Once bargaining is complete and a proposed agreement has been made, certain steps must be taken to make sure the agreement can be approved by the Fair Work Commission.
Pre-approval steps to be taken by employers
The employer must take all reasonable steps to ensure that:
- the terms of the agreement, and the effect of those terms, are explained to the employees
- the explanation is provided in an appropriate manner (eg appropriate for young employees or employees from culturally diverse backgrounds).
Notice and vote to approve
A majority of employees employed at the time who will be covered by the proposed agreement must approve the agreement by voting for it.
A vote must not occur until at least 21 days after the last day on which employees were given notice of their representational rights (see the Enterprise bargaining page).
The employer must take all reasonable steps to ensure that during the 7 day access period employees employed at the time who will be covered by the agreement are given a copy of the following materials:
- the agreement
- any other material incorporated by reference in the agreement, or
the relevant employees have access throughout the 7 day access period to a copy of those materials.
The employer must take all reasonable steps to ensure that by the start of the 7 day access period the relevant employees have been notified of:
- the time when the vote will take place
- the place where the vote will take place
- the voting method that will be used.
A successful vote
The agreement is made when:
- Single-enterprise agreement – a majority of the employees of the employer, or each employer, who cast a valid vote endorse the agreement.
- Multi-enterprise agreement – a majority of the employees of at least one of the employers, who cast a valid vote endorse the agreement. If the agreement was not approved by the employees of all of the employers, then the agreement must be varied so it is only expressed to cover each employer whose employees approved the agreement, and the employees of each of those employers.
- Greenfields agreement – it has been signed by each employer and each relevant employee organisation that the agreement covers (which need not be all of the relevant employee organisations for the agreement).
Agreements may contain terms about:
- matters pertaining to the relationship between the employer and the employees who will be covered by the agreement
- matters pertaining to the relationship between the employer and any employee organisation that will be covered by the agreement
- deductions from the wages for any purpose authorised by an employee covered by the agreement
- how the agreement will operate.
Agreements should not include any unlawful content. This includes:
- a discriminatory term
- an objectionable term
- a term that would enable an employee or employer to 'opt out' of coverage of the agreement
- a term that confers an entitlement or remedy in relation to unfair dismissal before the employee has completed the minimum employment period
- a term that excludes, or modifies, the application of unfair dismissal provisions in a way that is detrimental to, or in relation to, a person
- a term that is inconsistent with the industrial action provisions
- a term that provides for an entitlement to right of entry that is not in accordance with Part 3-4 of the Fair Work Act 2009, or
- a term that provides for the exercise of a state or territory WHS right other than in accordance with Part 3-4 of the Fair Work Act 2009 (which deals with right of entry).
New unlawful content from 1 January 2014
Agreements approved by the Commission on or after 1 January 2014 cannot include a term that requires superannuation contributions for default fund employees to be made to a superannuation fund, unless that fund:
- offers a MySuper product
- is an exempt public sector scheme, or
- is a fund of which a relevant employee is a defined benefit member.
Note: this requirement applies to all agreements approved on or after 1 January 2014, including those lodged before 1 January 2014.
Applying to the Commission for approval
Once an enterprise agreement is made, a bargaining representative for the agreement must apply to the Commission for approval of the agreement using Form F16 – Application for approval of enterprise agreement (Word), which can be found on our Forms page.
The application must be lodged with the Commission within 14 days of the agreement being made or within such further period as the Commission allows.
The application must be accompanied by:
Completed applications can be lodged:
What the Commission considers
To approve an enterprise agreement, the Commission must be satisfied that:
- the pre-approval steps have been taken
- the agreement has been genuinely agreed to by the relevant employees
- the agreement passes the better off overall test
- the agreement does not contain terms which exclude or have the effect of excluding the NES or a provision of the NES
- the agreement does not include any unlawful terms or designated outworker terms
- the group of employees covered by the agreement was fairly chosen
- the agreement specifies a date as its nominal expiry date (not more than 4 years after the date of Commission approval)
- the agreement provides a dispute settlement procedure
- the agreement includes a flexibility clause and a consultation clause.
Better off overall test
Before approving an enterprise agreement, the Commission must ensure the agreement passes the better off overall test.
This test requires that each of the employees to be covered by the agreement are better off overall than under the relevant modern award.
The better off overall test is outlined in s.193 of the Fair Work Act 2009.
Approval with undertakings
The Commission may approve an enterprise agreement that may not meet certain requirements of the Fair Work Act 2009 if satisfied that a written undertaking meets the concern.
The Commission may only accept a written undertaking from an employer, after seeking the views of each bargaining representative and if satisfied that the effect of accepting the undertaking is not likely to:
- cause financial detriment to any employee
- result in substantial changes to the agreement.
When the Commission approves the agreement it will issue a decision with the approved agreement and any undertakings accepted by it attached. A copy will be sent to all the parties involved, and the decision and agreement will be published on our website.