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Enterprise agreements benchbook

An overview of legal procedure & case law

Commission approval process

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Table of contents

On this page

  • Introduction
  • Stage in the bargaining process
  • Requirements for approving an enterprise agreement
  • References

 

Introduction

An enterprise agreement must be approved by the Fair Work Commission before it can commence operation.

The approval process includes a point-in-time assessment, which requires that each employee will be better off overall under the enterprise agreement when compared to the relevant modern award.

The objects and the scheme of the Fair Work Act 2009 imply that the requirements for approval of enterprise agreements are to be applied in a practical manner without unnecessary technicalities.[1]

Stage in the bargaining process

  1. Employer initiates or agrees to bargain for a proposed enterprise agreement

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  2. Employer issues employees with a notice of employee representational rights

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  3. Employees may appoint bargaining representatives

     

    Agreement making process

  4.  

    Good faith bargaining

    Representatives bargain for a proposed enterprise agreement

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    Bargaining

  5. down arrow

    Employer asks employees to approve proposed enterprise agreement (by voting)

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  6. Bargaining representative lodges enterprise agreement with the Commission for approval

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  7. The Commission approves enterprise agreement

     

    Approval process

Requirements for approving an enterprise agreement

See Fair Work Act ss.186–187

If an application for the approval of enterprise agreement is made and the enterprise agreement meets the requirements in sections 186 and 187 of the Fair Work Act, the Commission must approve the agreement.

Additional requirements for multi-enterprise agreements

See Fair Work Act ss.184 and 187

If an application for the approval of a multi-enterprise agreement is made, and the enterprise agreement meets the requirements in sections 186 and 187 of the Fair Work Act, the Commission must approve the agreement.

Related information

  • Multi-enterprise agreement to be varied if not all employees approve agreement

Additional requirements for greenfields agreements

See Fair Work Act ss.187(5)–(6)

If an application for the approval of a greenfields agreement is made, and the enterprise agreement meets the requirements in sections 186 and 187 of the Fair Work Act, the Commission must approve the agreement.

Where there are 2 or more unions that will be covered by the agreement, the Commission will consider whether the unions collectively are entitled to represent the industrial interests of a majority of employees who will be covered by the agreement.[2]

If an agreement is made under subsection 182(4) (which deals with a single‑enterprise agreement that is a greenfields agreement), the Commission must be satisfied that the agreement, considered on an overall basis, provides for pay and conditions that are consistent with the prevailing pay and conditions within the relevant industry for equivalent work.

Note: In considering the prevailing pay and conditions within the relevant industry for equivalent work, the Commission may have regard to the prevailing pay and conditions in the relevant geographical area.

Related information

  • Greenfields agreement
Requirement for approval Fair Work Act section Link to related information
Requirements for ALL enterprise agreements

The Commission must be satisfied that the agreement has been genuinely agreed to by the employees covered by the agreement

(This does not apply to a greenfields agreement)

186(2)(a) and 188

Genuine agreement

The Commission must be satisfied that the group of employees covered by the agreement was fairly chosen

186(3)

Meaning of 'fairly chosen'

The Commission must be satisfied that the agreement passes the better off overall test

186(2)(d)

Better off overall test (BOOT)

The Commission must be satisfied that the agreement specifies a nominal expiry date

186(5)

Nominal expiry date

The Commission must be satisfied that the agreement includes a dispute settlement term

186(6)

Term for settling disputes

The Commission must be satisfied that the agreement does not include any unlawful terms

186(4)

Unlawful terms

 

The Commission must be satisfied that the agreement does not include any designated outworker terms

186(4A)

Requirement that an enterprise agreement does not include any designated outworker terms

The Commission must be satisfied that the enterprise agreement meets the requirements with respect to particular kinds of employees (shiftworkers, pieceworkers, school-based apprentices and school-based trainees and outworkers)

187(4)

Particular kinds of employees

Where a scope order is in operation, the Commission must be satisfied that approval of the agreement is not inconsistent with good faith bargaining.

187(2)

Where a scope order is in operation – Approval not inconsistent with good faith bargaining

Additional requirements for MULTI-ENTERPRISE agreements

The Commission must be satisfied that the agreement has been genuinely agreed to by each employer covered by the agreement, and that no person coerced, or threatened to coerce, any of the employers to make the agreement

186(2)(b)

Genuine agreement

The Commission must be satisfied that if the agreement was not approved by the employees of all of the employers proposed to be covered – then the agreement has been varied so that it only covers those employers whose employees approved the agreement

187(3)

Multi-enterprise agreement to be varied if not all employees approve agreement

Additional requirements for GREENFIELDS agreements

The Commission must be satisfied that the relevant unions that will be covered by the agreement are (taken as a group) entitled to represent the industrial interests of a majority of the employees who will be covered by the agreement, in relation to work to be performed under the agreement

187(5)(a)

Greenfields agreement

The Commission must be satisfied that it is in the public interest to approve the agreement.

187(5)(b)

Greenfields agreement

The Commission must be satisfied that the agreement, considered on an overall basis, provides for pay and conditions that are consistent with the prevailing pay and conditions within the relevant industry for equivalent work.

Note: In considering the prevailing pay and conditions within the relevant industry for equivalent work, the Commission may have regard to the prevailing pay and conditions in the relevant geographical area.

187(6)

Greenfields agreement

References

[1] Re McDonald’s Australia Pty Ltd [2010] FWAFB 4602 (Watson VP, Kaufman SDP, Raffaelli C, 21 July 2010) at para. 13, [(2010) 196 IR 155].

[2] Re Baulderstone Pty Ltd [2011] FWAA 9299 (Ryan C, 23 December 2011) at para. 4.

Updated time

Last updated

24 May 2019

 

 

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      • 38 Hour Week Wage Principle [1983]
      • 40 Hour Week Case [1947]
      • 44 Hour Week Case [1927]
      • Apprenticeship indentures
      • Australian Minimum Wage and fitter (trades) rate since 1906
      • Boot Trades Case
      • Careers in Bootmaking and Boot Repairing
      • Cattle Industry Case 1966
      • Commercial Printing Case [1936]
      • Commonwealth Conciliation and Arbitration Act 1904
      • Cost of living newspaper articles from the early 1900s
      • Debates
      • Equal Pay Case 1969
      • Equal Pay Case 1972
      • Fruit Pickers Case
      • Gas Employees Case
      • Graph of Australian Minimum Wage since 1906
      • Harvester Case
      • Historic case judgments on the Fair Work Commission's website
      • Kingston's evidence
      • Linesmen's Case
      • Maternity Leave Case [1979]
      • Metal trades base level minimum wages [1967–2015]
      • Methods of wage adjustment
        • Establishing an Australian Minimum Wage 1907?1922
          • The origins of the Australian minimum wage
          • The 'needs' principle and 'capacity to pay'
          • Women's wages
          • First indexation decision
        • Quarterly indexation 1922–1953
        • The Great Depression 1931
        • Prosperity loadings 1937
        • World War II 1939–1945
        • The post-war period: 1953–1965 basic wage inquiries
        • The total wage 1966–1967
        • Removal of discrimination in award rates
        • Reintroduction of quarterly wage indexation 1975–1978
        • Six monthly wage indexation 1978–1981
        • Wage explosion 1981–1982
        • Reforming awards and work and management practices 1987–1991
        • Six monthly wage indexation 1983–1987
        • Enterprise bargaining and a minimum wage safety net 1991–1996
        • Statutory adjustments
        • The minimum wage in real terms
      • Mrs Beeton's cookbook
      • Paternity Leave Case [1990]
      • Personal/Carer's Leave Test Case [1995]
      • Piddington report
      • Re Bagshaw [1907]
      • Significant cases on the Fair Work Commission's website
      • Statistics for the purpose of comparison with the Australian minimum wage
      • The Amalgamated Society of Engineers v. The Adelaide Steam-ship Company Limited and Others
      • The Australian minimum wage from 1906
      • The Federated Marine Stewards and Pantrymen's Association v. The Commonwealth Steamship Owners' Association and Others
      • The Victorian minimum wage 1896
        • Legislative Council Second Reading Speech to the Factories and Shops Bill 1896
      • The first Award: 1906 Steam-ship Crew
      • 100 years of the minimum wage—Statistical comparison
    • Mrs Beeton's cookbook
    • Glossary
    • Related sites
    • Educational materials
  • AWRS First Findings report

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