What Is An Enterprise Agreement?

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Home > Blog > What Is An Enterprise Agreement?

Enterprise agreements are workplace instruments which outline the minimum terms and conditions of employment. The terms of an enterprise agreement are negotiated between employers, employees and unions or other representatives bargaining on behalf of singular employees or employee groups.

What does an enterprise agreement cover?

Enterprise agreements can cover a wide range of issues, including the hours employees work, fair wages, matters surrounding meal breaks and overtime as well as flexible working rights. Enterprise agreements can also cover dispute resolution processes.

A key characteristic of enterprise agreements is that they must provide award-covered employees with a position that is ‘better off overall’ than their relevant modern award. Enterprise agreements cannot offer employees any less than what is already contained in the minimum standards as set out by the National Employment Standards.

Is an enterprise agreement the same as an industrial award?

Enterprise agreements are not to be confused with industrial awards. Where industrial awards relate to minimum pay and working conditions for specific industries, enterprise agreements relate to conditions for specific companies only.

Do enterprise agreements expire?

Enterprise agreements are valid for a period of up to four years from the date of approval, however, they can continue to operate after the expiry date until such time they are replaced by a new enterprise agreement or terminated by the Fair Work Commission.

Are there different types of enterprise agreements?

Yes. There are two types of enterprise agreements which can be made under the Fair Work Act. These are single-enterprise agreements and multi-enterprise agreements.

Single-enterprise agreements

These types of agreements are created between either a single employer or two or more employers that are single-interest employers, and a group of employees. Having a single interest means having shared interests, for example through a joint venture, a common enterprise, or due to the corporations being otherwise related. Single-interest employers must seek a determination from the Fair Work Commission in order to confirm their status as such.

Multi-enterprise agreements

These types of agreements are formed between two or more employers whose interests are not shared, and any employees covered by the agreement. Two or more employees must voluntarily agree to bargain together in order for multi-enterprise agreement bargaining to occur.

Greenfields agreements

A third type of agreement, a greenfields agreement, exists for new enterprises and it may be executed before any of the employees who will be covered by the agreement have even been hired. These agreements may be single or multi-enterprise in nature and are typically negotiated between employee representatives and the new enterprise. New enterprises should be careful about the timing between establishing the enterprise and applying to the Fair Work Commission for a greenfields agreement. If the Commission finds that work has progressed too far beyond the preparatory stage, the Commission may not be satisfied that the enterprise is genuinely new.

What can’t be covered by an enterprise agreement?

An enterprise agreement cannot cover anything which would render it inconsistent with current provisions in the Fair Work Act pertinent to unfair dismissals, industrial relations or right of entry. Enterprise agreements must also not contain any discriminatory terms that would be deemed a breach of an employee’s general protections as set out in the Fair Work Act.

If you are an award-covered employee seeking to better understand your rights and working conditions under an enterprise agreement or you represent a business and are looking to negotiate the terms of an enterprise agreement on your behalf, our experienced employment lawyers can assist.

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