Workplace agreements

It is important to understand the difference between a common law employment contract and a workplace agreement. Whilst a common law contract exists whenever you engage an employee regardless of whether it is verbal or written, the term workplace agreement as used in industrial law means a formal document which contains specific terms and which is formally lodged with an authority.

The decision about whether you put in place a workplace agreement will depend upon the impact of the relevant award on the employment needs of your business. Because workplace agreements, which have been formally lodged, stand in place of awards, employers are able to modify certain terms of the award that do not suit the needs of their business provided the employees are not worse off financially as compared to the award. This can be particularly useful for dairy farmers because of the non-standard hours of this work.

A workplace agreement is different to a common law employment contract in a number of important ways.

  • A workplace agreement is a formal written document which must by law contain certain terms.
  • A workplace agreement must be formally lodged with an authority.
  • A workplace agreement can be inconsistent with an award so long as the employee is not at a disadvantage overall.
  • Specific documents must be completed before a workplace agreement can be lodged, and failure to do so can lead to penalties.
  • Specific documents must be given to the employee to read outlining their rights at law before a workplace agreement can be lodged, and failure to do so can lead to penalties.

The federal industrial laws about workplace agreements have changed a number of times in recent years. Before the WorkChoices laws came into effect in March 2006, workplace agreements were called Certified Agreements (agreements between an employer and a group of employees) and Australian Workplace Agreements or AWAs (agreements between an employer and an individual employee).

The WorkChoices laws retained AWAs but changed Certified Agreements to Collective Agreements.

The Fair Work laws which came into effect in 2008 created Individual Transitional Employment Agreements or ITEAs (special individual agreements which could only be made up until the end of 2009) and in July 2009 changed Collective Agreements to Enterprise Agreements.

The federal lndustrial laws about workplace agreements changed on 1 January 2010.

National system employers can enter into enterprise agreements under the federal industrial laws.

Non national system employers in WA can use the state industrial relations system to enter into a workplace agreement with their employees.

As the type of workplace agreement and the rules which apply vary it is a good idea to use your state farming organisation or legal adviser to help you write an appropriate and effective agreement.

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Federal enterprise agreements

There are three types of workplace agreement in the federal system:

  • single-enterprise agreements;
  • multi-enterprise agreements;
  • greenfields agreements (for new workplaces without employees).

The most common type of workplace agreement in the farming industry will be the single-enterprise agreement which is an agreement between a single employer and their employees or a group of employees.

The laws about Australian Workplace Agreements (AWAs) have changed. AWAs were workplace agreements between an employer and a single employee. Under the new laws, which came into effect in March 2008, only employers who already had employees under AWAs were able to enter into individual workplace agreements with other employees. These agreements are now called individual transitional employment agreements (ITEAs) and could only be made before the end 2009. Once the original AWAs expire the employer will have no option of using AWAs or ITEAs in the future. For more information, visit workplace agreements

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What has to be in a federal enterprise agreement?

Although an enterprise agreement offers a degree of flexibility, it must not exclude the ten minimum conditions contained in the National Employment Standards:

  • maximum weekly hours of work;
  • requests for flexible working arrangements;
  • parental leave;
  • annual leave;
  • personal/carer’s leave and compassionate leave;
  • community service leave;
  • long service leave;
  • public holidays;
  • notice of termination and redundancy pay;
  • Fair Work Information Statement.

Enterprise agreements must meet the ‘better off overall test’ (BOOT) when compared to the relevant award. In reality, this means that the employee must be better off financially when entering into the agreement than they would have been under the award.

Enterprise agreements must have an expiry date of no more than four years from the date of approval of the agreement by the Fair Work Commission.

A dispute resolution clause, a consultation clause and flexibility clause are also compulsory. There are model clauses available for inclusion in your agreement.

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Make sure the workplace agreement contains all of the entitlements in the NES

To avoid confusion and misunderstandings it is important that you make sure the workplace agreement contains all of the entitlements in the NES. If a term of a workplace agreement provides an entitlement less favourable to an employee than the equivalent entitlement in the NES, the entitlement under the NES will apply and be enforceable by the employee regardless of the terms of the agreement.

Click here for an example of an enterprise agreement to help you set out a draft agreement that you can take to your legal adviser.
For more information on workplace agreements including details on lodgement, dispute resolution, termination etc go to Workplace Agreements. Included in this resource is a checklist for approval and lodgement of an enterprise agreement.