Steps for making enterprise agreements

Notice of employee representational rights

Section 173 of the FW Act requires departments and agencies to provide to the employees that will be covered by the agreement a notice of representational rights (the Notice) before commencement of negotiations. This is a compulsory step that must be followed.

The Notice is to be given as soon as practicable but not later than 14 days after:

  • an employer initiates bargaining or accept to bargain for an enterprise agreement; or
  • an employer is being compelled to bargain for an enterprise agreement because of a majority support determination, a scope order or a low-paid authorisation

Section 174(1A) of the FW Act further provides that the Notice must:

Section 174(1A) of the FW Act further provides that the Notice must:

  • contain the content prescribed by the regulations
  • not contain any other content
  • be in the form prescribed by the regulations.

The prescribed form and content of the Notice are then set out at Schedule 2.1 of the Fair Work Regulations 2009.

The Notice must be a separate, standalone document with no agency logos, contact details or additional text added to it. The only information that can be inserted (in the identified place) is the name of the employer, the proposed name of the new agreement and the proposed coverage, which in most cases will be by reference to an existing agreement. The Notice must be attached to an email or as a separate document if, for example, sent in the mail. Agencies must ensure that there is no basis for concluding that any additional information that may have been sent with their original notice forms part of the Notice.

The Notice includes information about the employee’s right to appoint a bargaining representative. Where a union is entitled to represent the industrial interests of an employee in relation to their employment, then the union is the default bargaining representative. Where a union is involved in bargaining it must have coverage of the employees in relation to that area of employment. An employee can also appoint themselves or someone (who agrees) to act as their bargaining representative.

Under Regulation 2.04 of the Fair Work Regulations 2009, the Notice may be given to the employees in various ways such as given personally to the employee, sent by pre-paid post, be emailed or faxed or be displayed in a conspicuous location at the workplace.

The FWC has also published a Notice of employee representational rights guide that can be downloaded from the following web page:

An example of completed notice of employee representational rights can be found at Attachment 5.

Good faith bargaining

The Government’s industrial relations policies promote workplace relations based on consultation, cooperation and collective bargaining. It recognises the legitimate role of unions in the workplace and the right of employees to have their interests represented and considered.

The Government requires that all enterprise agreement negotiations are conducted in a manner that is constructive and avoids unnecessary disputation.

Departments and agencies and their bargaining representatives must comply with good faith bargaining requirements set out in section 228 of the FW Act. These requirements include:

  • 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 for the agreement in a timely manner
  • giving genuine consideration to the proposals of other bargaining representatives for the agreement, and giving reasons for the bargaining representatives' responses to those proposals
  • refraining from capricious or unfair conduct that undermines freedom of association or collective bargaining
  • recognising and bargaining with the other bargaining representatives for the agreement

The good faith bargaining requirements do not require that:

  • a bargaining representative to make concessions during bargaining for the agreement; or
  • a bargaining representative to reach agreement on the terms that are to be included in the agreement

Departments and agencies are required to recognise all bargaining representatives as defined in section 176 of the FW Act to include employers, employer associations, unions entitled to represent the industrial interests of an employee in the workplace to be covered by the agreement, as well as any other person appointed as a bargaining representative of an employee who will be covered by the agreement.

Departments and agencies and their bargaining representatives should familiarise themselves with the full requirements relating to good faith bargaining in Part 2 – 4 of the FW Act.

Voting process

The voting process is an important part of enterprise bargaining. Through this process all employees covered by the proposed agreement have an opportunity to agree or disagree with the negotiated terms and conditions of employment.

The vote can be organised only after the agreement is approved by the Government. Under no circumstances can an agreement be offered to the employees for approval after in-principle agreement is reached and before it receives Government endorsement.

At least seven full days before the voting date employers are required to take all reasonable steps to ensure that:

  • all employees employed at the time who will be covered by the agreement are given access to the written text of the proposed agreement and any other material incorporated into the agreement by reference (e.g. a copy of an award or a particular internal policy)
  • the employees are notified about the time and location at which the vote will occur and the voting method that will be used (e.g. ballot, electronically or by other means)

In addition, the employer is obliged to explain to the relevant employees the terms of the agreement and the effect of these terms. The explanation is to be provided in a manner that is appropriate to the particular needs of the employees (e.g. employees from culturally and linguistically diverse background, young employees and those who did not have a bargaining representative).

An agreement is made when a majority of the employees of the employer who cast a valid vote approve the agreement.

Approval of enterprise agreement by the FWC

Within 14 days from the date the agreement is made, a bargaining representative for the agreement must lodge the agreement to the FWC for approval. In order to be approved the agreement must pass the Better Off Overall Test (BOOT). An enterprise agreement will pass the BOOT if the FWC is satisfied that each of the employees covered by the agreement is better off overall than under the relevant award.

For public sector employers who are constitutional corporations the relevant award will be one or more modern awards made in 2010. For non-constitutional corporations, with minor exceptions at the time of release of these policies, it will be a modern award made in 2015 as a result of modernisation of public sector transitional awards that previously covered public sector employers that are not constitutional corporations. For further information about the award that covers your organisation, please contact the portfolio department or the CBU.

In addition, the FWC must be satisfied that the agreement:

  • does not contain any unlawful terms
  • specifies its nominal expiry date that cannot be more than four years from the date the agreement is approved by the FWC
  • includes a dispute settlement procedure
  • includes a flexibility clause and a consultation clause

The agreement approved by the FWC will commence operation seven days after it is approved by the FWC or at a later date specified in the agreement.