LexisNexis Practical Guidance®

Part 2-4 of the Fair Work Act 2009 (Cth) (FW Act) contains detailed provisions regulating the content of enterprise agreements.

These provisions allow certain terms to be included in agreements (“permitted” matters), require other terms to be included (“mandatory” terms), and prohibit others from being included (“unlawful” terms).

Permitted matters in an enterprise agreement include:

• • matters pertaining to the relationship between an employer and its employees (the concept of “matters pertaining” to the employment relationship is a long-standing feature of Australian workplace relations law);
• • matters pertaining to the relationship between employers and employee organisations;
• • deductions from wages that have been authorised by an employee; and
• • terms about how the agreement will operate.

Mandatory terms include a nominal expiry date of the agreement, a coverage term, a dispute settlement clause, and flexibility and consultation provisions.

Unlawful terms include discriminatory and “objectionable” provisions, and terms that provide for rights contrary to other provisions of the FW Act dealing with unfair dismissal, industrial action, and union right of entry.

See Terms of enterprise agreements.

Part 2-4 of the Fair Work Act 2009 (Cth) (FW Act) includes provisions dealing with the coverage and application of enterprise agreements that have been approved by the Fair Work Commission (FWC).

The distinction between an enterprise agreement covering a person and applying to a person is critical to the legal effect of the agreement. This is because an enterprise agreement does not impose obligations or provide entitlements unless it applies to a person, but it cannot apply to a person unless it covers them.

See Coverage, application and operation of enterprise agreements.

Once an enterprise agreement has been approved by the FWC and it comes into operation, it will exclude the application of any otherwise applicable modern award.

An enterprise agreement must not exclude the National Employment Standards (NES), but may include terms that are expressly permitted under the NES or applicable regulations, or terms that are ancillary, incidental or supplementary to the NES, but only to the extent that such terms are not detrimental to the employees in any respect. An enterprise agreement could, for example provide redundancy entitlements in excess of those set out under the NES.

A person must not contravene an enterprise agreement that applies to them, and civil remedies may be imposed for a contravention.

See Legal effect of enterprise agreements and interaction with other instruments/laws.

One of the requirements for FWC approval of an enterprise agreement is that the agreement includes a dispute settlement term.

Dispute settlement terms in enterprise agreements must set out a procedure by which the FWC or an independent person may settle disputes about any matters arising:

• •under the agreement, or
• •in relation to the NES.

This is a minimum requirement only, and the parties are free to include a dispute resolution term in their agreement which provides for the settlement of a wider range of disputes.

Parties negotiating enterprise agreements may choose to adopt the model dispute resolution term in the Fair Work Regulations 2009 (Cth), or reach agreement on their own dispute settlement term.

See Dispute resolution under enterprise agreements.

Once an enterprise agreement made under the Fair Work Act 2009 (Cth) has been approved by the Fair Work Commission (FWC), it can only be varied if its parties agree to the variation, or if the variation is necessary to remove ambiguity or uncertainty.

See Variation of enterprise agreements.

Similarly, an enterprise agreement that has been approved by the FWC can only be terminated by agreement during its nominal term. After the expiry of its nominal term, a party may unilaterally apply to the FWC for its termination, but must satisfy the FWC that termination is not contrary to the public interest, and is otherwise appropriate taking into account all the circumstances.

See Termination of enterprise agreements.