Enterprise agreement under the Fair Work Act 2009

Last updated: December 2020 | 5 min read

On 1 July 2009, the various types of collective and individual workplace agreements that existed under the previous workplace relations system were replaced by a single type of agreement: an ‘enterprise agreement’. This is simply an agreement between one or more national system employers and their employees, as specified in the agreement. Enterprise agreements are negotiated by the parties through collective bargaining in good faith, primarily at the enterprise level. Under the Fair Work Act 2009, an enterprise can mean any kind of business, activity, project or undertaking.

Under the Fair Work Act 2009, the following new enterprise agreements can be made:

Single-enterprise agreement

A single-enterprise agreement is made between a single employer (or two or more single interest employers) and employees employed at the time the agreement is made, and who will be covered by the agreement. Single interest employers are employers that are in a joint venture or common enterprise or are related corporations. They can also be employers authorised as single interest employers by Fair Work Australia, which may be either franchisees or other employers where the Minister for Employment and Workplace Relations has made a declaration.

Multi-enterprise agreement

A multi-enterprise agreement is made between two or more employers (that are not all single interest employers) and employees employed at the time the agreement is made and who will be covered by the agreement.

Greenfields agreement

A greenfields agreement is an enterprise agreement that is made in relation to a new enterprise of the employer or employers before any employees are employed. This can either be a single enterprise agreement or a multi-enterprise agreement. The parties to a greenfields agreement are the employer (or employers in a multi-enterprise greenfields agreement) and one or more relevant employee associations (usually a trade union).

An enterprise agreement is an agreement about permitted matters which are:

  • terms about the relationship between each employer and the employees covered by the agreement
  • terms about the relationship between each employer and any employee organisations (e.g. a trade union) who will be covered by the agreement
  • deductions from wages for any purpose authorised by an employee covered by the agreement
  • how the agreement will operate.

An enterprise agreement cannot include any unlawful content.

This includes:

  • a discriminatory term
  • an objectionable term (which are terms that require or allow payment of a bargaining services fee, or a contravention of the general protections provisions of the Fair Work Act 2009)
  • 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
  • a term that allows for the exercise of any State or Territory OHS legislative right of entry in a manner different to the rights set out in the right of entry provisions of the Fair Work Act 2009.

Fair Work Australia will review enterprise agreements for any unlawful content. Fair Work Australia cannot approve an enterprise agreement that contains unlawful content. Terms in an enterprise agreement, transitional instruments (award or agreement-based), and modern awards cannot exclude the NES and will have no effect.

How is an enterprise agreement made?

The Fair Work Act 2009 provides a simple, flexible and fair framework that assists employers and employees to bargain in good faith to make an enterprise agreement.

Employers, employees and their bargaining representatives are involved in the process of bargaining for a proposed enterprise agreement. An employer must notify their employees of the right to be represented by a bargaining representative during the bargaining of an enterprise agreement (other than a greenfields agreement) as soon as possible, and not later than 14 days after the notification time for the agreement (usually the start of bargaining). The notification should be given to each current employee who will be covered by the enterprise agreement.

Who can be a bargaining representative?

A bargaining representative is a person or organisation that each party to the enterprise agreement may appoint to represent them during the bargaining process.

The Fair Work Act 2009 identifies the following as bargaining representatives:

  • an employer that will be covered by the agreement
  • a trade union who has a member that would be covered by the agreement (unless the member has specified in writing that he or she does not wish to be represented by the trade union, or has appointed someone else)
  • a trade union that has applied to Fair Work Australia for a low paid authorisation that relates to the agreement
  • a person specified in writing as their bargaining representative by either an employer or employee who would be covered by the agreement.

For employees, the default bargaining representative is a trade union. However, employees can generally appoint whoever they wish as their bargaining representative, including themselves.

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