Fair Work Commission

Coverage of agreements

See Fair Work Act 2009 s.53

Requirement that there be at least 2 employees

An enterprise agreement cannot be made with a single employee. ^[1]

Case example

Coverage of employees and employers

An enterprise agreement covers an employee or employer if the agreement is expressed to cover (however described) the employee or the employer.

Covers

An enterprise agreement can be expressed to cover all employees of the employer or just a group of employees (provided that the group of employees is fairly chosen). Individual employees are not generally named in the coverage clause.

The words however described (above) take into account the situation where the people drafting the agreement do not use the technical terms cover and may describe different categories of employees to be covered by the agreement in different ways.

Any reference in the Fair Work Act to an enterprise agreement covering an employee is a reference to the agreement covering the employee in relation to particular employment – the work that the employee performs under the terms and conditions of the enterprise agreement.

The coverage of an enterprise agreement can also be affected by an order of the Fair Work Commission or a court.

Applies

An enterprise agreement only confers rights and imposes obligations on a person if it applies to that person.^[3]

For an enterprise agreement to apply to an employee and his or her employer, it must be in operation and cover the employee and employer and there must be no other provision of the Fair Work Act having the effect that the agreement does not apply.

Only 1 enterprise agreement can apply to an employee in relation to particular employment at any time. However, if an employee has 2 jobs with 2 different employers, there could be different agreements applying to the employee in relation to the different jobs. In this instance, each job is treated separately in determining the employee's entitlements and each job can potentially be covered by a separate agreement.

An enterprise agreement can also apply to an employee’s employment with 1 employer in some circumstances but not in others (for example, if the agreement is site-specific and the location of the employee's work changes). The question of when the agreement applies will be determined by reference to the scope and coverage terms in the agreement itself. ^[4]

Coverage of employee organisations (unions)

An enterprise agreement covers a union that was a bargaining representative of an employee who will be covered by the agreement if, before the Commission approves the agreement, the union makes an application to be covered by the agreement.^[5] The Commission will note in its approval decision that the agreement covers the union.^[6]

When an agreement covers (and applies to) a union, the union will have certain entitlements that it would not otherwise have. For instance, the union will be able to enforce the terms of the agreement.^[7]

A union is covered by a greenfields agreement if the union is entitled to represent employees who will be covered by the agreement and was a party to the making of the agreement.

When an agreement ceases to cover an employee, employer or union

Ceasing to operate

An enterprise agreement continues to operate after its nominal expiry date unless it is replaced by a new enterprise agreement or terminated by the Commission.

An enterprise agreement that has ceased to operate does not cover any employee, employer or union.^[8]

Terminating an agreement

An application can be made to the Commission for termination of an enterprise agreement prior to its nominal expiry date, where this has been agreed to by the employer and a majority of the employees covered by the agreement. Alternatively, an application to terminate an enterprise agreement that has passed its nominal expiry date can be made by any person covered by it, including a union.

Terms & conditions of employment after termination

After an enterprise agreement has been terminated, if there is no replacement agreement approved by the Commission, the minimum terms and conditions of employment are determined by the applicable modern award.^[9]

If there is an approved enterprise agreement to replace the existing agreement, the replacement agreement cannot apply until the existing agreement is terminated or its nominal expiry date has passed.^[10]

Effect of an employee being covered by an enterprise agreement

See Fair Work Act s.57

An employee can be covered by both a modern award and enterprise agreement, however only 1 instrument can apply to the employee in relation to particular employment at a particular time. If an employee is covered by an enterprise agreement, a modern award can continue to cover the employee, but does not apply to the employee in relation to the employment.

There may be multiple enterprise agreements covering an employee with the terms of the enterprise agreement itself defining when the agreement applies^[11]. Only 1 agreement can apply to an employee in relation to particular employment.^[12]

A modern award may cover the employer and employees in an enterprise other than those covered by an approved enterprise agreement.

References