What is an enterprise agreement?

What is an enterprise agreement?

An enterprise agreement, under the Fair Work Act 2009 (Cth) can be a single-enterprise agreement or involve multiple entities, known as a multi-enterprise agreement.  Section 172 of the Fair Work Act sets out the ‘permitted matters’ that can be included in an enterprise agreement:

a)      Matters related to the employer employee relationship that will be covered by the agreement;

b)     Matters related to the employer and employee organisations that will be covered by the agreement;

c)      Deductions from wages for any purpose as authorised by employees who will be covered by the agreement; and

d)     How the agreement will operate.

An enterprise agreement can be in place for either a three (3) or four (4) year term under the Fair Work Act 2009 (Cth). 

Once the enterprise agreement expires, it remains in place until it is either terminated or replaced under the Fair Work Act 2009 (Cth). 

As a result, in many cases, even when an enterprise agreement has expired it will still set the operative terms and conditions of employment well-beyond the initial three (3) or four (4) year term. 

Many employers and employees are unaware of the practical application of this, so it is always important when negotiating the terms of an enterprise agreement that it is understood that those terms may be in place for many years beyond the initial expiry date or term of the agreement.  

When implementing an enterprise agreement, it is important to understand that the items you are committing to now – can often shape the direction of the workplace relations framework in your organisation for many years to come.

Want to know more about how to make an enterprise agreement?

You can access our Guide: Preparing for Enterprise Bargaining that sets out the practical steps you can take to implement an enterprise agreement in your organisation.

Disclaimer: The material contained in this article is provided as general information only.  It is not, nor is intended to be legal advice.  If you wish to take any action based on the content of this article, we recommend that you seek professional advice that considers your specific context, needs and requirements.