Fair Work Commission

What your agreement should contain

Your agreement should:

• Contain a coverage term which sets out the employees to be covered by the agreement
• Include a dispute settlement term which complies with the requirements in the Act
• Include a consultation term which complies with the requirements in the Act
• Include a flexibility term which complies with the requirements in the Act
• Have a nominal expiry date that is no more than 4 years from the date the agreement is approved by the Commission (not the date it commences)
• Contain other entitlements and conditions for employees, such as monetary and non-monetary entitlements
• Not contain any entitlements that displace the National Employment Standards (NES), or alternatively contain an NES precedence clause

Coverage term

Dispute settlement term

Your agreement must contain a dispute settlement term which provides a procedure for settling:

• disputes about matters arising under the agreement, and
• disputes in relation to the NES.

The term must require or allow the Commission, or another person who is independent of those covered by the agreement, to settle a dispute.

A dispute settlement term must not, for example, provide for disputes to be resolved solely by:

• the managing director of the employer, or
• a disputes board made up of officials of a union covered by the agreement.

The term must also allow for the representation of employees during the dispute.

You can include the model dispute settlement term in the Regulations, or you can draft your own term, but this term must comply with the requirements of the Act.

If the agreement does not contain a dispute settlement term, or the term does not comply with the requirements in the Act, the Commission may:

• refuse to approve the agreement, or
• approve the agreement with undertakings (see more in our Undertakings page).

For more information see section 186(6) of the Act.

Consultation term

Your agreement must contain a consultation term which requires you to consult with employees about:

• a major workplace change that is likely to have a significant effect on your employees, and
• a change to their regular roster or ordinary hours of work.

The consultation term must allow for employees to be represented during consultations.

For changes to employees’ regular roster or ordinary hours of work, the consultation term must require the employer to:

• provide information to employees about the change
• invite employees to give their views about the change, and
• to consider the views of employees.

You can include the model consultation term in the  Regulations, or you can draft your own term, but this term must comply with the requirements of the Act.

If the agreement does not contain a consultation term, or the term does not comply with the requirements in the Act, the model consultation term will be taken to be a term of the agreement.

For more information see section 205 of the Act.

Flexibility term

Your agreement must contain a flexibility term that allows you to make an individual flexibility arrangement (IFA) with an employee which varies the effect of specified terms of the agreement in order to meet the genuine needs of you and the individual employee.

You can include the model flexibility term in the Regulations, or you can draft your own term, but this term must comply with the requirements of the Act.

If the agreement does not contain a flexibility term, or the term does not comply with the requirements in the Act, the model flexibility term will be taken to be a term of the agreement.

For more information see sections 202, 203 and 204 of the Act.

Nominal expiry date for the agreement

Your agreement must include a nominal expiry date. An agreement comes into operation 7 days after it is approved by the Commission (or later if specified in the agreement). The nominal expiry date can be no later than 4 years from the date the agreement is approved by the Commission. It can be sooner than that, but not more than 4 years.

Agreements continue to operate after their nominal expiry date until they are replaced or terminated by the Commission.

Commencement date

By default, an agreement will take effect 7 days after the Commission approves it. You may specify a later date in your agreement on which it will commence (pending approval) for example, to provide time to update your payroll system.

Entitlements and conditions for employees, such as monetary and non-monetary entitlements

Agreements commonly contain the following terms and clauses:

• definitions or glossary
• hours of work
• classification structure and rates of pay
• penalty and overtime rates
• allowances
• breaks
• deductions authorised by an employee
• shiftworkers for the purposes of the NES, and
• relationship to the modern award such as whether the award is incorporated.

For more information see sections 54, 58 and 186(5) of the Act.

The National Employment Standards (NES)

The NES are minimum standards that apply to all employees employed by a national system employer. However, only certain entitlements apply to casual employees.

It is not necessary for an enterprise agreement to expressly include each NES entitlement. Terms that are included in an enterprise agreement cannot be less beneficial than those provided in the NES. An enterprise agreement can provide more favourable entitlements than those provided in the NES.

The minimum standards under the NES relate to:

• maximum weekly hours
• requests for flexible working arrangements
• casual conversion
• parental leave and related entitlements
• annual leave
• personal/carer’s leave, compassionate leave and unpaid family and domestic violence leave
• community service leave
• long service leave (under State or Territory laws or as a preserved award-derived or agreement-derived entitlement)
• public holidays
• notice of termination and redundancy pay, and
• provision of a Fair Work Information Statement.

NES precedence term