Undertakings in enterprise agreements

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Overview

The Commission may approve an enterprise agreement that may not meet certain requirements of the Fair Work Act 2009 if satisfied that a written undertaking meets the concern.

The Commission may only accept a written undertaking from an employer, after seeking the views of each bargaining representative and if satisfied that the effect of accepting the undertaking is not likely to:

cause financial detriment to any employee
result in substantial changes to the agreement.

When the Commission approves the agreement, any accepted undertaking(s) is both noted in the decision and is attached to the copy of the agreement published on the Commission’s website.

Undertakings & applications for approval of agreements

If the Commission has a concern that an enterprise agreement does not meet the approval requirements in ss.186 and 187 of the Fair Work Act (which includes passing the BOOT), the Commission can approve the agreement if it receives and accepts a written undertaking from the employer(s) covered by the agreement which addresses that concern.^[1] The undertaking is a commitment that the employer will comply with what is written in the undertaking in addition to or instead of a term of the agreement. The undertaking forms a part of the agreement and is legally binding on the employer.^[2]

As the employees have voted on the agreement as it was lodged, the Commission will not accept an undertaking if it will result in substantial changes to the agreement.^[3] The Commission must also be satisfied that accepting the undertaking is not likely to cause financial detriment to any employee covered by the agreement.^[4]

Undertakings are often used to address technical deficiencies in an agreement (for example, where a nominal expiry date is more than 4 years after the approval date or when a provision is expressed to exclude or reduce a provision of the NES). Undertakings cannot be accepted to fix some deficiencies such as non-complying flexibility and consultation terms.

Before accepting an undertaking, the Commission must seek the views of each person the Commission knows to be a bargaining representative for the agreement.^[5] A bargaining representative can be the employer (or someone appointed by the employer), an employee organisation that represents an employee covered by the agreement and/or anyone appointed as such by an employee. The Commission may ask for evidence that the undertaking was provided to the bargaining representatives. For example, the Commission may ask to see emails from bargaining representatives confirming they approve the undertakings.

An undertaking relating to an enterprise agreement must be signed by each employer who gives the undertaking.^[6]

Any accepted undertaking(s) is both noted in the decision and is attached to the copy of the agreement which is published on the Commission’s website. A copy of the decision accompanied by the agreement with the undertaking attached is sent to the employer and all the persons named on the Form F16 when the agreement is approved.

Undertakings & applications to vary agreements

The practices above also apply to undertakings to variations to agreements (except the variation of the agreement will be approved under s.212 and the undertaking will be used to address a failure to meet the requirements of s.211).

Undertakings previously accepted by Commission Members

The following undertakings have been accepted by Commission Members to address concerns raised in applications to approve enterprise agreements.

Note: Every agreement is considered independently and the terms of an agreement are assessed globally. The undertakings below may not be sufficient to address a Member’s concerns in respect of other agreements.

Annual leave & shiftworkers

For the purposes of the additional week of annual leave provided for in the National Employment Standards of the Fair Work Act 2009 (Cth), a shiftworker is a seven day shiftworker who is regularly rostered to work on Sundays and public holidays.*

See [2018] FWCA 1095 Masson DP

For the purposes of the National Employment Standards (NES) a shiftworker will be an employee who works a roster and who, over a roster cycle, may be rostered to work ordinary time shifts on any of the seven days of the week, and who is regularly rostered to work on Sundays and public holidays.*

See [2018] FWCA 1114 Gostencnik DP

* The shiftworker definition should reflect the definition in the relevant award.

Annual leave expressed as hours rather than weeks

Clause 27.1.1 of the agreement provides that an employee shall be entitled to 152 hours leave on ordinary pay per year of continuous service with the employer. This clause is intended to provide for 4 weeks of paid annual leave in accordance with the National Employment Standards.

See [2018] FWCA 1193 Lee C

NES precedence term

This Agreement will be read and interpreted in conjunction with the National Employment Standards (NES). Where there is an inconsistency between this agreement and the NES, and the NES provides a greater benefit, the NES provision will apply to the extent of the inconsistency.

Rather than providing an undertaking that addresses a particular concern regarding an NES issue, an effective remedy may be to insert an ‘NES precedence’ clause that specifies that where there is an inconsistency between a provision in the agreement and the NES, the more beneficial term shall apply.

See also [2018] FWC 2140 at [19] regarding the need for an undertaking when an agreement contains an NES precedence term.

Incorporation of award in agreement

Incorporation: Clause 1.5

This agreement shall incorporate the provision of the Award, as varied from time to time, provided that where there is any inconsistency between this Agreement and the Award, the Agreement shall prevail to the extent of the inconsistency.

See [2018] FWCA 978 Harper-Greenwell C

Abandonment of employment

Termination: Clause 3.6.7

The employer, Ventia Utility Services, hereby undertakes notwithstanding clause 16.2, employees who abandon their employment prior to the end of the notice period, will be entitled to payment for all time actually worked up until the time of termination.

See [2018] FWCA 978 Harper-Greenwell C

Example of clause that will not apply

3. That cl.27.6 of the Agreement shall not apply.

See [2018] FWCA 2548 McKinnon C

Undertaking to variation

3. The second paragraph under clause 3.1 of the varied agreement is to be deleted and replaced with the following:

"The following are members of an employee's immediate family:

A spouse, defacto partner, child, parent, grandparent, grandchild or sibling of the employee; or

A child, parent, grandparent, grandchild or sibling of a spouse or defacto partner of the employee."

See [2018] FWCA 1644 Gostencnik DP

How to submit an undertaking

The undertaking should be addressed to the Member who is dealing with your application and emailed to their chambers.

Undertakings are commonly submitted to the Commission in Word or PDF format as email attachments. There are no specific requirements for the format of undertakings, other than that they must be signed by all employers covered by the agreement.

Sample undertakings

Sample 1

Dear Commissioner X

ABC Enterprise Agreement 2018–2020 (AG2018/44444)

Written undertakings under section 190 of the Fair Work Act 2009

ABC Pty Ltd hereby undertakes the following in relation to the ABC Enterprise Agreement 2018–2020:

Annual leave

For the purposes of the …

…

Signed for and on behalf of the employer

[signature]

Jane Citizen

Managing Director

20 February 2018

Sample 2

Dear Deputy President Y

DEF Enterprise Agreement 2018–2020 (AG2017/55555)

Undertaking (s.190 of the Fair Work Act 2009)

I, John Citizen, HR Manager for DEF Pty Ltd give the following undertaking with respect of the DEF Enterprise Agreement 2018–2021:

I have the authority given to me by DEF Pty Ltd to provide this undertaking in relation to the application before the Fair Work Commission.
In clause 7.6 of the Agreement dealing with severance pay, we undertake that employees aged under 45 years of age will be paid in accordance with the following scale: …

[signature]

Name

[date]

Download

Enterprise agreement making – Undertakings (PDF) (Published 23 October 2019)

References

^{[1] Fair Work Act s.190(2).
[2] Fair Work Act s.191(2).
[3] Fair Work Act s.190(3). See also [2014] FWC 1955.
[4] FW Act ss.190(3) and 190(4). See also SDA v Beechworth Bakery [2017] FWCFB 1664 which deals with the requirements before the Commission will allow undertakings and whether ‘make good’ clauses in undertakings are enforceable.
[5] Fair Work Act s.190(4).
[6] Fair Work Regulations 2009 reg 2.07.}

Updated time

Last updated

14 November 2019

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