Enterprise Agreements and the BOOT: making, voting and Fair Work Commission approval

What an enterprise agreement is

Enterprise agreements are collective agreements made at the enterprise level between employers and employees under the Fair Work Act 2009 (Cth). These agreements operate to define the terms and conditions of employment for employees at a specific workplace or group of workplaces. There are three types of enterprise agreements: single-enterprise agreements, multi-enterprise agreements, and greenfields agreements.

When an enterprise agreement is in operation, it displaces the modern award that would otherwise apply to the covered employees. This means the terms outlined in the agreement govern the employment relationship, rather than the provisions of the relevant award.

All enterprise agreements must specify a nominal expiry date. This expiry date cannot be later than 4 years from the date the agreement receives approval.

Making and voting on the agreement

The process for creating an enterprise agreement begins with employers providing employees with a notice of employee representational rights (NERR). This notice, required under section 173, must be provided within 14 days of the notification time.

Before employees can vote, a pre-approval access period of at least 7 days must be provided. This period allows employees to consider the proposed agreement. Voting can be conducted by ballot or another method agreed upon, and must take place after the conclusion of this 7-day access period.

For the agreement to proceed, it must be genuinely agreed to by a majority of employees who cast a valid vote. This requirement, outlined in section 182, ensures employee consent is central to the agreement’s creation.

The Better Off Overall Test (BOOT)

The Better Off Overall Test (BOOT) is established in section 193 of the Fair Work Act 2009. It requires that each employee covered by an award, and any prospective employee, must be better off overall under the proposed enterprise agreement than they would be under the relevant modern award. This assessment ensures that employees do not lose any of their existing entitlements through the agreement.

Following the Fair Work Legislation Amendment (Secure Jobs, Better Pay) Act 2022, the Fair Work Commission undertakes a global assessment when evaluating the BOOT. This means the Commission does not conduct a line-by-line comparison of the agreement and the award. The assessment prioritises objective and verifiable considerations, avoiding reliance on speculative or hypothetical situations.

An enterprise agreement can still be approved by the Fair Work Commission even if it fails the BOOT. This is possible if the Commission is satisfied that the agreement is in the public interest, as outlined in section 189.

Approval, operation and termination

Following a successful vote, applications for Fair Work Commission approval must be submitted within 14 days. Once approved by the Commission, the enterprise agreement comes into effect. This commencement occurs either 7 days after the approval date or on a date specified within the agreement itself.

An enterprise agreement remains in operation even after its nominal expiry date. It continues to bind employers and employees until a new agreement is in place or the existing agreement is formally terminated.

Termination of an expired enterprise agreement is possible. Either the employer or the employee representatives can apply to the Fair Work Commission under section 225. The Commission will assess any such application, taking into account the public interest and the potential impact on ongoing bargaining.