Enterprise agreements – what you need to know
The game has changed when it comes to getting your Enterprise Agreements (EA) approved by the Fair Work Commission with longer timeframes and a more involved process than a few years ago.
But successful enterprise bargaining – where employers and employees and unions negotiate an enterprise agreement – is an essential part of your workplace as it sets out the terms and conditions between employers and employees.
It can take six months to write or to review an existing agreement and expert advice throughout the process is recommended as failing to navigate the Fair Work System correctly can lead to costly errors and claims.
CCIWA’s Workplace Relations Manager Ryan Martin says the goal posts have changed in recent years and warns that you need to be aware of the changes and how to respond to them when it comes to preparing the agreement.
He says most road blocks can be overcome by seeking advice early and allowing enough time to work through the process, which now requires much more documentation.
Don’t get caught out
Martin says businesses are getting caught out by the extra requirements. He highlights a recent case where an employer thought it was ready to lodge its EA but suddenly realised the Form F16 and F17 requirements had changed since its last EA.
It needed help from CCIWA’s workplace relations team to get through the process.
“We did that for them and it took eight hours. Eight hours at $300 per hour is a significant increase in cost for something that used to take us two hours,” he says.
“It would have taken us less time if we’d been involved in the process the whole way through, because we could have asked them to provide certain documents at certain times and had it all ready to go at the end.”
While asking for more information up front will make the FWC’s job easier, it creates much more work for the employer before the agreement is ready for the approval stage.
Martin advises negotiating what you want as an employer prior to going to your workforce with the agreement.
“You can have a whole bunch of internal stakeholders wanting different things, particularly if you have different departments,” he says.
“You need to make sure you’re all on the same page and you’ve negotiated what you want as an employer before you go to the workforce because then they are going to want different things as well.
“Then you can meet their demands and arguments without fighting internally to get there.”
How long for approval?
How long the agreement takes to approve usually revolves around how customised the agreement is and how much it differs from the underpinning award, with some taking upwards of 150 days.
EAs have a nominal expiry date, so it is best to allow enough time for approval prior to that date.
“You’re not protected from industrial action if it’s not an in-term agreement,” Martin says.
“Once it reaches that nominal expiry date, you lose a bit of bargaining power if you are going to negotiate a new EA because the employers have a slight advantage there, which is why it is best to get it done in term,” he says.
He advises keeping employees informed of progress on the award, so they don’t get dissatisfied and leave.
“If you have a workforce that you have spent six months negotiating an agreement with and you’ve lodged it with the FWC and they’re waiting and waiting and not getting their pay increase, they will become increasingly frustrated,” he says.
“If other job opportunities pop up, if they can get a higher rate of pay somewhere else, they might go and work for a competitor, so you need make sure as part of your communication plan that once it’s lodged at the Commission it’s out of your control as the Commissioner might take a while to approve it.”
With employers not required to cover pay increases incorporated into an EA until approved, Martin says some businesses as a show of good faith and to retain their workforces will pay the first increase at the time of lodgement or expiry of the other agreement.
CCIWA’s team of workplace relations consultants can be contacted on (08) 9365 7746 or email@example.com. Regular training courses on how to effectively manage the EA process are also available.