What are the advantages of Enterprise Agreements?

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And the award goes to …

Shortly after the Australian Federation, the Commonwealth Court of Conciliation and Arbitration was established (1904) to settle disputes between employers, unions, and employees. It was the first such body in the world, and when a dispute was settled, the decision handed down was referred to as an award.

The hundred years or so since then have seen industrial relations and workplace awards evolve in a great many ways. The Court of Conciliation and Arbitration was ruled unconstitutional in 1956 and replaced by the Arbitration Commission and the Industrial Relations Court. Further developments have seen the appearance of the Fair Work Act (2009) and the Fair Work Commission (FWC).

Around 2008, the Industrial Relations Commission (IRC) began updating and modernising some 1560 State and Federal awards into 122 modern awards, and these were finally applied on 1 July 2014 following a 4-year transition period.

Of significance to this article, the Industrial Relations Reform Act of 1993 allowed for workplace disputes to be settled by enterprise bargaining between employers and unions.



Modern awards provide great protection for the minimum entitlements and remuneration of employees. However, over time, the complexities of many and varied workplace circumstances have created often quite convoluted rules relating to hourly rates, allowances, and so on. Certainly, the employee is well covered, but employers can be faced with significant complexities in trying to apply multiple awards with many varied requirements.

Recent years have seen the development of enterprise agreements (EA), often referred to as enterprise bargaining agreements or EBAs.

These are fleshed out over time between unions and employees on the one side, and employers on the other. Once the EA has been agreed to by both sides – including a majority vote from the union members – it is formally presented to the FWC for ratification.

The FWC ascertains whether the EA complies with the minimum provisions of the National Employment Standards (NES) requirements, and above all, makes absolutely sure that every employer is at least Better Off Overall, often referred to as the BOOT test.

EBAs are approved for a maximum term of 4 years, and therefore typically come up for renegotiation, submission, and approval within a 2-4 year timeframe.



Sometimes, complex rates of overtime, penalty rates, and allowances can be simplified by combining all such elements into one simple (but higher) base hourly rate. This provides simplicity for the employer, while still guaranteeing that the employee is at least as well remunerated.

Sensible negotiation allows for EBAs to be tailored to the specific needs of a business, rather than a once-size-fits-all award. Negotiation toward a good outcome can provide greater transparency, a sense of involvement for employees, and improved morale.

Since the EBA will apply to current and future employees, new hires will automatically work under the already-implemented EBA, avoiding the need for individual contracts.

The (up to) 4-year timeframe allows for greater predictability in forward planning, both in day-to-day operations, and when bidding to secure new contracts of work.

Employees can rest assured that they are at least as well off as working under their original award, and they too, can look forward to certainty of conditions for the period of the EBA.



There are virtually no disadvantages to employees, except where an individual disagrees with the majority union vote on the construct of the EBA. For employers, EBA negotiations can involve significant time and effort, though the advantage of workplace predictability is a large incentive.





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