Home' Enterprise Bargaining : Issue 1 Contents 21
Before approving an enterprise agreement, the FWC must be satisfied that:
► the enterprise agreement has genuinely been agreed to by the employees
and employers who will be covered by the enterprise agreement;
► the terms of the enterprise agreement do not contravene the NES;
► the enterprise agreement passes the better off overall test;
► all classes of employees to be covered by the enterprise agreement were
► the enterprise agreement does not include any unlawful terms;
► the enterprise agreement specifies a date as its nominal expiry date and
that date will be no later than 4 years after the day on which the FWC
approves the enterprise agreement;
► the enterprise agreement includes a flexibility term, consultation term and
a dispute resolution; and
► approving the enterprise agreement would not undermine good faith
The FWC must approve an enterprise agreement if these requirements are
For a greenfields agreement, the FWC must be satisfied that the relevant
unions that will be covered by the enterprise agreement are entitled to
represent the industrial interest of a majority of the employees who will
be covered by the enterprise agreement and it is in the public interest to
approve the greenfields agreement.
Additional approval requirements also apply to shift workers, pieceworkers,
school-based apprentices, school-based trainees and outworkers. The
FWC can refuse to approve an enterprise agreement where there are
reasonable grounds to believe that the enterprise agreement has not been
genuinely agreed to by the employees who will be covered by the enterprise
If not all of your employees will be covered by the enterprise agreement,
you will need to make sure that the employees who are to be covered have
been fairly chosen, for example, they are geographically, organisationally or
operationally distinct. You should seek specific advice on these issues and
how the law operates in the relevant circumstances before commencing
bargaining for an enterprise agreement.
Approving an enterprise agreement with undertakings
The FWC may approve an enterprise agreement with undertakings even
where all approval requirements have not been met. It may only accept an
undertaking when it is satisfied that accepting the undertaking is not likely
to cause financial detriment to any employee covered by the enterprise
agreement, or result in a substantial change to the enterprise agreement.
Similarly, in exceptional circumstances, the FWC may approve an enterprise
agreement that does not pass the better off overall test, as long as approval
is not contrary to public interest. For example, this may occur where the
enterprise agreement is part of a reasonable strategy to deal with a short-
term crisis in the business of the employer.
passing the better off overall test (boot)
An enterprise agreement must also pass the BOOT test. An enterprise
agreement will pass the BOOT test where the FWC is satisfied that each
class of employee will be better off overall under the enterprise agreement
than if the relevant modern award applied to that class of employee.
The BOOT test is a global test. The FWC must make a judgement as to
whether, taken as a whole, all the benefits provided under the enterprise
agreement make up for any loss of award conditions and entitlements.
Approving an enterprise agreement that does not pass the BOOT
In exceptional circumstances the FWC may approve an enterprise
agreement that does not meet the BOOT, provided that approval is not
contrary to public interest, for example, where the enterprise agreement is
part of a reasonable short-term strategy to revive an enterprise.
base rate of pay
The Fair Work Act ensures that an employee’s base rate of pay under an
enterprise agreement cannot be less than the base rate of pay under the
relevant modern award or a national minimum wage order.
These provisions apply during the life of the enterprise agreement. This
means that if the base rate of pay under the relevant modern award or
minimum wage order is ever adjusted to a higher amount than the base rate
of pay under an enterprise agreement, the enterprise agreement rate must
be adjusted to at least the same rate of pay as under the modern award.
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