Pulse Check: enterprise agreements – our experts answer your questions
Questions about enterprise agreements have been frequently asked through our Employee Relations Helpline this month. Here, our industrial relations experts answer your questions about enterprise agreements.
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Q: How does the Annual Wage Review affect the rates in our enterprise agreement?
A: Every financial year, the Fair Work Commission (FWC) issues determinations for the Annual Wage Review, amending the National Minimum Wage ($915.90 per week / $24.10 per hour, as at July 1, 2024) and the minimum rates of pay in modern awards (increased by 3.75%, as at July 1, 2024).
Under the Fair Work Act 2009 (Cth) (FW Act), employers with employees covered by an enterprise agreement (EA) must ensure the EA’s base rates of pay are at least equal to the relevant modern award base rates, or the National Minimum Wage Order if the applicable modern award no longer applies.
In practice, this means employers must pay EA-covered employees base rates of pay that match or exceed what they would receive under the relevant modern award. If EA rates fall below modern award rates due to the Annual Wage Review, all other EA terms will still apply, however the rates of pay will be as per the relevant award. Employers may choose to pay above modern award rates to stay competitive and avoid future discrepancies.
Employers are advised to conduct annual audits of their EA base rates against relevant modern awards to comply with legislation and reduce the risk of underpayment or wage theft claims.
Need assistance with audits? Contact [email protected] for more information on how we can assist you.
Q: How can bargaining be initiated for an enterprise agreement?
A: Bargaining for a new EA can be initiated in various ways:
- An employer can initiate bargaining by sending correspondence to employees expressing that bargaining is being initiated and separately issuing a Notice of Employee Representational Rights (NERR);
- An employer and their employees can mutually agree to start bargaining;
- Since December 2022, employees can initiate bargaining, depending on the circumstances, by their bargaining representative requesting in writing, and applying to the FWC for a bargaining order;
- Employee bargaining representatives can apply for a Majority Support Determination (MSD) and, if the criteria is met, the employer must bargain; or
- Bargaining representatives can apply for a single interest employer authorisation to require two or more employers with common interests to be covered by and initiate bargaining for the same agreement in certain circumstances.
More resources
- Want to learn more about EAs? Check out our Enterprise Agreements Training.
- Changes to EAs are just one aspect of the overhaul of Australia’s workplace laws. See the full scope.
- The way EAs are negotiated has changed: Is your business impacted?
The Fair Work Act prescribes the process and requirements for initiating EA bargaining, including the NERR, notification times, bargaining orders, MSDs, and Scope Orders. Employers should be familiar with these requirements, as failing to adhere may prevent an EA from being approved by the FWC.
Q: Can we have some employees under the enterprise agreement and some under a modern award?
A: The applicability of an EA to an employee depends on its scope and coverage, which set out where the EA operates (i.e., geographically, site-specific or scope of work) and the classifications it covers.
Organisations may create EAs that cover all or just part of their operations, leading to situations where only specific classifications, for example blue-collar workers, are covered while others, like white-collar workers, are not.
Employees not covered by an EA can either be covered by a modern ward or award free. Employers should conduct an award allocation to determine which industrial instrument applies to their non-agreement-covered employees.
Q: Can employees be covered by two enterprise agreements?
A: Under the FW Act, only one EA can apply to an employee at one time. This means if an employer has a current EA in place which has not yet passed its nominal expiry date (earlier agreement) and has commenced bargaining for a new or ‘replacement’ EA (later agreement), the later agreement cannot apply to the relevant employees until the earlier agreement has passed its nominal expiry date or has been terminated.
Where an employer has multiple EAs covering its operations, which EA applies to which employees is determined by the scope and coverage terms in the agreements. However, if an employee works for two different employers in different roles, distinct agreements may apply to each job. In this instance, both positions are assessed separately to determine the employee’s entitlements, and each job could potentially be covered by a separate agreement.
Please note, this information is general in nature and should not be considered legal advice.
If you have any questions about enterprise agreements, contact our Employee Relations Helpline on (08) 9365 7660 or email [email protected].
Or, if you require legal advice and would like to speak to one of our employment lawyers, email [email protected].
