An employer may choose to enter into an agreement with the group of its employees which governs the terms of the employment. This is known as an enterprise agreement.
Enterprise agreements are negotiated between the employer and the employees, although it is common a trade union to conduct negotiations on the employees behalf.
If requested, an employer cannot refuse to bargain with a trade union which is entitled to represent one or more employees. Negotiations for an enterprise agreement must be conducted in ‘good faith’.
It is also a requirement that all negotiations for an enterprise agreement must be conducted in ‘good faith’.
Enterprise agreements enable employers and employees to agree to depart from the standard provisions contained in the modern awards that would otherwise apply to them. Enterprise agreements can also be used to cover specific arrangements for specific enterprises.
An enterprise agreement cannot include anything unlawful (such as terms that are discriminatory or objectionable).
An enterprise agreement must be approved by the Fair Work Commission (FWC). The FWC must be satisfied that the employees will be ‘Better off’ under the enterprise agreement than they would be under the modern award that would otherwise apply to the employees. This is commonly known as the BOOT test.
Once approved by the FWC, the enterprise agreement operates to the exclusion of the relevant modern award until the agreement is terminated.
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Ashbrooke Law publications are intended to provide guidance and general information. They should not be relied upon as legal advice. Formal legal advice should be sought on matters of interest arising from this article.