Understanding Enterprise Agreements And Modern Awards In Australia

What are Enterprise Agreements?

1.The modern awards are in effect even though there exists the National Employment standards (NES). The modern awards are a profession-based analysis. There is a demand for propelled respect by some organizations and it is used to incorporate all the employees under a department. In the fundamental aspect, gifts set the basic standards which the business in a industry is allowed to pay the employees for the work and services they provide. Overall, it is at the discretion of the agents at the solitary industry or the manager to set and compare the conditions of business and wages. As being opposed to the propelled respect, the agreements are formulated to enable the agents’ a right to earn the minimum standard wages and salaries and defines the terms and conditions of the work. The imperative modern award is not equal to the wages which are set aside in an enterprise agreement.

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The agreements which involve the outcome of the deal between the different national industrial employers and employees is referred to as the Enterprise agreement. The Enterprise Agreement is formulated when the concerned parties negotiate amongst themselves using collective bargaining, which is generally done in good faith.  According to the fair Work Act, 2009, an enterprise can be defined as any kind of a business or an activity or even a planned undertaking.  The agreements which are used to set out terms and conditions which guide employment and those agreements which are signed by the employee and the employer are known as the registered agreements.

There are 2 categories under which the enterprise agreements are placed under the national workplace regulations system. These are-

  1. Agreement-based transitional instruments
  2. Enterprise agreements

On the other hand, an award is a standard of the slightest present-day terms and conditions which is applied to a specified area of social affairs of the delegates. The security provided by the award to the delegates depends on whether they fit into the occupations which are secured by the award. The re-organization of the old state and government systems of awarding the employees have resulted in the evolution of the modern-day awards and these awards became effective for public use from 1 January 2010.

The administrators and the agents can make a collective bargaining agreement which has the power to discard conceded terms, has provided by the Fair Work Act. The undertaking must be put into effect by the voting of the members and it must be maintained by the members involved. There are numerous systems which support such agreements and these systems need to be enrolled in the Sensible Work Commission. The AWAs which was a type of Particular workplace understanding and was used to remove the awards is no longer possible while the show day gifts which allows the Solitary Versatility agreements acts as a viable substitute.

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Types of Enterprise Agreements

The endeavor agreement makes it possible to change altogether the distinct classes of leave or the hours of pay by analyzing the framework of the agreement through the Better of Overall Test (BOOT) method. The employees need to have a clear framework as to what will be the general pay rates and what will be the additional pay rate based on additional work done. If the employees work for long duration and no additional allowances are given to them, then the general pay rates must be increased to respect and acknowledge the efforts of the employees.  The organizations can clearly mention the social affairs with huge business agreements or can comprehend the details with the workers in a clear manner.

Modern awards establish the minimum eligibility criteria for the employees to be able to obtain entitlements. All the employees who are employed in the industry are eligible for modern awards. The only exception is the employees come under the enterprise agreement. The scenario wherein the employees were covered under the enterprise agreement, but the agreement ceases to exist, then the employees will again be eligible for modern award again. The modern awards include the criteria for the employees to follow so that they can ascertain the entitlement s which they are supposed to get from the industry. In Australia, there are about 122 modern awards covering most of the occupations and the industrial activities. The entitlements which are less than the National Employment Standards (NES) and offer less benefits to the employees are not included in the Modern awards. There is a total of 10 minimum standards relating to employment which are included in the accounting of the National Employment Standards (NES) and it is applicable to all the employers and the employees who are covered under the Fair Worker Act of 2009. The Modern awards addresses the following issues such as the minimum wage rates, the penalty rates which are to be included for overtime and weekend work, the decision regarding leaves and the allowances to be paid. The modern award is applicable to all the employees who are employed in the industrial activities although it sometimes becomes difficult for the ascertainment of the enterprise agreements in the long run. According to the Fair Work Act of 2009, the modern awards are the documents which are legally written outlining the minimum wage rate and the conditions of the employment to be followed by the employers. There are in total about 122 industries in Australia which are covered by the Modern awards in Australia.  The Modern Awards makes the entitlements such as the pay, the hours of work.

What is Modern Award?

2.The Enterprise Bargaining involves the process of negotiating amongst the employers and the employees along with the bargaining representatives who have the objective of formulating an enterprise agreement. The framework for the organization about the rules and obligations and how the process is to be done, which includes the rules regarding bargaining, are stated under the Fair Work Act 2009. The Fair Work Act 2009 also enumerates the content of the enterprise agreements and how the agreement is to be made and approved by the concerned organizations. An agreement is the registered legal document which frames the terms and conditions relating to employment. This agreement usually happens amongst the employees and one or more employers. According to the framework set by the national workplace relations system, there exists two different subtypes of agreements. These are 1. Enterprise agreements 2. Agreement-based transitional instruments. The agreement based transitional instruments also includes the various types of individual and groups of agreements which could have been framed before 1 July 2009 under the various Workplace Relations Act of 1996. The Act also includes the Individual Transitional Employment Agreements (ITEAs). There are various agreements which exist under the Agreement-based transitional instruments such as the collective agreements, the Australian Workplace Agreements (AWA), the pre-reform certified agreements, the Individual Transitional Employment Agreements (ITEAs), the preserved individual and collective state agreements. There are various specifications in the enterprise agreement which enumerates the different clauses between one or more than one national system employers and their employees. The enterprise agreements come into existence because of the collective bargaining process of the parties involved in the enterprise level. These collective bargaining are done by upholding the intent to sincerely instill true faith in the industrial system. The Fair Work Act of 2009 states that the following new types of enterprise agreements can be formulated such as – 1. Single-enterprise agreement and 2.  Multi-enterprise agreement 3. Greenfields agreement. The Single-enterprise agreement is an agreement formulated amongst the single employer or more than one employer and the employees. The agreement is formulated at the time of employing the employees. The single interest employers include those employers who are presently in the joint venture or any common enterprise (Pekarek et al. 2017).

The process of negotiation amongst the managers and the representatives which are targeted to reach an agreement regarding the employee wage rates, conditions for work, benefits is known as the collective bargaining. The collective bargaining process includes the presentation of the employee issues by the agents of the trade association. The main emphasis of holding a discussion during a collective bargaining is to address the employee issues regarding the wages, hours of work, security of job, right to be involved in a workplace and the undertakings of the company.

Eligibility Criteria for Modern Awards

The purpose of an association is to hold consultations with the company head or leader or in some cases, discuss with other companies the employee issues which afflicts the employees and the workers. An agreement between a company with other associations or companies is known as a Collective Agreement. The issues concerning the grievances of the workers are enumerated under the Collective Bargaining and it is defined as the deal which takes place between the association representatives and the company. The various issues such as the wages, hours of working, work conditions, privileges are discussed and addressed by the Collective Bargaining.  The main motive of the meetings is to arrive at a conclusive agreement in the form of a collective bargaining agreement (CBA) or in the form of a collective employment agreement (CEA).

All the human rights conventions accept and acknowledge the right to general bargaining. The ability to cope with trading relationship is a fundamental human right and is enlisted in the Article 23 of the Universal Declaration of Human Rights (Bailey and Peetz 2014). The adaptability of the alliances affirming the reaping of the benefits accrued to the total managing is a major right and is enumerated under the International Labor Organization’s Declaration of the Fundamental Principles and Rights at Work in the Item 2(a). The meddling in the laws relating to the workers by the various countries and which ultimately ends up in the neglect and discrimination of the workers are scrutinized by the Adaptability of Association and Security of the Benefit to Create Custom, 1948 (CO78) (Qureshi 2015). The Overwhelming Court of Canada in June 2007 looked into the strategy for thinking and reviewed the total arguments in the human right for the workers.

The bargaining of the employees regarding their establishment of the flexibility of the workplace, proper understanding and framing of the workplace rules, and a reassessment of the sense of control regarding the work is considered as an important business aspect and the benefits are directly affecting the workers. Total wheeling and dealing is very much essential as an association in self-government as well as looking for the outside terminations. Achieving the administrative powers in the workplace as well as to ensure the rule of law in the workplace is the aim of the Awards. Workers are provided a chance to influence the framing of rules and regulations regarding the workplaces due to the bargaining powers.

Minimum Standards in Employment

The working conditions are presided over by the Enterprise agreements and various other controlled understandings which are applicable to

  • the organisation
  • A social group of associations or employees

After the organization arrives at an agreement, the employees are not given any relevant information except;

  • the basic salary and remunerations
  • application of the National Business Standards
  • The terms and conditions of the workers which are applicable to them

Enrolled agreements are working in effect as soon as the agreements are formulated. Depending on the impact of the business needs, the decision needs to be taken regarding the setting up of workplace association. The supervisors can alter certain terms and conditions for the employees who occasionally miss the targets set for them and provided the employees are in a weak economic and financial situation. These are possible due to the formal setting up of the workplace understandings (Kavanagh and McRae 2017). The dairy agriculturists because of the non-standard hours of their work are greatly benefitted.  

The point of reference is the only aspect wherein the workplace agreement differs due to the difference in the working ways of the business law contracts. These include;

  • A workplace understanding is defined as formally developed report brought into existence by the law enumerating terms and conditions.  
  • A workplace agreement incorporated formally with an authority.
  • A workplace agreement can differ with certain other aspects of the workers.
  • Certain documents must be allocated to the delegates to scrutinize the working of the workplace rights

Certain documents need to be provided to the delegate to assess their rights and duties in the workplace and failure to comply with the rules must be addressed immediately.

3.There are various legal obligations and rights which needs to be observed by the employers and the employees during the negotiation of the enterprise agreement.  Australia unlike the European countries had never had the system of representation of employee system at the level of enterprises. In the early part of the 1990s the conciliatory and arbitrary setup operated under the principal framework for analyzing the wages and conditions of the employees. Between the early 1990s and the 2006, the conciliatory and arbitrary aspects were covered up by the shift to do bargaining at the enterprise level (Oliver 2016). The enterprising agencies are set up with the intention to safeguard the employees and address their concerns in the workplace so that their issues and concerns can be addressed by the hiring agencies. The procedure for setting the agreement must include the provisions and the guidelines stated under the Fair Work Act of 2009 as well as fall in line with the standards set under the International Labour Union (Shaw, McPhail and Ressia 2018). Any form of discrimination at the workplace must be addressed properly by the hiring agencies and the issues and discrepancies which arise as a result of the conflict of interest among the two groups can be sorted out by the assistance and guidance of a mediating body or as commonly referred to as the Ombudsmen.  The Fair Work Ombudsmen resolves the dispute and issues accruing between the two bodies. The laws passed by the Government of Australia must be thoroughly studied to frame the enterprise agreement. There exists certain framework which are established by the international bodies (Walpole 2016). The international bodies such as the United Nations, The International Labor Organisation, the International Monetary Fund as well as the various Trade Unions and the Labor Unions have set up guidelines regarding the establishment of the minimum guidelines which are to be followed while setting up the Enterprise Agreements (Harben 2017). These guidelines ascertain the criteria to uphold and respect the dignity of the employee, the minimum wage rate, the eligibility criteria for hiring the employees and action to prevent the discrimination of women at the workplaces (Thomason 2018). These guidelines are to be set up under the framework of the Enterprise Agreement.  The enterprise agreement also has a detailed framework for enabling the employer and the employee to understand each other and respect each other’s concerns regarding the business and working aspects. The collective agreements benefit both the parties, such as the employers and the employees. The essence of following the guidelines during the framing of enterprise agreement is that the employees are safeguarded from the malpractices which can adversely affect them (McCrystal 2014). The employers also have a legal document which can legally bind the employees to follow the rules and regulations of the current organization. The employers are made to accept the minimum wage rate which are to be provided to all the employees.

Content and Processes of Enterprise Agreements

Modern awards differ from enterprise agreement (Oliver and Walpole 2018). The employees have the right to know as to what type of award guides the contract or the kind of enterprise agreement wherein the employee has entered during the time of joining the enterprise. The employees should also be aware about the new changes in the bargaining process. The Fair work act (2009) which monitors the relationship amongst the employees and their employers as well as the bargaining representatives should work in tandem with the agreement. The professional work measures which are in effect alongside the National Employment standards (NES) and which functions as a legally binding document stating the minimum salaries and the terms of employment are defined as the modern awards They connect both the organizations as well as the employees and the type of work which is done, and the industry involved, both affects them. The awards consist of the important information such as to whom the award provides coverage, the clauses, job details and the schedule. The award is not applicable when the business has a registered agreement in existence.

In the context of business, the agreement can be defined as a combination of mutually determined conditions amongst the employee and the employer with the objective of making an enterprise agreement (Smith 2016). The enterprise agreement consists of an expiry date mentioning the end of the agreement which normally is around four years since the date of its approval. The enterprise agreement is approved by the fair work act commission. The enterprise agreement contains the dispute settlement process which gives authority to the fair work as well as provides flexibility to the individuals to for making flexible agreements. It has been a norm for one or more employee associations or unions to frame the enterprise agreement which is designed by all the consenting parties involved (Rugman and Verbeke 2016).

The employees ae required to pass through the process of enterprise barraging before they consent to work in a given firm. Negotiation plays a dominant part in this process and the employees and the employers negotiate with each other to frame the enterprise agreement. The process of framing the agreement occurs in the presence of the bargaining representatives who are chosen bv the employees. The framing of the agreement involves the voting after which the result is ratified by the fair work commission (Thorthwaite and Sheldon 2014). There exists a set of legal rules and regulations which must be adhered to by both the parties during the process of negotiating the enterprise agreement amongst the employers and the employees. A simple and flexible framework which must be followed by this process amongst the employer and the employees to negotiate a safe environment which facilitates the formation of enterprise agreement is provided for by the Fair Work Act (Imperatori and Ruta 2015).

Collective Bargaining in Industrial Relations

The process of negotiations in the framing of the enterprise agreement involves the employer to legally notify all the employees who are affected by the enterprise to come up with their representatives before the start of the bargaining process.  The employees have the right to legally select whosoever they prefer to represent them, and they can even nominate themselves as the representative (Williamson, O’Donnell. and Shingles 2015). Any one party can be represented by the representative and the representative should also be under the coverage of the enterprise agreement. The representatives are forbidden to represent more than two persons as this can make him to negotiate in terms of making the process more neutral.

The representatives are required, at the time of the bargaining process, to disclose every information which relates to the financial benefits accruing to the parties. This is due to the presence of the proposed agreement in the closure document (Zuelke and Kirwan 2016). The proposal raised by other negotiating parties need to be considered (Cretan et al. 2018).Every representative needs to be involved in the bargaining process with the other representatives according to the Fair Work Act. According to the Act, all the representatives are to attend and participate in the meetings at the stipulated time, avoid the incorporation of admissions when the negotiating process is taking shape (Bishop 2018).

4.The agreement between the enterprises are referred to as Enterprise Bargaining Agreement. Enterprise Bargaining Agreement is considered as a legally binging agreement between the employee and the hiring agencies. The process involves the bargaining amongst the employees and the employers, after that he approval by most of the employees and after that the approval is given by the Fair Work Commission and secured by the Fair Work Act 2009.The arrangements which are needed for the National Employment Standard are assessed by the Fair Work Commission and this leads to the employees gaining a better off BOOT compared to the situation where the regulations weren’t followed. The benefits of an EBA may be different for both the employee and the employer.

The EBA’s advantages

For the employer, he EBA can provide a simplistic system for the employee’s salaries in comparison to the present-day awards. The present-day awards are ambiguous for the employees because of the presence of several awards in the present working environments (Townsend and Loudoun 2016). The EBA can offer an innovative approach here and can make the entire process hassle-free by the inclusion of overtimes, rates for penalties, allowances and other such allowances which are included in the basic rate by the process of re-evaluating their necessities in the award system, which implies that the employer can bring innovative cost-effective strategy in the workplace. The process of hiring also becomes easier because of the EBA with the employer using the pre-written agreement for all the newly hired workers and sparing the employer from the excessive paperwork which were needed previously (Olson and Wu 2015).

Human Rights and Collective Bargaining

The process of negotiating in an EBA gives an opportunity to formulate the deal according to the needs and requirements of the business. The process also focuses on a clear approach as well as objectives and both the employer and the employee knows what is expected of them. During the lifetime of an EBA, the protection against industrial action are also provided (Thornthwaite and Markey 2014). The period for which the EBA remains is considered as its normal life time and during this period, the employer does not concern himself with the tedious task of formulating new employment agreement for the new employees. Rather, the new employees follow the already existing agreement.

  The employees, as stated by PR Newswire, earn benefits in the following ways- there is an existence of a guarantee wherein the condition of the EBA places them in a situation where the employees are “Better off Overall” as compared to the situation of the present day modern awards. Until and unless the BOOT (Better off overall test) is satisfactorily cleared, the Fair Work Commission will not approve and agree to the EBA. (Berg 2015). During the entire process of the creation of an EBA, the employees are given an opportunity to bargain in the form of a group or as a union, which enables them to put their opinions and address their concerns with the support of the EBA.

The EBA comprises of a set of condition for the employer to abide by regarding the remuneration. This provides the employee security (Reiser and Dean 2017). The employees are given justice regarding their salaries and wages as all the employees know for a certain amount of time, the paying rates of each other even if the employer can decide to pay an employee much more than what the EA prescribes.

The right of the employee unions to enter any workplace to investigate and assess the FWA breach or to foster a negotiation for the formulation of a new agreement is provided by the Fair Work Act 2009 (Gacka 2017).

The EBA’s disadvantages

The time and cost which goes in to the negotiation process to complete the review and the approval process by the Fair Work Commission is the main disadvantage for the employers. There exist difficult processes which needs to be followed and inability to follow these can lead to the EBA’s rejection. The employer is trapped in a cyclic loop of EBAs such that on the expiration of one EBA, they are obliged to negotiate a new one often with increasing   the financial or non-financial payment. Even if the employer does not renew the EBA, the FWA demands that the old EBA be enforced anyway. This is in accordance to the National Employment Standards.

Importance and Benefits of Enterprise Agreements

It becomes almost impossible to adjust or alter the EBA which implies that in case of financial downturn, the employer has no option rather than pay for the EBA even if they are unable to pay such amount. The renegotiation of the EBA is such that the remuneration terms are difficult to negotiate down and as a result, the employer is increasing the payment always.

The breach of the EBA is considered a civil offence according to the Fair Work Act and can even lead the employer to incur civil penalties or to face prosecution (Mitchell et al. 2016).

The EBA provides no such disadvantage to the employees.

The laborer who wishes to be given coverage by the EBA will have to pay a hefty union fee and is a considerable amount of money. To be approved to by the union, an employee requires a majority vote. This means that the employees who have an issue or who do not want to be part of the union, have no option rather than be a member once the casting of vote is done. The dissenting member cannot opt out even if they voted against it.

The new employees must abide the rules during the term period. Even if the new employees have issues with the EBA, still they will have to abide by it. When the EBA is in effect, no other agreement or bargaining can be possible.

The EBA diminishes the flexibility of the employee. The role of the employer as well as the employee is diminished by the EBA which implies that the innovation outside the agreement in the EBA is diminished.


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