Agreements and bargaining

The agreement-making regime under the Fair Work Act 2009 (Cth) actively promotes collective bargaining rather than, as under WorkChoices, facilitating agreement making. This commentary discusses: enterprise agreements; single interest employers; union representation; approving an agreement; terms of an agreement; unlawful terms; treatment of existing instruments; variation and termination; interaction rules; industrial action; and the 'safety net'.


The agreement-making regime under the Fair Work Act 2009 (Cth) actively promotes collective bargaining rather than, as under WorkChoices, facilitating agreement making. Enterprise agreements are collective agreements made by employers and their employees under the Fair Work Act. In most cases, employees are represented by unions which have a legal status as ‘bargaining representatives’.
 
All enterprise agreements can operate alongside common law contracts of employment, however a contract of employment can only supplement (not be less beneficial) an enterprise agreement’s terms and conditions.
 
Nature of enterprise agreements
 
Enterprise agreements under the Fair Work Act are different in nature to common law contracts. They are made and approved by following the processes in Part 2-4 of the Act. The differences made between an agreement under the Fair Work Act and common law contracts include the fact that enterprise agreements made and approved under the Act bind all employees to whom they are expressed to apply, including those not employed at the time of a vote, those covered by the agreement but who do not vote at all and those who vote against approval of the agreement.

Approving agreements
 
The general duty on the Fair Work Commission to approve agreements is contained in s186 of the Fair Work Act. It provides that if an application for the approval of an agreement is made, the Commission must approve the agreement if the requirements of the Fair Work Act (ss186 and 187) are met. There is no general discretion by reference to public interest considerations, the objects of the Fair Work Act or general equity considerations to consider whether to approve an agreement that otherwise satisfies the statutory tests.

What must be included in an enterprise agreement?
 
Strict content requirements apply. A failure to meet these requirements can impact approval by the Fair Work Commission. All enterprise agreements must meet the minimum conditions of the National Employment Standards. Wage rates in agreements must also be at least equal to the relevant award rates or national minimum wage order.
 
There are also a number of terms that are mandatory for all enterprise agreements. These include:
  • a nominal expiry date, which can be a maximum of four years from the date of commencement
  • a dispute settlement procedure flexibility term, which enables the employer and an individual employee to vary a specific term of the agreement to meet their genuine needs, and
  • a consultation term regarding major workplace change.
Dispute settlement procedure
 
An enterprise agreement must include a procedure that requires or allows the Fair Work Commission (or another independent person) to settle disputes:
  • about any matters arising under the agreement, and
  • in relation to the National Employment Standards.
The procedure must also allow for the representation of employees covered by the agreement for the purposes of that procedure. However, the procedure cannot mandate union representation. Importantly, the Fair Work Commission has ruled that there is no requirement that the dispute settlement procedure empowers the Commission to arbitrate the dispute — conciliation will be sufficient.
 
Flexibility term
 
An enterprise agreement must contain a flexibility term that enables the making of an Individual Flexibility Agreement. This is an agreement in writing between the employer and an individual employee to vary the effect of particular terms of the agreement.
 
If an enterprise agreement does not include a flexibility term (or the flexibility term does not comply with the provisions of the Fair Work Act), the model flexibility term is taken to be a term of the agreement. To be compliant, the flexibility term must provide for at least some change in the effect of the terms of the agreement. In practice, relatively few effective flexibility terms are included in external agreements and examples of Individual Flexibility Agreements are rare.
 
An Individual Flexibility Agreement can be terminated by either party with no more than 28 days’ notice.
 
Consultation term
 
An enterprise agreement must also contain a consultation term, being a term that requires the employer to consult employees about major workplace changes that are likely to have a significant effect on them. The clause must also allow for employees to be represented for the purposes of that consultation.
 
If an enterprise agreement does not include a consultation term (or the consultation term does not comply with the provisions of the Fair Work Act), the model consultation term is taken to be a term of the agreement.
 
The model consultation clause is prescribed in the Fair Work Regulation 2009 (schedule 2.3), as follows:
 
Model consultation term

1. This term applies if: 

    1. the employer has made a definite decision to introduce a major change to production, program, organisation, structure, or technology in relation to its enterprise that is likely to have a significant effect on the employees of the enterprise; or 
    2. proposes to introduce a change to the roster or ordinary work hours of the employees.
2. The employer must notify the relevant employees of the decision to introduce the major change. 
 
3. The relevant employees may appoint a representative for the purposes of the procedures in this term.  
 
4. If: 
  1. a relevant employee appoints, or relevant employees appoint, a representative for the purposes of consultation; and
  2. the employee or employees advise the employer of the identity of the representative;
the employer must recognise the representative.  
 
5. As soon as practicable after making its decision, the employer must: 
  1. discuss with the relevant employees: 
    1. the introduction of the change; and 
    2. the effect the change is likely to have on the employees; and 
    3. measures the employer is taking to avert or mitigate the adverse effect of the change on the employees; and 
  2. for the purposes of the discussion — provide, in writing, to the relevant employees: 
    1. all relevant information about the change including the nature of the change proposed; and 
    2. information about the expected effects of the change on the employees; and 
    3. any other matters likely to affect the employees. 
6. However, the employer is not required to disclose confidential or commercially sensitive information to the relevant employees.
 
7. The employer must give prompt and genuine consideration to matters raised about the major change by the relevant employees. 
 
8. If a term in the enterprise agreement provides for a major change to production, program, organisation, structure or technology in relation to the enterprise of the employer, the requirements set out in subclauses (2), (3) and (5) are taken not to apply. 
 
9. In this term, a major change is likely to have a significant effect on employees if it results in: 
  1. the termination of the employment of employees; or 
  2. major change to the composition, operation or size of the employer's workforce or to the skills required of employees; or 
  3. the elimination or diminution of job opportunities (including opportunities for promotion or tenure); or
  4. the alteration of hours of work; or 
  5. the need to retrain employees; or 
  6. the need to relocate employees to another workplace; or 
  7. the restructuring of jobs. 
10. In this term, relevant employees means the employees who may be affected by the major change.
 
Types of enterprise agreements
 
Under the Fair Work Act, enterprise agreements can be either:
 
Single enterprise agreement (a single employer or 2+ 'single interest employers'): made when approved. Employees must be given reasonable opportunity to decide (7 day consideration period). Approval is generally by vote. Need majority ‘yes’ vote. Union/s that are bargaining representatives may apply to be covered by the agreement; or
 
Multi-enterprise agreement (2+ employers which are not 'single interest employers' which may be voluntary grouping or subject of a low-paid authorisation): May be available where there is one or more single businesses carried on by one or more employers. Approval is by vote. A majority of employees are needed to vote ‘yes’, of at least one of the employers.

To be single interest, the employers must be engaged in a joint venture or common enterprise, be related bodies corporate, or be authorised as such by the Fair Work Commission (certain employers such as franchisees can apply for such an authorisation). This means these related companies can bargain together to make a single enterprise agreement.
 
Bargaining for a multi-enterprise agreement is available without any public interest test. However, protected industrial action in support of multi-enterprise bargaining is not possible, nor is the Fair Work Commission able to make bargaining orders (other than for low paid workers), scope orders or majority support determinations.
 
Greenfields agreements
 
Either type of agreement can also be made as a greenfields agreement. Greenfields agreements are made between an employer and one or more relevant employee organisations, ie unions entitled to represent the industrial interests of one or more of the employees who will be covered by the agreement, in relation to work to be performed under the agreement). Non-greenfields agreements are made between an employer and its employees.

The Fair Work Amendment Act 2014, which commenced from 27 November 2015, amended the Act so that an employer who is bargaining for a proposed Greenfields Agreement has the option of applying to the Fair Work Commission for approval of the proposed enterprise agreement if no agreement is reached within a six month "negotiating period". The employer must ensure that notice is provided to each employee organisation that is a bargaining representative for the agreement, specifying the day on which the negotiating period will commence.

For the agreement to be approved by the Fair Work Commission, it must be satisfied the agreement provides pay and conditions consistent with prevailing industry standards for equivalent work.

To make a greenfields agreement:
  • it must relate to a genuine new enterprise (which includes a genuine new business, activity, project or undertaking), and
  • the employer must not have employed any of the persons who will be covered by the agreement and necessary for the conduct of that enterprise.
 
Single interest employers
 
Related companies, joint ventures and employers in a common enterprise can bargain together as ‘single interest employers’ to make a single enterprise agreement. Certain other employers, including franchises, can also apply to the Fair Work Commission for authorisation to bargain together for a single enterprise agreement. Both the Minister and Fair Work Australia have granted single interest employer authorisations. See KFC Order PR 989955 (19 October 2009) and Domino’s Pizza Enterprises Limited [2009] FWA 493; Victorian Hospitals’ Industrial Association [2011] FWA 8376. The Minister has made declarations (October 2009) of single interest bargaining in favour of kindergartens, health services and schools that wished to bargain together.
 
An authorisation of single interest bargaining does not compel the employers to bargain together, rather employers ‘may’ bargain together. (Then) Fair Work Australia did not attempt to prevent a union from bargaining with individual employers because the authorisation does not define the scope of the bargaining or compel group bargaining. The existence of the authorisation allows a form of bargaining that would otherwise not be allowed. See Stuartholme School & Others & The Corporation of the Trustees of the Roman Catholic Archbishop of Brisbane t/a Brisbane Catholic Education Office & Others v Independent Education Union of Australia [2010] FWAFB 1714.

Agreement with one employee
 
The Fair Work Act was amended effective from 1 January 2013 that an enterprise agreement cannot be made with a single employee.This applies even if it is the intention of the employer to employ more employees in the future. See Construction, Forestry, Mining and Energy Union [2013] FWC 3143.

Application of an agreement

 
Only one enterprise agreement can apply to an employee at a particular time, unless an employee has more than one job. In this instance, each job is treated separately in determining an employee’s entitlements and each job can potentially be covered by a separate agreement. This is subject to the coverage of the enterprise agreement.
 
Benefits of an enterprise agreement
 
There may be benefits in using enterprise agreements, although this will depend on the particular workplace and the terms and conditions that currently apply to employees.
 
Potential benefits include:
  • the implementation of workplace arrangements that are adapted and suitable for a specific business
  • the ability to exclude or modify award conditions that might otherwise apply to the employees. Excluding or modifying these award conditions may provide more flexibility, although a Better Off Overall Test must be satisfied to ensure employees receive adequate compensation for excluded or modified conditions, and
  • protection from industrial action, which will be unlawful during the nominal life of an enterprise agreement.
 
 
Union representation
 
Other than a greenfield’s agreement, a union(s) is not a party to an agreement. However, a union that is a bargaining representative for a proposed agreement can apply to the Fair Work Commission to be ‘covered’ by the agreement. A union is automatically a bargaining representative for an agreement if it has a member in the workplace whose industrial interests it is entitled to represent, and the member does not appoint another person (s174). A union need not be involved in bargaining to be covered by the agreement. Provided a union is a bargaining representative and notifies the Fair Work Commission, the Commission must order that the union is covered. If an enterprise agreement applies to a union, that union has the right to take legal proceedings to enforce its terms.
 
In effect, this means that non-union agreements are only possible:
  • in workplaces where there are no union members, or
  • where the union is not appointed as a bargaining representative and chooses not to be covered by the agreement.
 
Employers are not able to bargain with one union in preference to another — this also applies to greeenfields agreements. If a union has a member in the workplace — or is entitled to represent employees’ interests for greenfields agreements — the union can apply to be covered by the agreement. Further, any attempt to bargain with only one union may mean that an employer is not bargaining in good faith, and so could be subject to bargaining orders.
 
As a result, employers need to be aware of the potential for inter-union demarcation disputes. The Fair Work Commission has determined that employees must be given individual notice of their rights to representation. See Rebel Tenpin Pty Ltd t/a Holiday Lanes & Storm Bowling Aust [2010] FWA 562.
 
Notice of representational rights
 
It is a mandatory requirement of the Fair Work Act (s181(2)) that the request to approve an enterprise agreement not be made by the employer until at least 21 days after the last notice of employee representational rights is given. Failure by the employer to comply with this requirement will result in approval of the agreement before the Fair Work Commission being refused. See Benmax Pty Ltd Plumbing and Mechanical Services Canberra Collective Agreement 2009-2012 [2010] FWA 3503 (3 May 2010).
 
Commencement of bargaining
 
An employer may commence bargaining on their own initiative, or agree to a request by employees (or their union) to bargain. Within 14 days of bargaining commencing, the employer is required to give employees who will be covered by the proposed agreement notice of their right to be represented by a bargaining agent. A union is automatically a bargaining agent for an agreement if it has a member in the workplace and whose industrial interests it is entitled to represent and the member does not appoint another person.
 
There must be proof in writing that the employee has appointed the particular representative otherwise the Fair Work Commission will refuse to approve an agreement. See Safety Glass Pty Ltd t/a Melbourne Safety Glass [2009] FWA 1156.

Where an employer has not started bargaining or refuses to bargain, employees can apply to the Fair Work Commissiom for a ‘majority support determination'. An employer who refuses to bargain with employees who have obtained a declaration, the Commission may issue good faith bargaining orders against the employer. See also: Majority support determinations

Scope of agreement

 
Coverage of agreement
 
An agreement must be expressed to cover an employee. Any reference in the Fair Work Act to an enterprise agreement covering an employee is a reference to the agreement covering the employee in relation to particular employment – the work that the employee performs under the terms and conditions of the enterprise agreement.
 
The coverage of an agreement can also be affected by a Fair Work Commission order, such as a scope order.
 
The group of employees to be covered by a proposed agreement is chosen when the employer and the main employee bargaining representatives agree on a particular scope or the bargaining representatives commence bargaining on a shared assumption as to scope.
 
The scope of the agreement will be determined by the group of employees chosen to be covered by the proposed agreement and will typically be chosen at or shortly after the commencement of bargaining.
 
Prior to approving an agreement, the Fair Work Commission must be satisfied that the group of employees the proposed agreement would cover was fairly chosen.
 
An agreement may apply at some times and may not apply at other times for some employees (for example, if the location of the employees’ work changes). The determination for when it applies turns on the terms of the scope and coverage that the agreement itself provides. See Re ANZ Stadium Casual Employees Enterprise Agreement 2009 [2010] FWAA 3758; Cimeco Pty Ltd [2012] FWA 526.
 
Meaning of ‘fairly chosen’
 
While the Fair Work Commission’s decision as to whether or not the group of employees was ‘fairly chosen’ involves a degree of subjectivity or value judgement, in circumstances where an agreement does not cover all of the employees of the employer(s) covered by the agreement, the Commission must consider whether the group of employees covered by the agreement is:
  • geographically
  • operationally, or
  • organisationally distinct.
These matters are not decisive, rather they are matters to be given due weight by the Fair Work Commission, having regard to all other relevant considerations.
 
‘Applies’
 
 Only one enterprise agreement can apply to an employee at a particular time, unless an employee has more than one job. In this instance, each job is treated separately in determining an employee’s entitlements and each job can potentially be covered by a separate agreement.
Good faith bargaining
 
Part 4 Division 8 Subdivision A (s228) of the Fair Work Act sets out the good faith bargaining requirements that all bargaining representatives must follow:
  • attending and participating in meetings at reasonable times
  • disclosing relevant information, other than confidential or commercially sensitive information, in a timely manner
  • responding to proposals made by other bargaining representatives in a timely manner
  • giving genuine consideration to the proposals of other bargaining representatives and reasons for any responses
  • refraining from capricious or unfair conduct that undermines freedom of association or collective bargaining, and
  • recognising and bargaining with the other bargaining representatives. 
The Fair Work Commission is particularly strict in applying the good faith bargaining provisions of the Fair Work Act. An employer should take all reasonable steps to ensure the terms of a proposed agreement and the effect of those terms are explained to workers in a manner which took into account their particular circumstances. See Class Electrical Services Pty Ltd v CEPU [2009] FWA 1541; Finance Sector Union of Australia [2010] FWA 2690.
 
The Fair Work Act (s187(2)), which requires that the Fair Work Commission is satisfied that good faith bargaining requirements are met before approving agreements, applies only where a scope order is in place. It has suggested, however, that the question of whether of good faith bargaining requirements have been met may be relevant to determining whether employees have genuinely agreed to make an agreement.
 
Employers should ensure communications regarding the agreement do not exclude some bargaining representatives or employees. Where possible, employers should refrain from providing important communications and conduct voting processes at times when bargaining representatives or employees may be absent, eg holiday periods.
 
It is only in cases where a scope order is in force, however, that the good faith bargaining requirements are a mandatory consideration for the Fair Work Commission. See Appeal by Philmac Pty Ltd [2011] FWAFB 2668.
 
Non-permitted matters
 
A bargaining representative or party proposing that an agreement contain a non-permitted as a substantive term cannot be genuinely trying to reach an agreement under the Fair Work Act. See Tyco Australia Pty Ltd t/a Wormald v Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia [2006] AIRCFB PR974317; Australian Postal Corporation v Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia [2009] FWAFB 599; [2010] FWAFB 344.

Disclosing relevant information
 
The Fair Work Act (s228)(1)(b)) states that one of the good faith bargaining requirements is disclosing relevant information, other than confidential or commercially sensitive information, in a timely manner.
 
This will generally, but not always involve the disclosure of information to allow the other bargaining representative(s) to give consideration to the bargaining representative’s position. It may be, however, depending on the circumstances, the subsection of the Fair Work Act imposes an obligation on a bargaining representative to disclose information which is relevant to a position advanced by the other bargaining representatives, thereby facilitating bargaining.
 
Further, it will generally, but not always be, the case that the information obliged to be disclosed is at hand. In some circumstances, the obligation may require information be compiled. In such cases, it is a question of balancing factors such as relevance, the interests of the parties to bargaining and the burden imposed from compiling the information.
 
A bargaining representative will meet the good faith bargaining requirements under s228(1)(b) if:
  • the request for information required the collection and provision of a substantial body of data;
  • the bargaining representative receiving the request expresses the difficulties entailed and the burden imposed in sourcing and collating the information;
  • the bargaining representative has forwarded (or attempted to forward) some information in response to the request;
  • that a reasonable time frame is discussed in which it was anticipated the balance of information could (or not) be disclosed.
Where the requested relevant information has not been disclosed by the employer’s bargaining representative, the employee’s bargaining representative can make an application to the Fair Work Commission for bargaining orders under the Fair Work Act (s229), where the particular circumstances relating to the difficulties supplying the information, and its relevance to the current bargaining negotiations, could be raised before the tribunal. See Australian Nursing Federation v Victorian Hospitals’ Industrial Association [2012] FWA 285; Australian Municipal, Administrative, Clerical and Services Union v Aero-Care Flight Support Pty Ltd [2012] FWA 7214.
 
Bargaining orders
 
The general role of the Fair Work Commission in facilitating the bargaining process is set out in Division 8 of Part 2-4 of the Fair Work Act. The Division sets out the good faith bargaining requirements which bargaining representatives are required to meet and provides for the Commission to make orders to ensure the integrity of the bargaining process. Section 228 lists the good faith bargaining requirements. Sections 229-233 provide for the making of bargaining orders by the Fair Work Commission to enforce compliance with the requirements. The Commission has the power to make ‘bargaining orders’ enforcing these requirements and has a broad discretion as to the precise types of orders it can make.
 
Content of bargaining orders
 
A bargaining order in relation to a proposed enterprise agreement must specify all or any of the following:
 
the actions to be taken by, and requirements imposed upon, the bargaining representatives for the agreement, for the purpose of ensuring that they meet the good faith bargaining requirements;
requirements imposed upon those bargaining representatives not to take action that would constitute capricious or unfair conduct that undermines freedom of association or collective bargaining;
the actions to be taken by those bargaining representatives to deal with the effects of such capricious or unfair conduct;
such matters, actions or requirements as the Fair Work Commission considers appropriate (taking into account if the bargaining process is not proceeding efficiently or fairly because there are multiple bargaining representatives for the agreement), for the purpose of promoting the efficient and fair conduct of bargaining for the agreement.
 
Types of bargaining order
 
The types of bargaining orders that the Fair Work Commission may make in relation to a proposed enterprise agreement include the following:
  • an order excluding a bargaining representative for the agreement from bargaining;
  • an order requiring some or all of the bargaining representatives of the employees who will be covered by the agreement to meet and appoint a single bargaining representative to represent them in bargaining;
  • an order that an employer not terminate the employment of an employee, if the termination would constitute, or relate to, a failure by a bargaining representative to meet the good faith bargaining requirement which requires that they refrain from capricious or unfair conduct that undermines freedom of association or collective bargaining;
  • an order to reinstate an employee whose employment has been terminated if the termination constitutes, or relates to, a failure by a bargaining representative to meet the good faith bargaining requirement which requires that they refrain from capricious or unfair conduct that undermines freedom of association or collective bargaining.
For circumstances in which a bargaining order is made see Country Fire Authority v United Firefighters’ Union of Australia [2014] FWC 1293; Health Services Union v Victorian Hospitals’ Industrial Association [2012] FWAFB 2910.
 
However, employers cannot be required to make concessions or reach an agreement as a result of the good faith bargaining obligations. Therefore, there is no obligation to conclude an agreement. The breach of a bargaining order attracts a penalty. Where a bargaining representative has continually flouted bargaining orders, another bargaining representative can apply to the Fair Work Commission for a serious breach declaration which, if made, leads to an arbitrated workplace determination. See Endeavour Coal Pty Ltd v Association of Professional Engineers, Scientists and Managers, Australia (Collieries’ Division) [2012] FWAFB 1891.

A refusal to agree to all of the other parties claims, direct communication with employees even where union is involved, or introducing changes during the negotiation process, do not constitute a breach of good faith bargaining. See Liquor, Hospitality and Miscellaneous Workers Union Western Australian Branch v Hall & Prior Aged Care Organisation and Others [2010] FWA 1065; Construction, Forestry, Mining and Energy Union v Tahmoor Coal Pty Ltd [2010] FWA 942; Liquor, Hospitality and Miscellaneous Workers Union v Coca-Cola Amatil (Aust) Pty Ltd [2009] FWA 320. For an example of a bargaining order see Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union v Transfield (Australia) Pty Ltd [2009] FWA 93.
Scope orders
 
As soon as bargaining has commenced, a bargaining representative can apply to the Fair Work Commission for an order that specifies who the proposed agreement is to cover (a scope order). Such an application may be made where a disagreement over the scope of a proposed agreement arises.
 
For example, take an employer who commences bargaining for an agreement to cover its workforce throughout Australia. As bargaining progresses, one or more relevant unions decide that separate state-by-state agreements would be fairer and more efficient given the operational differences from state to state. If the employer refused to agree to the proposed change, then the unions may consider applying to the Fair Work Commission for a scope order that would effectively mandate the change.
 
Fair Work Commission decisions have shown that shelving disputes under the Fair Work Act is generally undesirable. Instead, taking control of the negotiations and setting scope at commencement is important for a number of reasons:
  • once set, it is likely that the only way to change the scope in the absence of consent of all bargaining representatives is through a scope order
  • the bargaining representative wanting to change the scope must establish that the new scope would promote the ‘fair and efficient’ conduct of bargaining; on this basis, the applicant for a scope order is (arguably) at a distinct disadvantage
  • setting the scope in a particular way may enable the employer to successfully oppose an application for a protected action ballot and potentially prevent protected industrial action. 
A scope order will not necessarily prevent bargaining for an agreement of a different scope. However, it:
  • may trigger an obligation on the employer to issue notices of employee representational rights where the scope of the proposed agreement has been extended
  • will require the Fair Work Commission to consider whether approval of the agreement would undermine good faith bargaining. Although this provision is yet to be interpreted by the Commission, the likely effect is that the agreement will not be approved unless its scope order matches the scope specified in the order, or all bargaining representatives have agreed to adopt a different scope.

A bargaining representative may only apply for a scope order if certain procedural requirements are met. Specifically, the bargaining representatives must:

  • have given written notice of concerns to the relevant bargaining representatives that bargaining is not proceeding efficiently or fairly because the proposed agreement does not cover the appropriate employees
  • have given the bargaining representatives reasonable times to respond to those concerns
  • consider that the relevant bargaining representatives have not responded appropriately.

The Fair Work Commission has held that these concerns must be reasonably held. The concerns cannot be fanciful or simply be asserted in order to attract jurisdiction. See Paterson v Police Federation of Australia and others [2011] FWA 7357.

Further, the Commission can only make a scope order where satisfied that it would promote the fair and efficient conduct of bargaining. Unions understand the utility of the scope order in altering (or protecting) the status quo around the coverage of the proposed enterprise agreement. Accordingly, employers need to be prepared to meet such a challenge and be proactive at the commencement of bargaining.

No penalty is attached to a breach of a scope order, but it may be relevant if the Fair Work Commission is asked to make bargaining orders. Further, if a subsequent agreement is made that covers a group of employees who differ from those in the scope order, the Commission can only approve the agreement if it is satisfied approval would not be inconsistent with or undermine good faith bargaining.
 
The relevant consideration under s238(4)(b) of the Fair Work Act is whether the order will promote the fair and efficient conduct of bargaining. The implication is that the Fair Work Commission should be satisfied that if an order is made the bargaining will at least be fairer or more efficient or both than it would be if no order were to be made. The relevant consideration under s238(4)(c) is whether the specified group is fairly chosen. It may be that a number of groupings might be fair — what this criterion requires is that the group that is included in the scope order is fairly chosen. This issue is also dealt with in s238(4A). See United Firefighters’ Union of Australia v Metropolitan Fire & Emergency Services Board [2010] FWAFB 3009; AMWU & Others v Shinagawa Refractories Australasia Pty Ltd [2011] FWA 5935.
Low-paid bargaining
 
Under Part 2-4 Division 9 of the Fair Work Act, a special low-paid bargaining stream applies to multiple enterprise agreements in relation to ‘low-paid’ workers. This stream can only be accessed through authorisation from the Fair Work Commission. The Fair Work Act does not define ‘low-paid’ employees, but gives the Commission various criteria to consider when deciding whether to issue an authorisation. In the event that bargaining breaks down either party, or both parties, can apply for an arbitrated workplace determination.
 
Approval process overview
 
Before putting the agreement to employees for vote, an employer must take all reasonable steps to ensure that employees have access to the written text of the agreement, and any material incorporated by reference in the agreement. Employees must have access to this material for the full seven days preceding the vote. Once bargaining is complete and a draft agreement made certain steps must be taken to ensure the agreement is valid.

Pre-approval steps to be taken by the employer
 
The employer must ensure that:
  • the terms of the agreement, and the effect of those terms, are explained to the employees
  • the explanation is provided in an appropriate manner, eg appropriate for young employees or employees from culturally diverse backgrounds.
Employees must endorse the agreement by voting for it. A vote must not occur until at least 21 days after the day on which the employees were given notice of their representational rights. During the seven day period before voting for the agreement, the employer must ensure employees are given a copy of:
  • the agreement
  • any other material incorporated by reference in the agreement.
The employer must also notify employees of:
  • the time and place at which the vote will occur 
  • the voting method that must be used.
When is a vote successful?
 
The agreement is made when: 
  • Single-enterprise agreement that is not a greenfields agreement — a majority of employees of the employer, or each employer, cast a valid vote endorsing the agreement. 
  • Multi-enterprise agreement that is not a greenfields agreement — a majority of the employees of at least one of the employers, cast a valid vote endorsing the agreement. If the agreement was not approved by the employees of all of the employers, then agreement must be varied so it is only expressed to cover each employer whose employees approved the agreement, and the employees of each of those employers. 
  • Greenfields agreement — it has been signed by each employer and each relevant employee organisation that the agreement covers.
Voting process
 
A voting process can include a variety of methods to ensure as many employees as possible have the opportunity to vote. Methods of voting include:
  • attendance voting – the employees vote for the proposed enterprise agreement either by completing a ballot form and placing it in a ballot box, or through a show of hands at a meeting;
  • postal voting – the employee vote for the proposed enterprise agreement by completing a ballot form which has been sent to a nominated address, and then returned to the place of work by return post. Postal voting is often used for employees who are absent from work on leave at the time when an attendance vote occurs;
  • online voting – the employees vote for the proposed enterprise agreement by completing an electronic ballot form which may be sent to them via email, be hosted on the employer’s intranet or perhaps hosted on an internet page; and
  • telephone voting – the employees vote for the proposed enterprise agreement by either phoning a telephone number and voting by using the Interactive Voice Response or by calling a ‘yes’ or ‘no’ phone number.
Unlawful content
 
Agreements should not include any unlawful content. This includes: 
  • a discriminatory term 
  • an objectionable term 
  • 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 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.
Applying for Fair Work Commission approval
 
Once an enterprise agreement is made, a bargaining representative for the agreement must apply to the FWC for approval of the agreement (Form F16 — Application for approval of enterprise agreement).
 
Greenfields agreements
 
In order to approve a greenfields agreement the Fair Work Commission is required to be satisfied that the organisation of employees negotiating the agreement is entitled to represent the industrial interests of a majority of employees who will be covered by the agreement. Under the Fair Work Act, greenfields agreements are the only type of agreements which can be made without the consent of a majority of employees covered by the agreement who, after being given an opportunity to vote, cast a vote to approve the agreement. The purpose of s187(5)(a) is to ensure that greenfields agreements are made with organisations that are representative of the relevant employees and to avoid a situation that employee consent is confined to representatives of a minority of employee to be covered by an agreement.
 
Section 187(5)(a) requires a consideration of the industrial interests of the employees who will be covered by and perform work in relation to the agreement and does not necessitate a broader consideration of the industrial interests of all employees to be engaged in a particular enterprise or on a particular construction contract.
 
The requirement that the consideration be confined to those employees to be covered the agreement is important in the context of the Fair Work Act which does not appear to limit the number of agreements that can be made with respect to a single enterprise so long as the representative element of the parties is satisfied. Agreements would normally be drafted so that employees to be covered are clearly established. Overlapping agreements would generally be avoided for the purposes of clarity and to minimise confusion, but they are not specifically precluded by the terms of the Fair Work Act.
 
The Fair Work Act (s58) provides that only one enterprise agreement can apply to an employee at a particular time. If two agreements cover an employee and neither nominal expiry date has passed, the earlier agreement is the only one that applies. See Australian Workers Union v Killarnee Civil & Concrete Contractors Pty Ltd, ITF The Thompson Family Trust; Construction, Forestry, Mining and Energy Union [2011] FWAFB 4349.
 
Approving an agreement
 
Under s186 of the Fair Work Act, to approve the enterprise agreement, the Fair Work Commission must be satisfied that:
  • employees genuinely agree (s188) – see United Group Rail Services Limited [2009] FWA 452; Application by A Maze’N Things Pty Ltd [2009] FWA 1176 
  • the agreement passes the 'Better Off Overall Test', meaning each employee under the agreement would be better off if it came into effect compared with the applicable modern award (agreement may not pass the Test but can be approved by the Fair Work Commission if not contrary to the public interest – s189
  • the terms of the agreement do not exclude the National Employment Standards (s.55)
  • the group of employees covered by the agreement was fairly chosen
  • there are no unlawful terms — see The War Veterans’ Home Myrtle Bank Inc [2010] FWA 1522
  • there are no designated outworker terms
  • if the agreement covers outworkers and the relevant modern award includes outworker terms, the agreement must include terms of that kind and the agreement terms must not be detrimental to the employee when compared with similar terms in the relevant modern award
  • the agreement contains an appropriate flexibility arrangements, consultation and dispute settlement procedure
  • the agreement has a nominal expiry date that is not more than four years after the date on which Fair Work Commission approves the agreement, except one approved in special circumstances where public interest outweighed passing the Better Off Overall Test. These agreements can have a maximum 2 year nominal life
  • if the agreement covers shift workers (as defined in the relevant modern award), the agreement must describe those employees as shift workers for the purposes of the National Employment Standards
  • if the agreement defines employees as pieceworkers and the relevant modern award does not include such a term, the effect of including such a term must not be detrimental to the employee in relation to the entitlements of the employee under the National Employment Standards
  • if the agreement does not define employees as pieceworkers and the relevant modern award does include such a term, the effect of not including such a term must not be detrimental to the employee in relation to the entitlements of the employee under the National Employment Standards
  • if the agreement covers school-based apprentices or trainees, any loadings provided for in the agreement in lieu of annual leave, personal/carer’s leave or public holidays must not be detrimental to the employee when compared with any similar loadings in the relevant modern award
  • if a scope order is in operation, approval is not inconsistent with good faith bargaining
  • for multi-enterprise agreements, the agreement has been genuinely agreed to be each employer covered by the agreement, and no person coerced, or threatened to coerce, any of the employers to make the agreement
  • for non-greenfields agreements, the agreement has been genuinely agreed to by the employees covered by the agreement
  • for greenfields agreements, the relevant employee organisations that will be covered by the agreement are (taken as a group) entitled to represent the industrial interests of a majority of the employees who will be covered by the agreement, in relation to work to be performed under the agreement.
The Fair Work Commission can accept undertakings where an agreement would otherwise not be approved. An agreement approved by the Commission comes into effect 7 days after the date of its approval. A union can apply to the Commission to be covered by an agreement provided it applies before the Commission approves the agreement.
 
Wage rates
 
Modern award classifications rates are the minimum award classification rate that can be paid under an award or an enterprise agreement. The terms of an enterprise agreement may contain the model clause from the relevant modern award that allows the employer to absorb an increase consequent to the Annual Wage Review 2013. It should be noted that in absorbing the Annual Wage Review increase, the Fair Work Act (s206(2)) provides that if the agreement rate is less than the award rate, the relevant award rate applies to the agreement-covered employee.
 
If an employee is not covered by a modern award, then the National Minimum Wage order would provide the employee with a base rate of pay as a part of the Safety Net. This National Minimum Wage order would require the employer to pay the employee a base rate of pay that at least equals the national minimum wage, or a special national minimum wage, set by the order.

Written undertaking
 
Section 190 of the Fair Work Act provides that if an s185 application for approval of an enterprise agreement is made and the Fair Work Commission has a concern the enterprise agreement does not meet the requirements in s186 and s187, the Commission may approve the enterprise agreement if satisfied that a written undertaking from the employer meets the concern and the effect of the Commission accepting the undertaking is not likely to cause financial detriment to any employee covered by the enterprise agreement or result in substantial changes to the enterprise agreement. Pursuant to s191 of the Fair Work Act, if the Fair Work Commission approves an enterprise agreement after accepting a written undertaking in relation to the enterprise agreement, the undertaking is taken to be a term of the enterprise agreement. See Bupa Care Services Pty Ltd P & A Securities Pty Ltd as trustee for the D’Agostino Family Trust t/a Michel’s Pattisserie Murwillumbah and Others [2010] FWAFB 2762.

Nominal expiry date
 
In the case of an enterprise agreement approved under s186 of the Fair Work Act or a workplace determination — the nominal expiry date is the date specified in the agreement or determination as its nominal expiry date, which must not be more than 4 years after the day on which the Fair Work Commission approves the agreement or determination.  An agreement will not be approved by the Commission if it seeks to have a nominal expiry date exceeding 4 years. It is regarded as an ‘unlawful term’ for the purposes of the Fair Work Act. See Savfarm Pty Ltd [2010] FWA 3650 (7 May 2010). There are additional requirements for approval of agreements which cover shift workers, pieceworkers, school-based apprentices and trainees, and outworkers.
 
In the case of an agreement approved under s189 of the Fair Work Act — the nominal expiry date is the date specified in the agreement as its nominal expiry date or 2 years after the day on which the Fair Work Commission approved the agreement.

Good faith bargaining
 
Bargaining representatives are able to apply for bargaining orders during the negotiations if they believe the good faith bargaining requirements are not being met, but once an agreement is made the good faith bargaining requirements have no relevance to the approval process in all but very limited circumstances. See Appeal by Philmac Pty Ltd [2011] FWAFB 2668.
 
Notice of representational rights — genuinely agree
 
In an appeal against a decision by (then) Fair Work Australia not to approve a proposed enterprise agreement, a Full Bench considered the question of whether the Fair Work Act requires notice required by the Act (s174) in order to meet the requirement of genuine agreement (s186) or whether, when read in the context of the Act as a whole, does not prevent genuine agreement.
 
In dismissing the appeal, the Full Bench (majority) determined that the appellant failed to meet the requirement to notify the employees of their entitlement to representation. The employer cannot distinguish between the advice that employees could nominate a bargaining representative and advice about default representation — advice on each of these matters is required under the Fair Work Act. Section 188 requires specific actions then additional broad discretionary consideration relating to grounds other than the specific matters.
 
The majority did not accept that failure to meet a specific requirement could not have been intended to prevent approval where genuine agreement does not exist, otherwise to allow provision of partial information which would mislead employees. The Appeal was dismissed. See Appeal by Ostwald Bros Pty Ltd re: Construction, Forestry, Mining and Energy Union [2012] FWAFB 9512; Veolia Environment Services (Australia) Pty Ltd v Australian Workers Union [2013] FWCFB 269.
 
 Better Off Overall Test
 
This test is based on the relevant modern award that covers any employees covered by the proposed enterprise agreement. It requires that each ‘award covered’ employee and each prospective award-covered employee must be better off under the agreement than they would if the relevant modern award applied to them. Any flexibility agreement made under the relevant modern award may not be taken into account for the purposes of the Better Off Overall Test.
 
The Test is not applied as a line by line analysis. It is a global test requiring consideration of advantages and disadvantages to award covered employees and prospective award covered employees. The question posed by the Test is not whether each employee is better off under the agreement compared to their particular existing working arrangements but whether they are better off overall if the agreement applied rather than the relevant modern award. See Re Australia Western Railroad Pty Ltd t/a ARG – A QR Company [2011] FWAA 8555.
 
An agreement may pass the Better Off Overall Test even if some award benefits have been reduced, as long as overall those reductions are more than offset by the benefits of the agreement.
 
The Test applies equally to all employees ‘covered’ by the proposed collective agreement, including those who may be subject to the high income threshold. Although the Test requires each award-covered employee to be better off, the Fair Work Commission may ‘assume’ that each employee within a designated class of employees are better off if the agreement passes the Test when applied to that class. See Re Jasbe Caldermeade Pty Ltd ATF BP Caldermeade Unit Trust and others [2013] FWC 6998.
 
The Better Off Overall Test allows award conditions (but not National Employment Standards conditions) to be traded off or excluded as long as the total remuneration and/or benefits received by the employee leave them better off than if the conditions remained the same. The application of the Test therefore, requires the identification of the terms of an agreement which are more beneficial to employees when compared with the relevant modern award, and the terms of an agreement which are less beneficial and then an overall assessment of whether an employee would be better off under the proposed agreement.
 
State and territory legislation
 
An enterprise agreement will fail the Better Off Overall Test if it contravenes the applicable state or territory employment statute. For example, an agreement would fail the Test if it provided for the cashing out of long service leave in a state or territory whose relevant law prohibited cashing out, eg New South and Victoria, whereas cashing out of long service leave for South Australian employees would pass the Test as this is allowed by the relevant South Australian long service leave legislation. See St Marys Rugby League Club Ltd [2010] FWA 8300. Under s27 of the Fair Work Act, a state or territory law that regulates long service leave is a non-excluded matter, meaning the Fair Work Act does NOT override its provisions. Likewise, the effect of s113 of the Fair Work Act seems to be designed to prevent long service leave from being traded away under enterprise agreements.
 
Preferred hours
 
A proposed agreement that provides that employees may elect to work at times when additional amounts would otherwise be payable under the agreement, and to be paid at the basic hourly rate of pay for working such hours, would not pass the Better Off Overall Test when the terms of a relevant reference instrument provide for payment for ‘preferred hours’ at overtime or penalty rates, and/or the agreement does not provide more beneficial terms and conditions. See Bupa Care Services Pty Ltd and P & A Securities Pty Ltd as trustee for the D’Agostino Family Trust t/a/ Michel’s Patisserie Murwillumbah and Others [2010] FWAFB 2762.
 
For the concept to be acceptable, it must rely upon the subjective belief of the employee rather than the objective testing of the award against the agreement. This approach undermines the standards fixed by awards.
 
Two or more possible awards
 
Multiple modern awards may need to be used to apply the better off overall test where different awards apply to different classes of employees to be covered by the agreement. The awards identified as applicable would be those that would cover the employer, and the duties performed by the employees, to be covered by the proposed enterprise agreement.
 
The Fair Work Act allows for flexibility by allowing employers and employees to have multiple instruments covering different or even the same operations. The terms and conditions that apply to particular work for employees covered by the agreement are dependent on the scope and operation of the relevant instruments. See Re Cimenco Pty Ltd [2012] FWA 526; ALDI Foods Pty Ltd as General Partner of ALDI Stores (A Limited Partnership) [2012] FWA 161.
 
 Loaded wage rate
 
An agreement can include loaded rates of pay which compensate for entitlements provided for in the comparative instrument, which is generally the applicable modern award. In circumstances where an award entitlement is incorporated into the hourly rate of pay, the rate of pay in the agreement is increased to compensate for the removal of award entitlements that would no longer apply.
 
In addition, the hourly rate of pay would need to consider the work arrangements of an employee. For example, if an employee were to predominately work weekends, the employee may not be better of overall as the agreement rate of pay would have to be increased to take into consideration a greater proportion of weekend penalties rather than the ordinary hourly rate for week day hours.

Entitlements that can be incorporated into an hourly rate include:
 
  • annual leave loading
  • shift allowances
  • weekend penalties
  • reasonable additional hours
  • overtime- noting that in additional to overtime for work performed in addition to ordinary hours, instances where the agreement span of hours has been modified, the modern award generally applies overtime for work performed outside the span, which should be factored into the hourly rate, and
  • work related allowances.
The Fair Work Commission may be required to consider whether a term in a proposed enterprise agreement that provides pre-payment of paid leave (in a loaded wage rate), such as annual leave and personal/carer’s leave, complies with the Better Off Overall Test and whether it contravenes the National Employment Standards. Pre-payment of paid leave will involve the employee taking (say) annual leave or personal/carer’s leave as unpaid leave, because the employee has already received payment for the leave in the loaded wage rate. Such a term has been held by the Federal Court to contravene the provisions of the Standards (ss87 & 96) because the requirement is for the employee to take paid annual leave or paid personal/carer’s leave.
 
The Court dealt with the entitlement to paid personal/carer’s leave and recognises the entitlement in section 96 of the Act as not just an entitlement to personal/carer’s leave but an entitlement to paid personal/carer’s leave. The Court regarded the term ‘paid personal/carer’s leave’ in the Fair Work Act as a composite term. See Construction, Forestry, Mining and Energy Union v Jeld-Wen Glass Australia Pty Ltd [2012] FCA 45; BM & KA Group as trustee for BM & KA Group Unit Trust [2103] FWC 3654.
 
While the Fair Work Commission has determined that an enterprise agreement can facilitate the cashing out of annual leave, the terms of the agreement must comply with the relevant provisions in the National Employment Standards (s94). This means there must be (among other requirements) a minimum balance of at least 4 weeks’ annual leave available to the employee. In the case of paid personal/carer’s leave, a term that allows cashing out of paid personal/carer’s leave is permissible, subject to meeting the requirements under the Standards (s101(2)). See Hull-Moody Finishes Pty Ltd [2011] FWAFB 6709.
 
In approving a proposed enterprise agreement, the Fair Work Commission is required to consider whether a loaded wage rate complies with the Better Off Overall Test. Modern award classification rates are the minimum award classification rate that can be paid under an award or an enterprise agreement. The terms of an enterprise agreement may contain the model clause from the relevant modern award that allows the employer to absorb an increase consequent to the Annual Wage Review. It should be noted that in absorbing the Annual Wage Review increase, the Fair Work Act (s206(2)) provides that if the agreement rate is less than the award rate, the relevant award rate applies to the agreement-covered employee.
 
Absorption of Annual Wage Review
 
The terms of an enterprise agreement may contain the model clause from the relevant modern award that allows the employer to absorb an increase consequent to the Annual Wage Review. It should be noted that in absorbing the Annual Wage Review increase, the Fair Work Act (s.206(2)) provides that if the agreement rate is less than the award rate, the relevant award rate applies to the agreement-covered employee.
 
Interaction of National Employment Standards and enterprise agreements
 
The National Employment Standards applies to each employee whatever other instrument also applies. This means where an employee is seeking the approval of a proposed enterprise agreement that provides terms detrimental to the employee compared to the Standards, the Standards will override the agreement. The Fair Work Act (s206) provides that minimum wage rates in an enterprise agreement must not be less than the relevant minimum wage rates set out in the applicable modern award.

This means the proposed enterprise agreement would need to ensure that the agreement addresses wage adjustments over the life of the agreement to ensure the loaded wage rate is at least equivalent to applicable modern award wage rate with respect to the relevant classification.
 
The Fair Work Act (s55) provides that a modern award or enterprise agreement must not exclude the National Employment Standards or any provision of the Standards. This means that a proposed enterprise agreement will not be approved unless it complies with the minimum requirements under the Standards relating to paid and unpaid leave, eg annual leave, personal/carer’s leave, parental leave, public holidays, etc. See Re Canavan Building Pty Ltd [2014] FWCFB 3202.
 
Public interest
 
The Fair Work Act (s189) allows for the approval of enterprise agreements that do not pass the Better Off Overall Test if, because of exceptional circumstances, approval of the agreement would not be contrary to the public interest. The Fair Work Commission may only approve an agreement on this basis if failure to pass the Test is the only reason the Commission is not required to approve the agreement.
 
An example where exceptional circumstances may exist is where the agreement is part of a reasonable strategy to deal with a short-term crisis in, and to assist in the revival of, the enterprise of an employer covered by the agreement. See Re Poolhaven Pty Ltd [2011] FWAA 4036.

Undertakings

 
Where the Fair Work Commission has determined that an enterprise agreement does not meet the requirements of the Fair Work Act, including the Better Off Overall Test, the Commission can request a written undertaking to satisfy their concerns. Before accepting the undertaking, the Commission must:
  • seek the views of each known bargaining representative for the agreement
  • be satisfied the proposed undertaking is not likely to cause financial detriment to any employee covered by the proposed agreement, or
  • result in substantial change of the original agreement that was voted on.
If an undertaking is accepted, the terms of the undertaking are taken to be a term of the agreement. See Re Kore Construction Pty Ltd [2014] FWC 1955.
 
Arbitration

Enterprise bargaining
 
Section 266 of the Fair Work Act refers to an industrial action-related workplace determination. If:
  • the Fair Work Commission makes an order under s423 or s424 terminating protected industrial action, and
  • the post-industrial action negotiating period of 21 days, or an additional 21 days (total of 42 days) if all bargaining representatives agree to such an extension, end, and
  • matters remain in issue between the bargaining representatives
The Commission must make an industrial action-related workplace determination as quickly as possible after the end of that period. The terms that must be included in the determination are summarised under the heading ‘workplace determination’.

Private arbitration
 
The Fair Work Act allows the Fair Work Commission to exercise powers of private arbitration in relation to dispute settlement procedures in enterprise agreements to deal with disputes that go beyond ‘the application of the agreement.’ This could include matters that pertain to the relationship between the employer and the employees covered by the agreement that are not dealt with by a specific provision in the agreement. Nevertheless it remains the case, under the Fair Work Act, that the power of private arbitration is confined to the scope of the enterprise agreement itself. That is, the dispute settlement procedure in an agreement cannot be used to deal with disputes between entities that are not covered by the agreement. See Painter v Commonwealth of Australia (Department of Defence) [2011] FWAFB 8043; Boral Resources (NSW) v Transport Workers’ Union of Australia [2010] FWAFB 8437.
 
The Fair Work Commission can only arbitrate where it is specifically empowered to do so. Unless the agreement conferred dispute settling functions on it, the Commission has no power to perform these functions. It is the choice of the parties whether the Commission has a role in arbitrating disputes under the relevant clause in the agreement. See Woolworths Limited t/a Produce and Recycling Distribution Centre [2010] FWAFB 1464; Ampol Refineries (NSW) Pty Ltd v Australian Institute of Marine and Power Engineers (1998) AIRCFB Print P8620.
 
Terms of an agreement

The Fair Work Act (s172(1)) provides for the types of matters that may be contained in an enterprise agreement. An agreement that is about one or more of the following matters may be included in the agreement:
  • matters pertaining to the relationship between an employer that will be covered by the agreement and that employer’s employees who will be covered by the agreement;
  • matters pertaining to the relationship between the employer or employers, and the employee organisation or employee organisations, that will be covered by the agreement;
  • deductions from wages for any purpose authorised by an employee who will be covered by the agreement;
  • how the agreement will operate,
but not unlawful terms. 
 
An agreement could still be validated by the Fair Work Commission if the non-pertaining matter was ancillary or incidental, or a machinery provision relating to, a matter pertaining to the employment relationship.
 
The Fair Work Act (s172(1)(a)) provides that the terms of an enterprise agreement must be ‘matters pertaining to the employment relationship'. Frequently, it will be obvious that a term pertains to the employment relationship — eg a term about the payment of wages or a term about hours of work and shift patterns. However, there are some terms where it not so immediately clear whether the terms are about matters pertaining to the employment relationship. See Airport Fuel Services Pty Ltd v Transport Workers Union [2010] FWAFB 4457; Schefenacker Vision Systems Australia Pty Ltd, AWU, AMWU Certified Agreement 2004 [2004] AIRC 1064; Australian Postal Corporation v Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia — Communications Division [2010] FWAFB 344.
 
What are 'permitted matters'?

The following terms would be within the scope of permitted matters for the purpose of the Fair Work Act:
  • wages and allowances, hours of work, shift patterns;
  • terms relating to particular staffing levels (subject to any other applicable legislative requirements or limitations) particularly if those terms are aimed at ensuring the health, safety and well-being of employees;
  • matters related to the relationship between the employer, and the employee organisation(s) (union) that will be covered by the agreement including terms relating to trade union training, entitling employees to paid time off to attend union meetings and allowing union involvement in dispute settlement;
  • terms relating to conditions or requirements about employing casual employees or engaging labour hire or contractors if those terms sufficiently relate to employees’ job security — eg a term which provided that contractors must not be engaged on terms and conditions that would undercut the enterprise agreement;
  • terms that would provide that casual employees are converted to permanent employees after a set period of time;
  • deductions from wages for any purpose authorised by an employee who will be covered by the agreement – although a term will have no effect if they benefit the employer and are unreasonable in the circumstances or, if the employee is under 18 years of age – without a parent or guardian’s agreement;
  • terms that would prevent an employer from seeking a contribution or indemnity from an employee in respect of personal injuries or losses suffered by that person where such injuries or losses were caused by the employee in the course of the employment.
  • how the agreement will operate, including terms setting out how and when negotiations for a replacement agreement will be conducted, the nominal expiry date or terms specifying who the agreement will cover.
The following terms would not be intended to be within the scope of permitted matters for the purpose of the Fair Work Act:
  • terms that would contain a general prohibition on the employer engaging labour hire employees or contractors;
  • terms that would contain a general prohibition on the employer employing casual employees;
  • terms that would require an employer or employee covered by the enterprise agreement to make a donation to a political party or charity;
  • terms that would require an employer to source only products from a particular supplier or Australian made products, unless, eg such a term was directly related to employee’s job security;
  • terms that would require an employer to engage or not engage particular clients, customers or suppliers who had agreed to commit to certain employment, environmental or ethical standards, unless, eg such a term was directly related to employees’ health and safety;
  • terms that relate to corporate social responsibility, eg terms requiring an employer to participate in charity events or commit to climate change initiatives.
Section 172(1)(b) relates to matters that are about the relationship between the employer and the employee organisation that will be covered by the agreement. For a term to be legitimate, the term needs to relate to the employee organisation’s representation of employees under the agreement. 
 
The following terms are examples of those intended to fall within this section of the Fair Work Act:
  • terms relating to union training leave and leave for training conducted by a union;
  • terms that provide for employees to have paid time off to attend union meetings or participate in union activities;
  • terms that provide for union involvement in dispute settlement procedures;
  • terms that allow unions to promote membership or have noticeboards in the workplace or otherwise provide information to employees;
  • terms that require an employer to provide information to a union about employees who are covered by an enterprise agreement or information about a union to an employee;
  • terms that provide for a union to attend the workplace for certain purposes such as dispute resolution or consultation meetings (subject to the rules governing unlawful content).
Union disputes, consultation clauses 

(Then) Fair Work Australia determined that enterprise agreements can contain a dispute resolution clause that covers ‘matters pertaining’ to the employment relationship, and a clause that means unions must be informed of proposed major changes at the workplace. See Boral Resources (NSW) Pty Ltd v Transport Workers’ Union of Australia [2010] FWAFB 8437 (1 November 2010).
 
The High Court found that industrial action could not be taken in support of claims that could not be validly included in an agreement under the (then) Workplace Relations Act. See Electrolux Home Products Pty Ltd v The Australian Workers Union and others [2004] HCA 40.
 
Annual leave — shift workers
 
The Fair Work Act (s196(2)) requires the Fair Work Commission to be satisfied that the agreement defines or describes the employee as a shift worker for the purposes of s87, which deals with annual leave. This would ensure that a shift worker would receive five weeks annual leave for each year of service with his or her employer. A shift worker would not be able to trade away his or her extra week’s annual leave under the agreement. See Ramsay Health Care Australia Pty Ltd t/a Greenslopes Private Hospital v Australian Workers Union of Employees, Queensland [2012] FWAFB 4033.
 
Annual leave — payment on termination
 
A proposed agreement was not approved by (then) Fair Work Australia because it contained a term stating that an employee is paid accrued annual leave on termination, ‘other than for serious and wilful misconduct’, as such a term breaches s90(2) of the Fair Work Act. See UGM Engineers Pty Ltd [2012] FWA 14.
 
Cashing out annual leave
 
The Fair Work Commission will approve a term of an agreement that allows cashing out of annual leave because it does not breach the Better Off Overall Test. Annual leave cannot be cashed out if the leave balance would be less than 4 weeks, each cashing out must be the subject of written agreement and there must be no discounting of the payment. The provisions of s.93(2) apply to the Test and are considered sufficient. See Re Armacell Australia Pty Ltd; Wilmaridge Pty Ltd as Trustee for the O’Neill Family Trust t/a Direct Paper Supplies; Downer EDI Works Pty Ltd [2010] FWAFB 9985 (24 December 2010).
 
Cashing out long service leave
 
State or Territory long service leave laws are not subject to variation by the terms of the agreement. A term of an agreement which purports to reduce an entitlement under State or Territory long service leave legislation has no legal effect in any way. For example, a term in an enterprise agreement that allows cashing out of long service leave is invalid where it is contrary to the relevant state or territory statute. See Re Armacell Australia Pty Ltd; Wilaridge Pty Ltd as Trustee for the O’Neill Family Trust t/a Direct Paper Supplies; Downer EDI Works Pty Ltd [2010] FWAFB 9985 (24 December 2010); St Marys Rugby League Club Ltd [2010] FWA 8300 (12 November 2010).
 
Cashing out personal/carer's leave
 
The Fair Work Act (s101) provides that a clause in an enterprise agreement permitting cashing out is permissible subject to that clause conforming to three conditions (s101(2)(a)-(c)), which are:
  • paid personal/carer’s leave must not be cashed out if the cashing out would result in the employee’s remaining accrued entitlement to paid personal/carer’s leave being less than 15 days; and
  • each cashing out of a particular amount of paid personal/carer’s leave must be a separate agreement in writing between the employer and the employee; and
  • the employee must be paid at least the full amount that would have been payable to the employee had the employee taken the leave that the employee has foregone.
The clause in the enterprise agreement, however, does not have to repeat ‘word-for-word’ the words set out in the Fair Work Act (s101(2)). See Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union v Colorpak Ltd [2012] FWA 6934.
 
Superannuation — choice of fund
 
A contribution to a fund by an employer complies with the choice of fund provisions under the Act where a contribution, or part of the contribution, is made under or in accordance with certain industrial agreements specified in the Superannuation Guarantee (Administration) Act 1992 [Cth] (s32C). These agreements are:
  • an enterprise agreement; or
  • a workplace determination; or
  • an Individual Transitional Employment Agreement; or
  • a pre-reform certified agreement; or
  • a pre-reform Australian Workplace Agreement; or
  • a collective agreement; or
  • an old IR agreement.

A contribution to a fund also complies with the choice of fund provisions under the Act if it is made in accordance with:

  • a notional agreement preserving state awards, and in respect of salary or wages paid before 1 July 2006;
  • a preserved state agreement;
  • a Division 2B state instrument;
  • a State industrial award.

Deduct recruitment costs  

(Then) Fair Work Australia refused to allow an agreement clause that would have enabled the employer to deduct recruitment costs from employees’ pay packets if they resigned soon after commencement. Such a clause failed the Better Off Overall Test. See Radploy Pty Ltd t/a Lake Imaging [2011] FWA 39 (5 January 2011).  
 
Preferred hours arrangement
 
(Then) Fair Work Australia upheld an appeal against an earlier decision that approved an enterprise agreement with a ‘preferred hour’s clause’ whereby an employee could request to work outside ordinary hours. If the employer approved the request, the employee would be paid at ordinary rates, rather than at overtime penalty rates. The Fair Work Act requires the Fair Work Commission to provide an opportunity for a written undertaking to be given where the agreement cannot be approved by the Commission because it fails the no disadvantage test. The Full Bench was satisfied that the undertaking met the no disadvantage test concerns. See Appeals by BUPA Care Services Pty Ltd & Ors: re approval of enterprise agreements [2010] FWAFB 2762.
 
‘Opt-out’ provision
 
The Fair Work Amendment Act 2012 (Cth) came into effect on 1 January 2013 which, among other changes, inserted a new subclause (s194(ba)), stating a term that provides a method by which an employee or an employer may elect (unilaterally or otherwise) not to be covered by the agreement. This is generally referred to as an ‘opt out’ clause in an enterprise agreement. 

Contractors 
 
Some enterprise agreements contain a clause that requires contractors to be engaged on terms no less favourable than those that apply to employees under the agreement, as well as clauses relating to right of entry, and encourage of union membership. The matter is likely to be heard on appeal in the Federal Court. See Australian Industry Group v ADJ Contracting Pty Ltd [2011] FWAFB 6684.
 
Terms restricting or qualifying the employer’s right to engage independent contractors are not matters pertaining to the employment relationship. See Transport Workers Union of Australia v Qantas Airways Limited; Q Catering Limited [2012] FWAFB 6612; Wesfarmers Premier Coal Ltd v Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union (No.3) [2005] FCA 40.
 
Also, a clause that requires contractors to have union agreements cannot be lawfully included in an enterprise agreement. See Airport Fuel Services Pty Ltd v Transport Workers Union of Australia [2010] FWAFB 4457.
 
Sham arrangements — contractors
 
Casuals employed on a regular and systematic basis are not contractors and should receive appropriate employment benefits. In a case that involved alleged sham contracting, there had been the dismissal of casuals employed on this basis. The employer was found to have breached the (then) Workplace Relations Act (s902(1)) in relation to unused annual leave entitlements and superannuation. See Fair Work Ombudsman v Maclean Bay Pty Ltd [2012] FCA 10.

Contracting out clause
 
(Then) Fair Work Australia determined that enterprise agreement clauses that require contractors to be engaged on terms and conditions ‘no less favourable’ than employees in a particular workplace will be valid under the Fair Work Act. Accordingly, the inclusion of such a clause may act as a disincentive for some employers to engage contractors. See Asurco Contracting Pty Ltd v Construction, Forestry, Mining & Energy Union [2010] FWAFB 6180; Appeal by the Australian Industry Group Re: ADJ Contracting Pty Ltd [2011] FWAFB 6684.
 
Wording not clear
 
Terms contained in an enterprise agreement may have been made deliberately unclear to obtain agreement. ‘The words used may, and often do, represent a formula which means different things to each side, yet may be accepted because this is the only way to get ‘agreement’ and in the hope that disputes will not arise.’ See Prenn v Simmonds [1971] 1 WLR 1381.
 
Interpretation of terms
 
There are a number of authorities that should apply to the construction of terms in an agreement. The principles underpinning interpretation on a term of an agreement are:
'No extra claims' clause

A Full Court of the Federal Court
found that a 'no extra claims' clause in an enterprise agreement was contrary to the Fair Work Act. The clause should not restrict the ability of the parties to the enterprise agreementto jointly apply to vary the enterprise agreement in accordance with the relevant provisions under the Fair Work Act.

The relevant clause in the agreement was deemed inconsistent with the Fair Work Act which allows parties to jointly make a variation of an enterprise agreement, and that the employer may request the relevant employees to approve such a proposed variation. Consequently, the clause had no effect - see
Toyota Motor Corporation Australia Ltd v Marmara [2014] FCAFC 84.
 
 
Unlawful terms
 
An enterprise agreement cannot contain 'unlawful terms', which are:
  • discriminatory terms
  • terms providing unfair dismissal rights during the minimum employment (qualifying) period or excluding unfair dismissal rights after the minimum employment period
  • terms inconsistent with the industrial action, right of entry provisions or general protections provisions
  • bargaining representatives' fees.
Under s195 of the Fair Work Act a term of an enterprise agreement is a discriminatory term to the extent that it discriminates against an employee covered by the agreement because of, or for reasons including, the employee’s race, colour, sex, sexual preference, age, physical or mental disability, marital status, family or carer’s responsibilities, pregnancy, religion, political opinion, national extraction, or social origin. 
 
A proposed enterprise agreement, for example, was rejected by (then) Fair Work Australia as the redundancy clause provided different benefits based on whether the employee had passed their ‘normal retirement date.’ This was considered to be direct discrimination and contravened s195(1) of the Fair Work Act on the basis of age. With the passage of the Age Discrimination Act 2004 [Cth] there is no longer any compulsory retirement age for employees. See Australian Catholic University Limited t/as Australian Catholic University [2011] FWA 3693.
 
Genuinely agreed
 
Section 186 of the Fair Work Act prevents approval of an agreement where there is not genuine agreement. Section 188 of the Fair Work Act refers to the circumstances when employees have ‘genuinely agreed’ to an enterprise agreement. To be genuinely agreed, the Fair Work Commission must be satisfied that the employer or each of the employers covered by the agreement, complied with the following provisions of the Fair Work Act in relation to the agreement:
  • subsections 180(2), (3) and (5) (which deal with pre-approval steps);
  • subsection 181(2) (which requires that employees not be requested to approve an enterprise agreement until 21 days after the last notice of employee representational rights is given; and
  • the agreement was made in accordance with whichever of subsection 181(1) or (2) applies (those subsections deal with the making of different types of enterprise agreements by employee vote); and
  • there are no other reasonable grounds for believing that the agreement has not been genuinely agreed to by the parties.
There cannot be genuine agreement unless there has been a valid majority vote of the employees that will be covered by the agreement. The Explanatory Memorandum to the Fair Work Bill 2009 draws attention to two cases which dealt with this issue under earlier legislation. 
 
Those cases deal with circumstances in which the selection of the group to vote for an agreement and the level of information provide to employees who were asked to vote on the agreement was inappropriate or inadequate. See Construction, Forestry, Mining and Energy Union v AIRC [1999] FCA 847; Grocon Pty Ltd re Grocon Pty Ltd Enterprise Agreement Victoria — PR927672 [2003] AIRC 132.
 
For an approval that was refused by (then) Fair Work Australia because there was no genuine agreement see Cimeco Pty Ltd t/a/ North Western Australian Constructions Projects Agreement 2011 & Ors [2012] FWA 526.
 
Unilateral mistake in drafting
 
The Fair Work Act (ss186 and 187) specifies a set of criteria of which, if satisfied, enliven a statutory duty to approve the agreement. The ‘basic rule’ in s186(1) is that if an application for the approval of an enterprise agreement is made under s185, the Fair Work Commission must approve the agreement under this section if the requirements set out in ss186 and 187 are met.
 
Unilateral mistake by an employer justifying rescission at common law is not relevant to any of those requirements. This is particularly the case where the employer or bargaining representative had the benefit of time and advice to consider the implications of the agreement it proposed to the workforce. 
 
This means that before presenting a proposed enterprise agreement to the Fair Work Commission, the parties should check the terms of the agreement for mistakes, and then check again, otherwise the agreement will be approved and no rescission order will be considered by the Commission. See C J Mansfield Pty Ltd v Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing, and Allied Services Union of Australia [2012] FWAFB 3534.
 
Treatment of existing instruments
 
The Fair Work Act provides for all existing instruments to continue as ‘transitional instruments’ until they are terminated or replaced by a Fair Work instrument. Awards and Notional Agreements Preserving State Awards will become ‘award-based transitional instruments’ and all Workplace Relations Act agreements will become ‘agreement-based transitional instruments’. Different rules apply to agreement-based transitional instruments depending on whether they are derived from individual or collective agreements.
 
Individual agreements
 
If an employee is covered by an individual transitional agreement, such as a Australian Workplace Agreement or an Individual Transitional Employment Agreement, then that individual agreement continues to apply to the employee.
 
Whilst an individual agreement applies to an employee, or the employer in relation to the employee, an enterprise agreement does not apply. Consequently, such employees cannot be covered by the scope of a proposed enterprise agreement and, therefore, employees with individual agreements are excluded from bargaining unless they apply to terminate the individual agreement.

Transfer of business
 
Employees may want to stay bound by their prior agreement where the company is taken over by another employer which has its own agreement. (Then) Fair Work Australia upheld the employees’ rights to retain the prior agreement where it will be to their detriment to be covered by the new employer’s agreement. See CEPU v CSIRO [2010] FWA 1171. There is also scope under the Fair Work Act for an order to be made in the future should there be some major change in circumstances.
 
Variation and termination 
 
Variation
 
Section 217 of the Fair Work Act allows a party to an agreement to apply to the Fair Work Commission to vary an agreement to remove an ambiguity or uncertainty. The circumstances in which transitional instruments can be varied are limited. They can be varied:
  • to remove an ambiguity or uncertainty
  • resolve an uncertainty or difficulty about how they interact with a modern award, and
  • remove terms that are inconsistent with the general protection.
Provisions in the Fair Work Act allowing pre-reform certified agreements and preserved state agreements to be varied and extended for up to three years from the variation, operated until 31 December 2009.
 
Termination — enterprise agreements
 
If an enterprise agreement has passed its nominal expiry date, any of the parties to the agreement may apply to the Fair Work Commission for the termination of the agreement. If an application for the termination of an agreement is made, The Commission must terminate the agreement if:
  • satisfied that it is not contrary to the public interest to do so, and
  • it is considered appropriate to terminate the agreement.
If an enterprise agreement is terminated and not replaced, the applicable modern award will automatically cover an employee from the date of termination of the existing agreement approved by the Fair Work Commission.
 
Conditional termination
 
An employer and an employee may agree to terminate an individual agreement-based transitional instrument by making a conditional termination. A conditional termination has the effect of terminating an Australian Workplace Agreement or an Individual Transitional Employment Agreement if a proposed enterprise agreement is made that covers the employee and the employer, and the proposed agreement comes into operation. Either agreement terminates when the proposed enterprise agreement comes into effect.
 
Applying for approval to terminate
 
If a termination of an agreement has been agreed to, a person covered by the agreement must apply to the Fair Work Commission for approval of the termination using Form F24 for an enterprise agreement. The application must be accompanied by any declarations that are required by the Fair Work Commission Rules to accompany the application. It must be made:
  • within 14 days of the termination being agreed to, or
  • within such further period as the Fair Work Commission allows.
The termination operates from the day specified in the Fair Work Commission decision to approve the termination.
 
Termination — pre-Fair Work agreements 
 
Collective agreement-based instruments will be able to be terminated in the same way as enterprise agreements under the Fair Work Act — by agreement, or after the Notional Expiry Date if it is not contrary to the public interest.
 
Individual agreement-based transitional instruments (ie Australian Workplace Agreements, pre-reform Australian Workplace Agreementss, Individual Transitional Employment Agreements and individual Preserved State Agreements) are subject to rules that allow them to be:
  • terminated by agreement at any time
  • terminated by either party unilaterally after the nominal expiry date — the termination takes effect 90 days after the Fair Work Commission approves it, or
  • terminated conditionally on an enterprise agreement that covers the employer and employee coming into operation unilaterally (if the transitional instrument has passed its nominal expiry date) or by agreement (if it has not passed its nominal expiry date).
Entering a conditional termination is significant where an individual agreement has not passed its nominal expiry date because it allows the employee to fully participate in bargaining — including taking protected action and voting on an enterprise agreement.
 
The relevant legislation dealing with terminating a collective agreement-based transitional instrument can be found at Item 16 of Schedule 3 of the Fair Work (Transitional and Consequential Amendments) Act 2009 and Subdivision D of Division 7 of Part 2-4 (s226) of the Fair Work Act. Under the legislation the unilateral termination of an agreement is restricted.
 
This is because the termination of an agreement can in many cases result in a significant shift in the balance of forces in bargaining. In most cases collective agreements remain in place until a new agreement is negotiated to replace it. See SDV (Australia) Pty Ltd re SDV Australia Pty Ltd — Warehouse Collective Agreement 2008 — NSW [2013] FWC 5385; Royal Automobile Club of Victoria [2010] FWA 3483.
Interaction rules
 
Under the Fair Work (Transitional and Consequential Amendments) Act 2009 [Cth], the interaction rules between transitional instruments and Fair Work instruments are:
  • individual agreements continue to override all collective agreement-based instruments, including enterprise agreements
  • enterprise agreements can replace collective agreement-based transitional instruments (whether or not the instrument’s nominal expiry date has passed)
  • modern awards replace award-based transitional instruments
  • modern awards will not apply to employees covered by an individual agreement-based transitional instrument or by an enterprise agreement made under the Fair Work Act
  • modern awards will, however, apply to employees covered by a collective agreement-based transitional instrument such as a pre-reform certified agreement. The agreement will prevail over the modern award to the extent of any inconsistency. This may cause some surprising outcomes and employers covered by such an agreement should review the interaction of these instruments carefully.
Industrial action
 
Industrial action is protected, ie immune from legal redress, where it occurs in the context of bargaining and subject to certain important administrative requirements being met. The Fair Work Act provides that industrial action will be ‘protected action’ if it is undertaken for the purpose of supporting or advancing bargaining claims or for responding to a lockout by the employer, subject to certain restrictions.

Subsequent to the Fair Work Amendment Act 2014, which became effective from 27 November 2105, e
mployees are not able to take industrial action unless bargaining for an enterprise agreement has actually commenced. This amendment overcomes the so called ‘strike first, talk later’ situation that arose following the JJ Richards Case (where employees were permitted to take industrial action in order to pressure an employer into agreeing to bargain).

Under the amendments, for a protected action ballot order to be issued by the Fair Work Commission, bargaining must have commenced either by the employer agreeing to bargain, or by a majority support determination being issued by the Commission.

 
Requirements of unions/employees:
  • they must genuinely seek an agreement
  • they must secure a protected action ballot
  • they must provide 3 working days notice of a particular action
  • they must take the particular action within 30 days of the ballot.
Unions/employers cannot:
  • take action before the nominal expiry date of the agreement
  • involve ‘non-protected’ people
  • take action outside the scope of a secret ballot order
  • take action outside the scope of the protected action notice
  • bargain for unlawful terms
  • engage in pattern bargaining
  • take action to pursue some other non-bargaining agenda.  
An applicant for a ‘protected action ballot order’ must be genuinely trying to reach an agreement. Fair Work Australia determined that the concept of genuinely trying to reach agreement involves a finding of fact applied by reference to the circumstance of the particular negotiations. See Total Marine Services Pty Ltd v Maritime Union of Australia [2009] FWAFB 368.
 
Unlawful industrial action
 
Unlawful industrial action can result in penalties, to both the organisation and the individual. For example, industrial action taken in objection to a company’s decision to dismiss an employee is unlawful if it occurs prior to the expiry of the enterprise bargaining agreement. See Fair Work Ombudsman v Transport Workers’ Union & Anor [2010] FMCA 826.
 
Unprotected industrial action
 
Industrial action going beyond the scope of notified work bans is unprotected action. (Then) Fair Work Australia determined that supervisors who refused to provide certain information in the course of their work went beyond the scope of notified work bans and, hence, was unprotected action. See ASC Pty Ltd v Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union known as the Australian Manufacturing Workers Union [2012] FWA 418.
 
Stand down
 
There must be a direct causal link between industrial action and the inability to usefully employ those stood down before a stand down is considered to be valid. Electing to stand down at a particular time for reasons of operational convenience or collateral advantage, or for some tangential or ancillary reason, may break the casual linkage. In a matter before (then) Fair Work Australia, employees returned to work on an incremental basis during the stand down period and those employees were entitled to payment for time worked. See Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union v Toyota Boshoko Australia [2012] FWA 1135.
 
National Employment Standards 
 
Since 1 January 2010, the National Employment Standards have applied to each employee whatever other instrument also apply. It means that where an employee is covered by an instrument that provides terms that are detrimental to the employee compared to the Standards, the Standards will override the instrument.
 
Minimum wage rates in all types of agreements — both enterprise agreements and transitional agreements — must not be less than the relevant minimum wage rates set out in the applicable modern award, subject to its transitional provisions. See Ferrymen Pty Ltd v Maritime Union of Australia [2013] FWCFB 8023.

Section 55 of the Fair Work Act provides that a modern award or enterprise agreement must not exclude the National Employment Standards or any provision of the Standards.

Nominal expiry date

Under the Fair Work Act (s.
186(5)), one of the general requirements for the Fair Work Commission to approve an enterprise agreement is an agreement must specify a nominal expiry date, and the date is not more than 4 years after the day of approval by the Commission.

This can be expressed as a specific date in the future or a specified period after the date of approval by the Fair Work Commission - see Newlands Coal Pty Ltd v Construction, Forestry, Mining and Energy Union [2011] FWAFB 7325.

An agreement continues to operate after the nominal expiry date until replaced or terminated by an application to the Commission. The terms of the agreement apply unless a terms fails to meet the relevant National Employment Standards or minimum wage provided by the applicable modern award.

Agreements & awards

 
An employee cannot be covered by both a modern award and an enterprise agreement at the same time. If an employee is covered by an enterprise agreement, a modern award does not apply to the employee in relation to their employment. An agreement that is in operation and covers an employee determines the employees’ rights and obligations in relation to particular employment.
 
There may be multiple enterprise agreements covering an employee with the terms of the enterprise agreement itself defining when the agreement applies. See Re Cimenco Pty Ltd [2012] FWA 526.

Unfair dismissal

An employee covered by an enterprise agreement can make an unfair dismissal application to the Fair Work Commission, even where the employee's annual rate of earnings is greter than the high income threshold.

This also includes any existing agreement made under legislation prior to the Fair Work Act. For example, an employee employed under an agreement-based transitional instrument, such as a Australian Workplace Agreement or Individual Transitional Employment Agreement, has jurisdiction to claim unfair dismissal because such instruments are recognised under the provisions of the Fair Work (Transitional and Consequential Amendments) Act 2009 [Cth] - see Coventry v Southern Gulf Catchments Pty Ltd [2011] FWA 7018.

While an enterprise agreement may exist in a workplace the agreement must cover the employee for there to be jurisdiction under unfair dismissal laws - see Taylor-Hunt v Downer EDI Works Pty Ltd [2010] FWA 4626.
 
 
 
 

WantToReadMore

Get unlimited access to all of our content.