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Bargaining representatives must comply with various ‘good faith bargaining’ requirements when negotiating an enterprise agreement (other than a greenfields agreement). These requirements do not apply to the process of varying or terminating an enterprise agreement.

The good faith bargaining requirements imposed on all bargaining representatives include:

  • Attending and participating in meetings at reasonable times;
  • Disclosing relevant information (other than condiential or commercially sensitive information) in a timely manner;
  • Responding to proposals made by other bargaining representatives in a timely manner;
  • Giving genuine consideration to the proposals of other bargaining representatives for the agreement, and giving reasons for the barganing representative’s responses to those proposals;
  • Recognising and bargaining with the other bargaining representatives for the agreement; and
  • Refraining from capricious or unfair conduct that undermines freedom of association or collective bargaining.

Bargaining commences when the employer agrees to bargain or initiates bargaining for the agreement (including by offering an agreement to the employees). Bargaining can also be initiated where Fair Work Australia:

  • Determines that a majority of employees support bargaining for an enterprise agreement (known as a mjority support determination). This would apply where an employer has not agreed to bargain with its employees. Fair Work Australia must receive an application from a bargaining representatives of an employee. Fair Work Australia has discretion to use whatever method it considers appropriate to work out whether a majority of employees want to bargain. This may be a ballot, a petition or a show of hands. Where the order is made, it essentially forces an employer to the bargaining table.
  • Makes a scope order which specifies the employer(s) and employees that will be covered by the proposed enterprise agreement. A bargaining representative may apply to Fair Work Australia for a scope order where teh bargaining is proceeding inefficiently or unfairly because the agreement will not cover the appropriate employees or covers employees that it’s not appropriate for the agreement to cover.
  • Makes a low-paid authorisation which provides employers and employees access to the low-paid multi-enterprise bargaining stream.

Employers should do their utmost to ensure that they do not breach the good faith bargaining requirements in the FW Act, to avoid potential financial penalties and to avoid an arbitrated outcome being imposed on them. 

There is no requirement for formal notification of the commencement of bargaining, or any time period during which bargaining must take place. However, an employer must notify employees of their right to appoint a bargaining agent within 14 days of one of the above events occurring.

An employer, employee or union covered by the agreement must apply to Fair Work Australia for approval within 14 days after the agreement is made. The application must be accompanied by a signed copy of the agreement and any declarations that are required by the procedural rules to accompany the application. 

An enterprise agreement does not have any legal effect until it is approved by Fair Work Australia.

Approval requirements

Fair Work Australia must be satisfied that all of the following requirements have been met before approving an enterprise agreement:

  • The agreement was genuinely agreed to by the employees covered by the agreement. Fair Work Australia must be satisfied that employees were provided with a copy of the agreement at least 7 days before the start of the voting process, that the employer took all reasonable steps to explain the agreement to employees and that a majority of the employees that cast a valid vote approve the agreement.
  • The terms of the agreement do not contravene the National Employement Standards (see Master Builders Fact Sheet 7).
  • The agreement passes the Better Off Overall Test (from 1 January 2010), or if the agreement was lodged between 1 July 2009 and 31 December 2009, the agreement passes the no disadvantage test.
  •  The group of employees covered by the agreement was fairly chosen.
  • The agreement does not contain unlawful terms.
  • The agreement contains a nominal expiry date which is not more than four years from the day on which Fair Work Australia approves the agreement.
  • The agreement contains the mandatory terms.
  • Approving the agreement would not undermine good faith bargaining if a scope order is in opration.
  • The agreement meets the approval requirements dealing with shift workers, pieceworkers, outworkers, or school-based apprentices and school-based trainees.

If the agreement is a multi-employer agreement, Fair Work Australia must be satisfied that each employer genuinely agreed to the agreement and that no person coerced, or threatened to coerce, any of the employers to make the agreement. If a multi-enterprise agreement was not approved by the employees of all the employers who asked their employees to vote on the agreement, that the agreement has been varied to cover only the employers (and their employees) whose employees approved the agreement.

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