Fair Work Commission

Introduction

The COVID-19 pandemic and the responses from governments, both federal and state, have had a substantial impact on businesses and their employees with a range of restrictions implemented across a wide range of industries.

These restrictions have affected businesses and their employees and will continue to do so into the foreseeable future.

Consequently, some parties to enterprise agreements are considering varying their enterprise agreements to introduce additional flexibility to help address the impact of the COVID-19 pandemic.

How do I vary my current enterprise agreement?

The employer and its employees who are covered by the enterprise agreement can agree to a variation. Any variation must be approved by the majority of employees who vote for the variation.

Before employees vote on a variation to their agreement, the employer must take some of the same steps as required to make a new enterprise agreement. This includes that the employees must have been given access to a copy of the variation for 7 days before they vote.

The requirements for varying an agreement are similar to those for approving a new agreement, including that the agreement as varied must pass the better off overall test.

How do I make an application to vary an agreement?

The Commission will expedite any applications to vary agreements sent to COVID19Applications@fwc.gov.au.

Can I use Individual flexibility arrangements instead of varying my agreement?

A number of enterprise agreements contain individual flexibility arrangements (IFAs).

An IFA is a written agreement used by an employer and employee to change the effect of certain clauses in their agreement. It is used to make alternative arrangements that suit the needs of the employer and employee that may include changes to regular rosters and working hours.

However, an IFA cannot be used to reduce or remove an employee’s entitlements under the agreement and must leave the employee better off overall than they would be under the agreement.  Consequently, an IFA is less likely to be as effective as varying an enterprise agreement to address the impact of COVID-19 in the workplace.

I have already lodged an application to approve a new agreement but do not want to proceed

If you have made an application for approval of a new enterprise agreement or to vary a current agreement, that has been lodged but not yet approved, and would like to withdraw that application, the applicant should email a Notice of discontinuance to member.assist@fwc.gov.au or contact the chambers of the Commission Member who is dealing with the application as soon as possible.

How do I terminate my current enterprise agreement?

Termination after nominal expiry date

Under the Fair Work Act 2009, agreements continue to operate after their nominal expiry date until they are replaced or terminated by application to the Fair Work Commission.

If an enterprise agreement has passed its nominal expiry date, any of the parties to the agreement may apply to the Commission for the termination of the agreement.

If an application for the termination of an agreement is made, the Commission must terminate the agreement if:

• satisfied that it is not contrary to the public interest to do so, and
• the Commission considers it appropriate to terminate the agreement.

Termination by agreement before nominal expiry date

Employers and their employees may agree to terminate an enterprise before its nominal expiry date. An employer may request that the employees endorse the termination by voting for it.

The termination of an agreement has no effect unless it is approved by the Commission.

Terms and conditions of employment after termination

After an enterprise agreement has been terminated, if there is no replacement agreement approved by the Commission, the minimum terms and conditions of employment are determined by the applicable modern award.

If there is an approved enterprise agreement to replace the existing agreement, the replacement agreement cannot apply until the existing agreement is terminated or its nominal expiry date has passed.

How do I make a new enterprise agreement?

An enterprise agreement can be made between one or more employers and two or more employees with their chosen representatives.

Exceptional circumstances

For an agreement to be approved by the Commission, it must pass the better off overall test (BOOT), as well as meeting other statutory requirements.

The Fair Work Act allows for the approval of an agreement that does not pass the BOOT if, because of exceptional circumstances, approval of the agreement would not be contrary to the public interest.

An example of a case in which the Commission may be satisfied exceptional circumstances exist is where the agreement is part of a reasonable strategy to deal with a short-term crisis in, and to assist in the revival of, the enterprise of an employer covered by the agreement.