What are the Different Types of Enterprise Agreements? | LegalVision (2024)

As an employer, you may have heard of enterprise agreements and wondered if they suit your business. Enterprise agreements are agreements between employers and employees that set out minimum employment terms and conditions. Both employees and employers can begin the process of introducing an enterprise agreement through collective bargaining. There are three types of enterprise agreements including:

• single enterprise agreements;
• multi-enterprise agreements; and
• greenfields agreements.

This article outlines the key features of each type of agreement.

Why Enterprise Agreements?

There are fundamental differences between modern awards and enterprise agreements. Modern awards outline the rights and responsibilities of employers and employees for the particular industry or occupation it covers. These entitlements might include:

• minimum wage;
• penalty rates;
• overtime rates;
• allowances; and
• breaks.

Modern awards include the Hospitality Industry (General) Award 2020, the General Retail Industry Award 2020 and the Clerks (Private Sector) Award 2020.

On the other hand, the Fair Work Act allows employers and employees to form their enterprise agreement rather than comply with the applicable modern award. An enterprise agreement can replace a modern award by varying the terms to suit the employer and the employee better.

Nevertheless, an enterprise agreement will not allow an employer to “get around” the minimum employment standards. Ultimately, before approving an enterprise agreement, the Fair Work Commission must ensure that the employee is better off overall than if the relevant modern award covered them.

What Are Single Enterprise Agreements?

An employer or two or more employers who share a single interest can create a single enterprise agreement. To create a single enterprise agreement, all the employers wishing to join the agreement need to receive a determination from the Fair Work Commission that they are single-interest employers.

For example, this could be employers in related corporations or those involved in a joint venture. A joint venture is where two or more parties work together to accomplish a task or project. These employers can come together to negotiate an agreement with their collective employees.

Additionally, although franchisees may operate as separate businesses, they may have a common interest when dealing with their employees. A well-performing franchise will ensure that franchisees are not in competition with each other. To achieve this, the franchise could negotiate a single enterprise agreement.

What Are Multi-Enterprise Agreements?

Two or more employers and employees of different enterprises can create a multi-enterprise agreement. These agreements differ from single enterprise agreements in that employers do not need to prove they have a single interest in the bargaining process. Employers will, however, need to agree to bargain together. This can be common for projects involving multiple organisations, for example, in construction.

What Are Greenfields Agreements?

A greenfields agreement is a specific category of an enterprise agreement that is only available to a genuine new enterprise. This could be, for example, a new business or project. The key feature of a greenfields agreement is that the employer needs to make the enterprise agreement with a specific union before any employees are officially employed. Therefore, as an employer, you must apply before any work (beyond any preparatory work) begins.

A greenfields agreement can be a single enterprise and a multi-enterprise agreement. The usual parties in the bargaining process for a greenfields agreement are the employer(s) and an employee association such as a trade union.

What Are Some Key Terms in an Enterprise Agreement?

You must include four critical terms in your enterprise agreement. These are:

• an expiry date no longer than four years from the date the Fair Work Commission approves the enterprise agreement;
• a dispute resolution procedure that allows for either the Fair Work Commission or an independent third party to settle disputes relating to the terms of the agreement or National Employment Standards;
• a term to allow employees to make an individual flexibility agreement (IFA) with their employer, which varies the terms of the enterprise agreement according to that single employee’s specific needs; and
• a consultation term requires that employers consult employees regarding any significant workplace changes and allows employees to have representation in that consultation process.

What Should I Not Include in an Enterprise Agreement?

An EA should not include any unlawful content. Unlawful content can include:

• discriminatory clauses;
• anything that undercuts an employee’s right under the National Employment Standards; or
• anything inconsistent with unfair dismissal rights and general protections under the Fair Work Act.

Key Takeaways

The three types of enterprise agreements are:

• single enterprise agreements;
• multi-enterprise agreements; and
• greenfield agreements.

Before establishing an enterprise agreement, you must determine which type of enterprise agreement is most suitable for you. It is important to note that the Fair Work Commission needs to approve the agreement before it can commence operation.

If you have any questions about enterprise agreements, it’s a good idea to speak to our experienced employment lawyers, who can assist as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents. Call us today on 1300 544 755 or visit our membership page.

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