Enterprise Bargaining and Labour Productivity under Fair Work Act of 2009

EMPLOYMENT RELATIONS
INTRODUCTION
Enterprise bargaining was introduced in Australia in the early 1990s. The concept was
introduced as a new strategy to negotiate employment terms and new wages. The then minister
for Industrial relations introduced the amendments to the Australian parliament with a speech
highlighting the importance of enterprise bargaining. The amendment was incorporated into Fair
Work Act of 2009 which contains matters relating to employment in Australia. This research
paper delves into analysis of legal obligation and entitlement created under the Fair Work Act
when forming enterprise agreements; the problems associated with measuring labour
productivity and finally the views of trade unions and employer organisations concerning the
link between enterprise agreements and labour productivity as discussed below
ENTERPRISE AGREEMENTS UNDER FAIR WORK ACT OF 2009
Enterprise bargaining refers to the process of negotiation between employers and employees or
through their representatives to form an enterprise agreement.1 The whole process of enterprise
bargaining, contents of enterprise agreement, legal requirements, rights, duties, obligations and
the entitlements of each negotiating parties are contained in the Fair Work Act 2009 (FWA). The
FWA also contains provisions for registration and approval of the enterprise agreements for legal
enforceability in case of any disputes.
An enterprise refers to any kind of an undertaking, a business or a project activity. Enterprise
agreements are done at the enterprise level.2 The agreement cannot be entered into with one
1 Fair Work Act s 12 Dictionary of the Act
2 n 1 above s 12

employee.3 The process takes the form of collective bargaining negotiations which are carried
out in good faith by the parties. Parties intend to be legally bound by the terms and conditions of
the agreement once it is approved and registered. Enterprise agreements are classified into the
below explained categories;
a. Single enterprise agreement
This kind of agreement is entered into by a single employer or two or more employers having a
single interest and employees. The employees are to be employed during the time when the
agreement is made. Single interest employers refer to different employers engaging in a common
enterprise, a joint venture or corporations that are related.4 Single interest employers could also
include franchisees authorized by the Fair Work Commission or declared as so by the Minister of
Employment.5
b. Multi enterprise agreements
This type of an agreement is an enterprise agreement entered into by two or more employers not
having a single interest and the employees. The employees are supposed to be employed upon
the agreement being made and that their interest will be covered by the agreement formed.6
c. Greenfields agreement
This kind of an enterprise agreement is entered into before employees are employed. It is made
because of an employer in either single party agreement or multi-party agreement introducing a
3 n 1 above s 175 (6)
4 n 1 above s 172(5)
5 Fair Work Act 2009 s 172(2)
6 n 3 above s 172 (3)

new enterprise hence requiring more employees. This kind of an agreement is entered into by the
employers and employees’ trade unions. 7
Terms that must form the contents of an enterprise agreement
Terms in an enterprise agreement constitutes the following; relationship between the employees
and the employer; relationship between the employer and the trade unions; authorized deductions
from the wages by the employer; operation parameters of the agreement itself, the duration of the
agreement which cannot exceed four years from the date the agreement was approved by the Fair
Work Commission; dispute settlement clause setting the dispute settlement procedures
conforming with the National Employment Standards (NES); individual flexibility clause
required for both employers’ and employees’ needs; consultation clause obligating the employer
to consult the employees before initiating major changes affecting the work place. Consultation
clause as well as flexibility clause is mandatory terms of the enterprise agreement8
Procedure for initiating and forming an enterprise agreement
The employees must be notified by the employer of their right to have a bargaining
representative on the negotiation table.9 The notification is however not a requirement under the
Greenfields agreement since the other party to the negotiation table is always an employee’s
Organisation or a trade union. The above notification must be made to employees within 14 days
after a notification for commencing the bargaining has been issued.10 Under the process for
Greenfields agreement, the employer must issue a written notice for the proposed agreement to
the trade union. The trade union seats on the negotiating table as the representative of the
7 n 3 above s 172(4)
8 Fair Work Act 2009 202 and 205
9 Fair Work Act 2009 s 173
10 n 8 above s 173(3)

employees yet to be employed in the new enterprise. The notice sent to the trade union must state
the commencing date of the six month duration for Greenfields agreement negotiation.
Individuals or organisations that can be bargaining representatives
According to Fair Work Act, the following people or organisations can be bargaining
representatives; a trade union whose one of its members is going to be positively affected by the
agreement unless the members specifies in writing another person to represent him. An employer
who is to be covered by the agreement is also a bargaining representative. The other
representatives include a trade union representing employees under a Greenfields agreement;11 a
person specified as a representative by an employee or employer. The specification has to be
made in writing.12 All the people represented whether employees or employers must be covered
by the agreement being negotiated.
Bargaining representatives have a legal obligation to disclose any financial benefit they will get
from a certain term of the agreement being negotiated.13 The disclosure has to be made using a
disclosure document which sets out the details of the financial benefit being disclosed.14 The
disclosure document must be handed over to the employer the employer Organisation or a trade
union. The employer upon receipt of the document will then hand it to the employees.
Requirements of bargaining in good faith
While participating in the enterprise agreement negotiations, bargaining representatives are
supposed to act in good. They are supposed to attend negotiation meetings on time; disclose any
insensitive or non-confidential information that is relevant and respond to proposals from the
11 n 8 above s 177
12 Fair Work Act 2009 s 176(1)
13 n 11 above s 179(1)
14 n 12 above s 179(4)