If your business doesn’t fit neatly under a modern award, there are many good reasons for taking a different approach. By Peter Maguire
Wouldn’t it be great if you could simplify compliance with modern awards and related matters?
If you could tailor their content to your workplace? If you could have everyone on the same terms of employment?
Guess what? Notwithstanding all of the negative commentary about enterprise bargaining, you can do all of those things and more in an enterprise agreement.
WHAT IS AN ENTERPRISE AGREEMENT?
An enterprise agreement is an agreement made between an employer and a group of employees on wages and conditions of employment for that group of employees.
They can be made with all or some employees in a particular enterprise (or multiple enterprises in a specific industry or with a common interest) and each agreement has to be approved by the Fair Work Commission.
They can incorporate modern awards that have application to the group of employees or they can exclude those modern awards, totally replacing them.
They can be made for periods of up to four years but continue to operate after that time until formally terminated or replaced by a new Agreement.
REASONS FOR DOING AN ENTERPRISE AGREEMENT
There are a variety of very good reasons that might apply depending on the particular award coverage and the circumstances of the business. These include:
Simplification: modern awards try to cover whole industries or particular occupations across multiple industries and we often find that much of the content in modern awards has little or any relevance to particular businesses. So we can trim it back to what is relevant.
Flexibility: all modern awards have Individual Flexibility Clauses which allow some flexibility with existing employees in a limited range of matters and Facilitative Provisions which also allow some room for negotiation on some things. However, they won’t necessarily provide the sorts of flexibilities that employees might want and the employer is happy to offer and that can be addressed through an enterprise agreement.
Customisation: modern awards are largely a one-size-fits-all approach and we know that one size doesn’t fit all. For example, classification structures in modern awards are often difficult to apply to a particular business because they lack definition or they just don’t make sense. In most cases, they were developed decades ago and really don’t take account of technological and other changes to the way we work and the skills that we use today. If you pay people sufficiently above award, you can make your own structure that makes sense for your business and your people.
Standardisation: because different categories of employees may be covered by different Awards, you can have situations where employees working in the same business have different legal entitlements under the respective Awards which isn’t really fair. You can fix that in an Enterprise Agreement.
Employer Value Proposition: all enterprise agreements are published on the Fair Work Commission’s website and you can use that to publicly demonstrate your employer value proposition to prospective employees because it is locked in by law.
HOW ARE THEY MADE?
There are strict procedural steps that have to be followed to ensure that:
- The Agreement is substantively fair – i.e. employees are actually better off under the Agreement than they would be under the relevant Award(s) and no employees or categories of employees have been unfairly excluded from the Agreement
- The Agreement is procedurally fair – i.e. the prescribed procedural steps have been followed, employees have been properly informed about their bargaining rights and the effects of making the Agreement, the special needs of prescribed classes of workers such as those whose first language is not English, young people, women and others have been considered and a majority of the workers covered by the proposed Agreement who voted genuinely approved the Agreement.
Employees nominate one or more people to represent them and they can nominate themselves if they wish to.
If an employee is a member of a union, the union has default bargaining rights unless that employee nominates someone else as their bargaining representative.
If a majority of the employees to be covered by the proposed Agreement vote in favour of it, it is then submitted to the Fair Work Commission
The process for making an enterprise agreement is complicated and the Fair Work Commission’s approach to them is complex. Additionally, individual Commissioners can have their own way of dealing with them.
That means that you do need professional assistance in developing and implementing one and we can assist with that. Equally, if any of the scenarios described above fit your business situation, it can be a very worthwhile exercise that can deliver real positive change in workplace flexibility, fairness and employee engagement.
Peter Maguire is the owner and practice leader of Ridgeline HR, an award winning HRM consulting practice which he founded in 2000. Peter is an acknowledged expert in workplace relations compliance and also a high-performance leadership coach with over 40 years’ experience in HRM. Ridgeline HR’s byline is Helping PEOPLE in BUSINESS and that is essentially what Peter does – help business people with their people business.