Enterprise agreements

Enterprise agreements constitute an important area of the Commission's work. As well as assessing and approving enterprise agreements, the Commission is able to assist parties with the process of making enterprise agreements and the resolution of disputes arising from the bargaining process.

An enterprise agreement is a binding instrument made between an employer and their employees (or in the case of a greenfields agreement between the employer and relevant union/s) governing the terms and conditions of employment. Before approving an enterprise agreement, the Commission must be satisfied the enterprise agreement meets the legislative criteria set out in the Fair Work Act, including that it passes the 'better off overall test' (BOOT). This test requires that each of the employees to be covered by the agreement is better off overall than under the relevant modern award.

Approval of agreements

Applications to approve enterprise agreements declined 12.3 per cent in 2014–15. This is in line with a general decline in these types of applications from 2011–12.

Approval of agreements is not automatic. The Commission must be satisfied that a number of statutory requirements have been met including the:

  • agreement has been made with the genuine agreement of those involved
  • agreement passes the BOOT
  • agreement does not include any unlawful terms or designated outworker terms
  • group of employees covered by the agreement was fairly chosen
  • agreement specifies a date as its nominal expiry date (not more than four years after the date of approval)
  • agreement provides a dispute settlement procedure
  • agreement includes a flexibility clause and a consultation clause.
Table 25: Enterprise agreement approvals – lodgments
Type of application Lodged Approved   Not approved Application withdrawn Total finalised1
  2011–12 2012–13 2013–14 2014–15 2011–12 2012–13 2013–14 2014–15   2011–12 2012–13 2013–14 2014–15 2011–12 2012–13 2013–14 2014–15 2011–12 2012–13 2013–14 2014–15
s.185 – Single-enterprise 7812 6333 5945 5449 7440 6051 5602 5027   79 59 99 114 264 281 269 382 7783 6391 5970 5523
s.185 – Greenfields 705 712 749 407 665 685 745 399   3 3 3 2 27 29 20 17 695 717 768 418
s.185 – Multi-enterprise 48 42 60 66 44 36 56 55   1 1 1 1 3 4 5 8 48 41 62 64
Total 8565 7087 6754 5922 8149 6772 6403 5481   83 63 103 117 294 314 294 407 8526 7149 6800 6005
  1. Results are not confined to applications lodged in this period.

Agreement approval times

Table 26 shows the median number of days taken to finalise 50 per cent and 90 per cent of applications. This year the time to approve 50 per cent of single enterprise agreements rose from 17 days in 2013–14 to 21 days. The time to approve 50 per cent of multi-enterprise agreements also rose during the 2014–15 reporting period. The time taken to finalise 50 per cent of greenfields agreements was maintained.

These rises may be attributed to an above expected level of lodgments during November and December 2014 combined with a high level of Members taking leave during this period, both of which contributed to an increased timeframe for finalisation of agreement matters during the third quarter of the reporting period. Figures for the final quarter of the reporting period show improvements in the Commission's performance in this area.

Table 26: Enterprise agreements – timeliness, lodgment to finalisation (median time days)
Type of application KPI1 50% of matters 90% of matters
    2011–12 2012–13 2013–14 2014–15 2011–12 2012–13 2013–14 2014–15
s.185 – Single-enterprise – lodgment to finalisation (days) 32 days 17 16 17 21 53 54 50 56
s.185 – Greenfields – lodgment to finalisation (days) 32 days 21 14 14 14 58 38 41 46
s.185 – Multi-enterprise – lodgment to finalisation (days) 32 days 35 22 26 34 91 64 54 90
  1. The Commission has used the KPI targets from the 2013–14 Portfolio Budget Statements as a guide as the 2014–15 Portfolio Budget Statements were silent on these targets.

Assistance with agreement making

Employers and employees usually complete enterprise agreement negotiations (or bargaining) themselves, but these negotiations can break down or become deadlocked, and an agreement between the parties cannot be reached.

In these situations the Commission has a variety of powers to assist the bargaining process if requested to do so under a number of sections of the Fair Work Act. The number of bargaining applications rose by 12.8 per cent in 2014–15, continuing a general increase in these types of application since the 2012–13 reporting period.

Table 27: Bargaining applications – lodgments
Type of application 2011–12 2012–13 2013–14 2014–15
s.229 – Application for a bargaining order 99 78 96 87
s.236 – Application for a majority support determination 62 74 77 96
s.238 – Application for a scope order 30 15 24 12
s.240 – Application to deal with a bargaining dispute 307 231 208 270
s.242 – Application for a low-paid authorisation 1 0 1 0
s.248 – Application for a single interest employer authorisation 31 8 16 11
Total 530 406 422 476

In Focus

Agreements Pilot

Following a successful pilot in 2014–15, the Fair Work Commission has adopted a new process designed to improve the timeliness and consistency of enterprise agreement approval matters.

Enterprise agreements must meet a number of requirements under the Fair Work Act in order to be approved by the Commission, including meeting the 'better off overall test' (BOOT) and satisfying certain procedural steps. Prior to the pilot these applications were individually checked and assessed by Commission Members.

To facilitate a faster review and greater consistency of enterprise agreement approvals, the Commission piloted a new triage process between 6 October 2014 and 30 June 2015. The pilot's aim was to determine if improvements could be made in relation to timeliness, cost effectiveness and consistency. It also aimed to relieve some of the administrative burden placed on Commission Members when determining these applications, providing them with more time to focus on more complex matters.

In the pilot, the preliminary review of agreements was conducted by a team of administrative staff, experienced in reviewing enterprise agreements. Under the supervision of Deputy President Gostencnik, Deputy President Kovacic and Commissioner Lee, enterprise agreements lodged for approval were assigned to the team to ensure compliance with each of the statutory obligations, including bargaining, voting and prescribed content.

The team developed a formal review process, including checklists, which helped ensure consistency across agreement approval applications. Following their preliminary review, staff members prepared an assessment for the Member as to whether each enterprise agreement met the BOOT and other statutory requirements. Commission Members, assisted by the analysis undertaken by the administrative staff, continued to make decisions as to whether an agreement should be approved.

Initially the pilot assessed agreements in the building, metal and civil construction industry lodged in Western Australia and some in Victoria, and all agreements lodged in Tasmania. Once operational processes had been established and internal training material developed, the Commission expanded the pilot in December 2014 to include all agreements from WA and the ACT.

Between 1 January 2015 and 30 June 2015, 23 per cent of all agreement approval applications lodged under s.185 of the Fair Work Act were allocated to the pilot.

Inca Consulting conducted an independent review of the pilot in April–May 2015. The review concluded that administrative staff could effectively and efficiently assess the compliance of enterprise agreements with requirements of the Fair Work Act. The review also noted that the timeframes for approvals made under s.186 of the Fair Work Act had significantly improved.

The pilot demonstrated that more time could be made available to Members, enabling them to focus on other more complex work which would make better use of their specialised skills.

Importantly, the review found that the pilot had facilitated the consistent treatment of agreement approval applications. Trends were also more easily identified, which provided the Commission with opportunities to more actively assist parties to prepare enterprise agreements and avoid common pitfalls. For example, the Commission developed the Notice of Employee Representational Rights Guide to assist parties to comply with the relevant statutory provisions and decrease the incidence of agreement applications having to be withdrawn because of a technical non-observance of a pre-lodgment requirement.

The pilot also helped the Commission to identify other ways it could assist parties with agreement making, and a number of new initiatives are being considered or implemented.

An enterprise agreement making 'step-by-step' guide is being developed, along with a checklist that has a particular focus on assisting small business with bargaining and agreement making. The checklist will be written in plain language and include a summary of important dates in the agreement-making process.

The draft guide and checklist were reviewed by small business focus groups and will be published on the Commission's website in the next reporting period, once this feedback has been considered and any changes made.

A facility is available on the Commission's website that allows parties to send through their agreement-related queries. Parties using this function can expect a detailed response within approximately 24 hours of submitting their inquiry.

In addition, based on the learnings from the pilot, Commission Members have delivered industry briefings to assist employers and industry groups to lodge compliant enterprise agreements.

The Commission expects that over time these initiatives will lead to a longer-term improvement in the efficient assessment and timely approval of agreements.

Following the success of the pilot, from 1 July 2015, a greater range of enterprise agreement applications have been progressively referred to the new triage process.

By early 2016, it is anticipated 80 per cent of agreement approval applications may be dealt with under the triage process.

Image of the guide to the Notice of employee representational rights published on the Commission's website.

(View the larger image)

Image: The Commission published this guide to the Notice of employee representational rights, after the Agreements pilot highlighted this as a common error made by parties.

Photo of administrative staff members who reviewed enterprise agreements as part of the Agreements Pilot in 2014-15.

Image: Some of the administrative team who reviewed enterprise agreements as part of the Agreements Pilot in 2014–15.


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