Federal enterprise agreements - continuation of  current arrangements


Federal enterprise agreements - continuation of current arrangements

For a new federal wages and conditions regime to come into effect it seems clear that employers and employees will have to negotiate new arrangements.


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For a new federal wages and conditions regime to come into effect it seems clear that employers and employees will have to negotiate new arrangements. The new federal legislation has not been drafted yet; and when it is drafted employers and employees will then have to negotiate new agreements to change current arrangements. In the meantime the current system of award and agreement regulation would continue.

Employers will be aware of the current advertising campaigns of the ACTU and the Federal Government which have concentrated on the types of arrangements which may result from proposed changes to the federal Workplace Relations Act. The ability of an employer and his/her employees to negotiate employment conditions in a particular workplace has been a feature of the federal workplace relations legislation for many years and this will be even more obvious under the proposed changes.

While it is important to take into account the possibility of changes to the types of agreements that may be negotiated, it may be an appropriate time to detail the current federal agreement options available to workplaces, as currently applicable arrangements may not necessarily be effected immediately by any future legislative changes.


The Workplace Relations Act 1996 [Cth] (WRA) provides for the Australian Industrial Relations Commission to approve an enterprise agreement that has been reached between an employer and employees.

Once certified, these agreements have the same force as a federal award and will supersede any binding federal or applicable state awards, to the extent of the inconsistency.

In addition, the legislation currently allows the negotiation of an Australian Workplace Agreement (AWA) between an employer and an individual employee. If an AWA is silent on a particular employment condition, then there is no entitlement.

All of the bargaining options currently available under the federal agreements system can cover an employee under a federal award, state award and/or extend to a non-award employee.

The no disadvantage test

An important feature of the current federal agreement system is the legislation ensures that a certified agreement must not disadvantage employees in terms of their existing wages and conditions, with such test being a comparison to the relevant federal or state award or, in the absence of a relevant award, a comparison to an 'appropriate' award. The AIRC will not certify an agreement unless this 'no disadvantage test', among other requirements, is satisfied.

The Federal Government has proposed to alter the nature of this test from a comparison to the relevant or appropriate award to a comparison of four minimum conditions of employment, including annual leave, parental leave, personal leave (sick leave), and a minimum wage. Under these circumstances, the relevance of the applicable award or an appropriate award will diminish over time.

Certified agreements

While the federal WRA provides employers with as many as five enterprise bargaining options, the two most common types of agreement under the federal jurisdiction are an 'agreement with organisations of employees' and an 'agreement with employees'.

Agreement with organisations of employees - There are a number of features of this types of federal agreement. These include:

  • a union must be a party to this type of agreement, and is binding on union members and the company;
  • an interstate dispute (or award) is the basis for a certified agreement;
  • a valid majority (50% + one) must vote in favour of having the agreement. If a valid majority votes in favour of the agreement, it is binding on all union members within the company;
  • the agreement must be genuine and informed;
  • the 'no disadvantage test' must be met;
  • the agreement must be approved by a hearing of the Australian Industrial Relations Commission.

The difficulty of a federal union certified agreement is that such an agreement is not binding on non-union members.

Agreement with employees - The features of this types of agreement include:

It can be made without a trade union being a party, and relies on the constitutional power of the Commonwealth rather than the interstate dispute power. This makes this form of agreement accessible to any constitutional corporation even if not a party to a federal award;
for a union to be involved in the process, it must have at least one member;
in all other respects, the agreement is subject to the same tests as a certified agreement.

Australian Workplace Agreements (AWAs)

While many employers would regard AWAs as a relatively recent innovation, they have existed in the WRA since 1996. The incidence of AWAs in the private sector over their nine years of existence has been relatively small, with various surveys suggesting approximately four to six percent of private sector employers being a party to an AWA.

However, AWAs may become a prominent feature of the federal government's proposed workplace relations reforms, considering the commentary thus far on this issue. As with any type of contract of employment, there are advantages and disadvantages depending on the industry and the nature of an employer's business and an employee's occupation. In many instances, AWAs can provide some flexibility to existing employment arrangements and may be an appropriate way for an employer to legitimise existing 'unregistered' conditions of employment.

The main features of this type of agreement include:

  • it completely replaces the relevant award. There is no application of the award in regard to that employee. If the AWA is silent on the matter, there is no entitlement;
  • the 'no disadvantage test' must still be met, although it is possible to balance the agreement out overall, ie. gains in some areas, losses in others, so long as it results in no overall disadvantage to the employee;
  • the agreement must be individually signed by the employee;
  • the agreement must be offered on the same terms to all comparable employees in an enterprise;
  • the agreement is voluntary;
  • a union may not be a party to an AWA, but can be used as a bargaining agent by an employee;
  • the agreement is not ratified by the AIRC but are approved by the Office of the Employment Advocate (OEA). The AIRC will become involved in arbitrating if the OEA disapproves of the agreement and the parties still want to proceed with the agreement.

Industrial action - strikes and lockouts

The WRA contains a number of powers for the AIRC where industrial action is taken by either party to an agreement in relation to the bargaining of the agreement. This is referred to as 'protected industrial action' - to be able to strike and to lock out - will exist during a formal bargaining period, however, the WRA establishes a framework which seeks to limit the scope for 'unlawful industrial action' by:

  • providing the AIRC with powers to curtail industrial action;
  • limiting the circumstances in which industrial action will be protected; and
  • banning the payment of strike pay.

It is unclear what role or relevance 'protected industrial action' will have under new federal legislation.


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