What does an agreement cover?

Employers and employees can only make an enterprise bargaining agreement about permitted matters.

Permitted matters are terms which relate to:

• Matters pertaining to the relationship between the employer (or employers) and employees covered by the agreement
• Matters pertaining to the relationship between the employer (or employers) and employee organisation(s) covered by the agreement
• Deductions from wages for any purpose authorised by an employee covered by the agreement
• How the agreement will operate.

Agreements that contain terms that are not about permitted matters will still be valid, but only to the extent of the provisions relating to the permitted matters. The non-permitted matters will have no effect.

Mandatory terms

Certain terms are mandatory for all enterprise agreements. The Fair Work Regulations prescribe a model flexibility term, a model consultation term and a model dispute resolution term. Where an enterprise agreement does not contain a mandatory flexibility or consultation term, the model term will be taken to be a term of the agreement.

Employers and employees (and their bargaining representatives) can refer to the model dispute resolution term for guidance, and may agree to include the model term, or part of it, in a proposed agreement.

Read more about the bargaining process.

Flexibility term

A flexibility term enables an employee and employer to agree to an individual flexibility arrangement, which meets the needs of both parties. The flexibility term must set out the terms of the enterprise agreement that can be varied by an individual flexibility arrangement.

Flexible arrangements may be made for:

• When work is performed
• Overtime rates
• Penalty rates
• Allowances
• Leave loading.

The flexibility term must require the employer and employee to genuinely agree to any individual flexibility arrangement.

Consultation term

A consultation term requires the employer(s) to consult with employees covered by the agreement about any major workplace changes that are likely to have a significant effect on those employees. The term must allow employees to be represented during consultation – this could be by an elected employee or a representative from a union.

Dispute resolution term

A dispute resolution term outlines the procedure for settling disputes about matters arising under the agreement and in relation to the National Employment Standards. The term must provide for Fair Work Australia (FWA) or another person who is independent of the parties to deal with a dispute, and must provide for representation of employees in the dispute settlement process.

Unlawful terms

If an enterprise agreement contains unlawful terms, then FWA must refuse to approve the enterprise agreement.

A term of an enterprise agreement will be an unlawful term if it:

• Is a discriminatory term that discriminates against an employee because of, or for reasons including, the employee’s race, colour, sex, sexual preference, age, physical or mental disability, marital status, family or carer’s responsibilities, pregnancy, religion, political opinion, national extraction or social origin. A term would not be considered to discriminate if the reason for the discrimination is the inherent requirements of the particular position or because the agreement provides particular wages for junior employees, employees with a disability or employees to whom training arrangements apply.
• Is an objectionable term which contravenes the general protections of the Fair Work Act 2009 (the Act) or the payment of a bargaining services fee
• Would be inconsistent with the unfair dismissal provisions of the Act
• Would be inconsistent with the industrial action provisions of the Act. For example, a term would be unlawful if it were to allow industrial action before the nominal expiry date of the agreement.
• Would be inconsistent with the right of entry provisions of the Act. For example, a term would be unlawful if it were to allow right of entry to investigate a suspected breach or to hold discussions not established by the Act. However, an agreement can include terms allowing for union officials to enter the employer’s premises for other purposes, such as to represent an employee under a term dealing with resolution of disputes or to meet with the employer when bargaining for a replacement to the current agreement.
• Would result in an exercise of state or territory occupational health and safety rights in a way that is inconsistent with the right of entry provisions.