Enterprise Agreements – Strengths and Weaknesses from an Employer’s Perspective

An enterprise agreement (EA) is a document that binds employer and 

all present and future employees, relating to the terms and conditions of their employment. 

The employer and individual employees may enter into a separate agreement however, the EA will serve as a minimum entitlement. 

 

An enterprise agreement will replace the modern award.  

Advantages: 

If applied to the “right” business, an EA can serve as a useful document to identify the specific needs of that organisation.  For example: 

  1. flexible terms and conditions that are moulded to the organisation for example hours of work and rostering; 
  2. certainty of remuneration by incorporating loadings into a base rate; 
  3. predetermination of wage growth; 
  4. increased ability to tender for project work;  
  5. simplification of terms and conditions especially if an organisation hires employees under multiple different awards; 
  6. appeasement of relevant unions through cooperation; and  
  7. increased ability to fix costs. 

Disadvantages:

  1. the EA must be better off overall for most employees when compared to the applicable award;  
  2. negotiating the EA takes time and effort and often occurs at least every 4 years; 
  3. there is a stringent process in place in order to register the EA; 
  4. negotiating the EA usually involves the participation of external voices including relevant unions; and 
  5. it is difficult to vary the EA once it is registered, which will hinder the business if its circumstances change in a negative manner.  

If you are interested in entering into an enterprise agreement, then our team at MJT Law are happy to advise of your options. 

 

  Article written by Chris De Santana Associate 



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