are better off due to the terms and conditions are considered at an industry level compared to an enterprise level. The new streams allow for greater collaboration with employees and employees regarding the type of EA they chose to undertake.

Now may be the time to get an EA agreement drafted, so if you are looking for any assistance, please don’t hesitate to contact us.