What Is an Enterprise Agreement Definition
An enterprise agreement, also known as an enterprise bargaining agreement (EBA), is a legally binding document that outlines the terms and conditions of employment between an employer and their employees. This agreement is negotiated between the employer and employee representatives, usually a union, and covers a range of workplace matters such as salaries, working hours, leave entitlements, and dispute resolution procedures.
An enterprise agreement is specific to a particular enterprise, such as a single business or a group of businesses under the same ownership. It is a flexible alternative to industry-wide awards that are determined by government bodies and are not tailored to individual businesses.
Under the Fair Work Act 2009, an enterprise agreement must pass the „better off overall test“ (BOOT). This means that the agreement must provide better overall terms and conditions than the relevant award or legislation. It must also not include any illegal or discriminatory terms and must be approved by the Fair Work Commission before it can become legally binding.
Enterprise agreements can offer benefits for both employers and employees. They can customize employment terms and provide greater flexibility for employers to respond to economic changes, while also providing job security and improved working conditions for employees.
For employers, an enterprise agreement can help to attract and retain staff by offering competitive salaries and conditions and providing a positive workplace culture. It can also lead to increased productivity and efficiency by providing clear expectations and procedures for employees.
For employees, an enterprise agreement can offer job security, career progression opportunities, and better working conditions. It can also provide a voice for employees through union representation and the ability to negotiate fair and reasonable terms and conditions.
In conclusion, an enterprise agreement is a legally binding document that outlines the terms and conditions of employment between an employer and their employees. It is specific to a particular enterprise and must pass the „better off overall test“ to become legally binding. Enterprise agreements can offer benefits for both employers and employees and provide greater flexibility than industry-wide awards.