An enterprise agreement (EA, sometimes called an EBA) is a legal agreement setting the minimum pay and conditions for a group of employees at one business or a group of businesses, made by bargaining and approved by the Fair Work Commission. Where an enterprise agreement applies, the award doesn't, but the National Employment Standards still do, and an agreement only takes effect once the Commission approves it.
Most Australian employees get their pay and conditions from an award or an enterprise agreement. Awards cover an industry or a type of job; an enterprise agreement is tailored to one workplace. Everything below comes from the Fair Work Commission and the Fair Work Ombudsman.
Agreement, award or contract?
| Enterprise agreement | Award | Employment contract | |
|---|---|---|---|
| Made by | Bargaining between employer(s) and employees, approved by the Commission | The Fair Work Commission | Employer and one employee |
| Covers | At least 2 employees, at one or more businesses | An industry or occupation | One person |
| Can it go below the minimum? | No: it must pass the better off overall test | It is the minimum | No: can't provide less than the award, agreement or NES |
The National Employment Standards sit underneath all three. If an agreement offers less than an NES entitlement, the NES applies instead.
The three types
- Single enterprise agreement: one employer, or related employers, and 2 or more employees.
- Multi-enterprise agreement: 2 or more employers and 2 or more employees.
- Greenfields agreement: for a new enterprise that doesn't have employees yet.
Since 26 August 2024 there are also collective agreements for employee-like workers on digital labour platforms and regulated road transport contractors, which are made with a union rather than with employees.
How an enterprise agreement is made
- Plan. Either side can want an agreement; if the employer won't start, employees can apply for a majority support determination.
- Start bargaining. For a single enterprise agreement, the employer gives employees a Notice of Employee Representational Rights (NERR) telling them they can appoint a bargaining representative. Everyone must bargain in good faith.
- Develop the agreement. It must include required terms, including a nominal expiry date no more than 4 years after approval, and pass the better off overall test (BOOT).
- Give the access period. At least 7 clear days before the vote, employees must have the agreement, any material it refers to, and details of how, where and when to vote. The vote can't start until at least 21 days after the last NERR was given.
- Vote. Methods can include ballot boxes, a show of hands, postal, online or phone voting.
- Apply for approval within 14 days of the agreement being made.
- The Commission decides. It may ask for an undertaking to fix a minor issue. Once approved, a replacement agreement applies 7 days later unless it names a later date.
The Commission's own example: for a vote on Friday 21 February, the access period runs from the morning of Friday 14 February to the evening of Thursday 20 February, and employees must be told how and when to vote by Thursday 13 February.
The nominal expiry date trap
Agreements don't end on their nominal expiry date. The Commission is clear that they keep operating, fully enforceable, until they're replaced or terminated, even years later. So an old agreement with low rates still binds both sides until someone acts, although the NES apply wherever the agreement falls below them.
Pre-2010 "zombie" agreements are the exception: any still operating automatically terminated on 7 December 2023 unless an application was made to extend them.
Changing or ending an agreement
| You want to | What the Commission offers |
|---|---|
| Change the terms | It can approve variations to an enterprise agreement |
| End it after the nominal expiry date | Employers or employees can apply to terminate it (Form F24B, with supporting declarations) |
| Check whether it still passes the BOOT | It can reconsider whether an approved agreement passes the better off overall test |
| Replace it | Bargain for a new agreement; it takes over 7 days after approval unless it names a later date |
What changed in 2023 and 2024
The Secure Jobs Better Pay Act and the two Closing Loopholes Acts changed how agreements are made, and some Commission step pages still describe the process for notification times before 6 June 2023, so check which rules apply to you. The main changes:
- Delegates' rights term: agreements where employees were asked to vote on or after 1 July 2024 must include one, at least matching section 350C of the Fair Work Act. If it's less favourable than the modern award's, the award term applies instead.
- The BOOT: for agreements made on or after 6 June 2023, the Commission makes a global assessment of whether any reasonably foreseeable employee is better off than under the modern award, and it can amend an agreement after lodgement or reconsider one after approval.
- Employees who vote must have a sufficient interest in the agreement and be sufficiently representative of who it covers.
- Multi-enterprise agreements now come in 3 types: supported bargaining, single interest employer and cooperative workplaces agreements.
Bargaining representatives and good faith
Employees can appoint a bargaining representative, often a union, and the employer must tell them about that right at the start through the NERR. Both sides must bargain in good faith, and the Commission can help resolve a bargaining dispute. Small employers aren't left alone either: the Commission publishes a case study showing how a small business tailored pay and entitlements through an agreement, plus a bargaining plan template.
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Disputes
Every agreement must include a dispute resolution process. Usually the first step is the employee and employer trying to sort it out at work, and many agreements let the Commission help if that fails. Agreements also interact with workplace rights that apply regardless, such as the right to disconnect.
Finding an existing agreement
The Fair Work Commission publishes approved agreements in a searchable document database, including those under review or terminated. If you're not sure whether one covers you, the Fair Work Ombudsman has a guide to finding the right one, and its Infoline is 13 13 94.
The verdict
For a small business, an enterprise agreement makes sense when the award doesn't fit how you work and you're prepared to run a formal process. Build the timetable around the 21-day and 7-day rules, keep notes of everything you give employees, and lodge within 14 days of the vote. If you inherit an expired agreement, remember it still applies until it's replaced.
Frequently asked questions
What is an enterprise agreement?
A legal agreement setting minimum pay and conditions for employees at one or more businesses, made through bargaining and approved by the Fair Work Commission.
Does an enterprise agreement end at its nominal expiry date?
No. It keeps operating until it's replaced or terminated by the Fair Work Commission.
How long is the access period before an enterprise agreement vote?
At least 7 clear days. Employees must have the agreement and voting details by the start of it.
What is the deadline to lodge an enterprise agreement?
Apply to the Fair Work Commission for approval within 14 days of the agreement being made by the vote.
