What are the steps for enterprise bargaining

February 28, 2022

What are the steps for enterprise bargaining
BlogEnterprise Agreements

Enterprise agreements are important arrangements between employers and employees, generally functioning as a workplace rulebook that consolidates and simplifies the terms and conditions of employment. An enterprise agreement is finalised after the employees have participated in an enterprise agreement voting process. Before the voting can commence, however, the terms and conditions for the agreement would first have to be thoroughly discussed and negotiated in the enterprise bargaining stage.

The enterprise bargaining process can be quite complex. Though the specific steps may vary depending on the unique requirements of your business, here is a useful guide for navigating the process.

Step 1: Initiating the bargaining process

The bargaining process should be formally initiated and agreed upon before starting in earnest. Keep in mind the timeframes as if you miss the deadlines, the Fair Work Commission (FWC) would not approve the application for the agreement. (The FWC offers tools such as a date calculator to help you keep track of the important dates and schedules for the bargaining process.)

To satisfy the criteria for fairness set by the FWC, employers must create the Notice of Employee Representational Rights (NERR). A copy of the NERR should be provided to the employees who would be covered by the enterprise agreement no more than 14 days after the bargaining process started.

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Step 2: Appointing the bargaining representatives

Bargaining representatives should be appointed to handle the negotiation. They must be independent and not be under the influence or control of the employees’ employer. Typically, the relevant trade unions are appointed as bargaining representatives to balance the interests of the employees and the needs of the business. They are to bargain ‘in good faith’ so that the process runs fairly and efficiently.

Step 3: Drafting the agreement

Both parties must sit down and discuss the terms and conditions until they strike a deal that aligns with their interests and principles. Several terms that the draft must contain include:

the nominal expiry date, which is no more than 4 years after the date the FWC approves the agreement;

the procedure for dispute settlement, which must grant authority to either the FWC or another independent body to settle disputes covered by the agreement;

a flexibility term, which allows individual flexibility arrangements to be made; and

a consultation term, which requires employers to consult with their employees about any major workplace changes that can significantly affect them.

The enterprise agreement also includes terms about permitted matters such as hours of work, deductions, definitions of relationships between each employer and any employee organisations such as unions, rates of wages as well as penalty and overtime rates.

Step 4: Developing the agreement

Once an initial agreement has been reached, it must be checked to assure its compliance with the requirements of the Fair Work Act. Small errors may lead to major delays to its approval. The agreement must be able to pass the Better Off Overall Test, which ensures that the agreement contains better entitlements than any relevant award.

Step 5: Requesting and holding a vote

The voting stage of the bargaining process can be requested once the employer has successfully proven that the employees ‘genuinely’ agree to the agreement. A ‘genuine’ agreement constitutes the employer meeting all the requirements set out in Section 188(1) of the Fair Work Act. The employer should also be able to prove that all reasonable steps are taken to follow the rules:

giving employees a copy of the agreement and the relevant reference materials, or access to such materials

notifying the employees when and where the voting will take place

notifying the employees how they can vote

explaining the terms of the agreement to the employees

Once the requirements have been met, the voting process can commence. If a majority has been reached in favour of the agreement, then the agreement is considered ‘made’ and it can be lodged to the FWC for approval.

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Step 6: Lodging the agreement

Within 14 days of the agreement being ‘made’ by a majority vote, a signed copy of the agreement should be lodged to the FWC along with an application for approval (Form F16) and a Statutory Declaration from the employer in support of the application for approval.

Once the agreement has been lodged, a member of the FWC will assess it for compliance with the Fair Work Act. If the member determines that the agreement is satisfactory, the approval decision will be posted on the FWC website as well as emailed to the parties. The agreement will come into effect seven days after the FWC gives it approval.

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