What is a workplace agreement?

A workplace agreement in Australia is a registered collective agreement that sets the pay and conditions for employees at a particular workplace or business. Under the Fair Work Act 2009, the main type of workplace agreement is the enterprise agreement, which replaces the relevant modern award once approved by the Fair Work Commission and can also include individual flexibility arrangements.

Enterprise agreements cover three formats: single-enterprise agreements between one employer and its employees, multi-enterprise agreements between two or more employers and their employees, and greenfields agreements for new businesses or projects before employees have started. The Secure Jobs, Better Pay Act 2022 reformed the framework to make it easier for small businesses to join multi-employer bargaining and to strengthen the Better Off Overall Test (BOOT) for approval.

An enterprise agreement is negotiated between the employer and bargaining representatives, who can include unions, employee representatives, and the employer. Employees vote on the proposed agreement after a seven-day consideration period. The Fair Work Commission then reviews the agreement and approves it only if it has been genuinely agreed, complies with the National Employment Standards, leaves every employee better off overall than the relevant modern award, and contains the required model dispute resolution and consultation terms.

Once approved, the agreement applies to all employees performing work covered by it, regardless of whether they voted in favour. Agreements have a nominal expiry date of up to four years, after which they continue to operate until they are replaced or terminated. About 11,500 active enterprise agreements covered around 2.4 million Australian employees as of 2024, particularly in the public sector, large retailers, manufacturing, and the health and education sectors. Individual Flexibility Arrangements within an agreement allow an individual employee and the employer to vary specific terms (such as overtime rates or allowances) without affecting the agreement as a whole, provided the employee remains better off overall.