Multi-Enterprise Agreements

By Stephen Kemp

23 August 2023

A number of amendments made to the Fair Work Act by the Fair Work Legislation Amendment (Secure Jobs Better Pay) Act 2022 affecting enterprise agreements came in to effect on 6 June 2023.

In this article we explain the basic structure of the Act’s provisions in relation to multi-enterprise agreements.

Nomenclature

The Act provides for several types of enterprise agreements, namely:

• single-enterprise agreements made by one employer or two or more related employers (that is, employers engaged in a joint venture or common enterprise which are related bodies corporate).
• multi-enterprise agreements made with 2 or more employers (not all related), being:
  • single interest employer agreements, where a single interest employer authorisation was in operation in relation to the agreement immediately before the agreement was made;
  • supported bargaining agreements, where a supported bargaining authorisation was in operation in relation to the agreement immediately before the agreement was made; and
  • cooperative workplace agreements, where no supported bargaining authorisation or single interest employer authorisation was in operation in relation to the agreement immediately before the agreement was made.
• greenfields agreements relating to a genuine new enterprise at a time when the employer or employers have not engaged the employees necessary to conduct the new enterprise.

Authorisations

No authorisation is required for single-enterprise agreements or cooperative workplace agreements.

Single interest employer authorisations

A party seeking to enter a single interest employer agreement must obtain a single interest employer authorisation from the Fair Work Commission (Commission).

The Commission may only make a single interest employer authorisation upon an application being made by either the employers who will be covered by the proposed agreement or a bargaining representative of an employee who will be covered by the proposed agreement.

In dealing with the application the Commission must be satisfied, amongst other things, that:

• At least some of the employees are represented by a union.
• The employers and bargaining representatives of the employees have had the opportunity to express their views on the authorisation to the Commission.
• If the application was made by a bargaining representative of an employee, then either each employer has consented to the application or each employer:
  • employs 20 or more employees;
  • has not made an application for a single interest employer authorisation that has not yet been decided;
  • has not been named in a single interest employer authorisation or a supported bargaining authorisation in relation to the employees;
  • engages employees the majority of whom want to bargain for an agreement;
  • is not covered by an enterprise agreement that has not passed its nominal expiry date;
  • has not reached agreement with a representative union to bargain for a single-enterprise agreement that would cover substantially the same employees.
• Either:
  • the employers carry on similar business activities under the same franchise; or
  • the employers have clearly identifiable common interests and it is not contrary to the public interest to make the authorisation.

[Note: if the application is made by a bargaining representative of an employee and the employer employs 50 or more employees, a rebuttable presumption arises that there is a common interest and that granting the authorisation is not contrary to the public interest.]

• If the common interests test is applied (that is, the employers are not franchisees), the operations and business activities are reasonably comparable with those of the other employers.

[Note: if the application is made by a bargaining representative of an employee and the employer employs 50 or more employees, a rebuttable presumption arises that the operations and business activities of the employers are reasonably comparable.]

The Commission may not make a single interest employer authorisation if the proposed agreement will cover employees engaged in general building and construction work.

An employer specified in a single interest employer authorisation that is in operation may only make a single interest bargaining agreement with the relevant employees and must not initiate bargaining or bargain for any other kind of enterprise agreement.

Supported bargaining authorisations

The supported bargaining stream replaces the low paid stream.

A bargaining representative or a representative union may apply for a supported bargaining authorisation.

The Commission must make a supported bargaining authorisation if it is satisfied that;

• It is appropriate for the employers and employees to bargain together having regard to:
  • the prevailing pay and conditions within the relevant industry or sector (including whether low rates of pay prevail in the industry or sector);
  • whether the employers have clearly identifiable common interests;
  • whether the likely number of bargaining agents would be consistent with a manageable collective bargaining process; and
  • any other matter the Commission considers appropriate.
• At least some of the employees are represented by a union.
• No employee who is proposed to be specified in the authorisation is covered by a single-enterprise agreement that has not passed its nominal expiry date.
• The agreement does not cover employees in relation to general building and construction work.

The Commission must also make a supported bargaining authorisation where an application is made and the employees are in an industry, occupation or sector declared by the Minister.

Where a supported bargaining authorisation is in operation the Commission may, on its own initiative, provide assistance to bargaining representatives, including by directing a party to attend a conference.

Variation of a multi-enterprise agreement to add an employer and employees

The sections of the Act that have attracted the most attention and comment are those allowing multi-enterprise agreements to be varied to extend the coverage of those agreements to include employers (and through them employees) who were not parties to the agreement. This commentary has largely focussed on the ability of such variations to be made, without the consent of the parties to the agreement.

Variations to a single enterprise employer agreement

An application to vary an agreement to cover a prospective employer and employees may be made by:

• The prospective employer and its employees acting jointly; or
• A union covered by the single interest employer agreement.

The Commission must approve a variation if it is satisfied, amongst other things, that:

• The employers and employees covered by the agreement have had the opportunity to express their views on the application.
• If the application is made by the prospective employer and employees jointly, that the variation has been genuinely agreed to by the affected employees;
• If the application was made by a union then:
  • the prospective employer employs at least 20 employees
  • the majority of the affected employees want to be covered by the agreement; and
  • the employer and affected employees are not covered by another enterprise agreement that has not passed its nominal expiry date or have agreed to bargain for a simple single enterprise agreement;
  • the employers covered by the agreement and the prospective employer carry on similar business activities under a franchise arrangement or the employers have clearly identifiable common interests.
  • if the common interest test is applied, the activities of the employer are reasonably comparable to those of the other employers already covered by the agreement.

If the prospective employer employs 50 employees or more, there is a rebuttable presumption that there are common interests.

The Commission must not approve the variation if it is satisfied that:

• the prospective employer is bargaining in good faith for a proposed enterprise agreement that will cover the prospective employer and the affected employees,
• there is a history of effective bargaining in relation to one or more enterprise agreements that have covered the same employer and employees; and
• less than nine months have passed since the most recent nominal expiry date of such an agreement.

The Commission may refuse an application if it considers that compliance with the terms of the agreement as varied may result in a person committing an offence or being liable to pay a pecuniary penalty.

Variations to a supported bargaining agreement

The prospective employer and its employees seeking to be covered by an agreement may make a joint application for a variation of the supported bargaining agreements. Where this happens, the Commission must approve the variation if it is satisfied that:

• Had the employer been specified in the application for a supported bargaining authorisation, the Commission would have been required to make the authorisation;
• A majority of the employees have voted to approve the variation;
• The variation has been genuinely agreed to by the affected employees; and
• There are no serious public interest grounds for not approving the variation.

In addition, a union that is covered by a supported bargaining agreement may apply for the variation of that agreement to add an employer. No consent is required.

Where a union makes the application, the Commission must approve the variation if it is satisfied that:

• the majority of affected employees want to be covered by the agreement; and
• it is appropriate for the employees to be covered by the agreement.

In determining whether it appropriate for the employees to be covered, the Commission:

• must take into account the views of each union covered by the agreement and the prospective employer; and
• may have regard to matters it is required to consider when making a supported bargaining authorisation.

The Commission must not make the variation, if:

• the affected employees are covered by an enterprise agreement that has not passed its nominal expiry date; or
• the employer is specified in a single interest employer authorisation in relation to any of the affected employees.

Variations to a cooperative workplace agreement

A variation of a cooperative workplace agreement adding an employer to that agreement may be made jointly by the prospective employer and the affected employees.

The Commission must approve a variation if it is satisfied that:

• The employers and any relevant unions covered by the agreement have had an opportunity to express their views on the variation;
• The employees have by a majority voted to approve the variation;
• The variation has been genuinely agreed to by the affected employees; and
• It is not contrary to the public interest for the employer and the effective employees to be covered by the agreement.

The Commission must not, however, approve the variation if the prospective employer is specified in a supported bargaining authorisation or a single interest employer authorisation in relation to the affected employees.

Application of provisions

Given that these provisions have only recently come into effect, there have not been any judgments indicating how the provisions will be applied.

We are aware of two applications that have been made.

The Independent Education Union of Australia, WA Branch has applied for a Single Interest Employer Authorisation covering the support, operations and general staff of 10 Catholic schools.  The majority of the respondent schools have previously agreed to bargain together regarding terms and conditions for teaching staff and do not oppose the application, although several parties have sought permission to intervene regarding findings that are likely to be made by the Commission.  The application will be determined on the papers.

The Independent Education Union of Australia, United Workers Union and the Australian Education Union – Victorian Branch have applied for a Supported Bargaining Authorisation covering 62 employers in the Early Education and Care Industry.  The matter was heard on 16 and 17 August 2023 and judgment reserved.

The outcome of both applications will likely determine the approach the Commission will take in future.

Commentary

Concern has been expressed that the provisions may result in smaller employers being “roped in” to single interest employer agreements that have been reached with much larger and better resourced competitors, having the potential of imposing higher wages that the smaller employer cannot afford. Time will no doubt tell whether that happens.

In the meanwhile, employers with more than 20 employees should consider renegotiating any of their enterprise agreements that have passed their nominal expiry dates or negotiating an single enterprise agreement if there is no existing agreement.

 

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Disclaimer: The information published in this article is of a general nature and should not be construed as legal advice. Whilst we aim to provide timely, relevant and accurate information, the law may change and circumstances may differ. You should not therefore act in reliance on it without first obtaining specific legal advice.