If you are an employer in Australia, it is essential to have an understanding of the two main types of employment agreements – enterprise agreements and modern awards. Both are crucial for businesses as they outline the terms and conditions of employment for employees. In this article, we will examine the difference between enterprise agreements and modern awards to help you make informed decisions based on your business needs.
What is an enterprise agreement?
An enterprise agreement is a legally binding agreement negotiated between an employer and their employees, or their representatives. Enterprise agreements set out the specific terms and conditions of employment including wages, working hours, leave, and other entitlements. Enterprise agreements are tailored to a particular business or organisation and its workforce and can apply to a single business or a group of businesses.
What is a modern award?
A modern award, on the other hand, is a legal document outlining the minimum terms and conditions of employment for a particular industry or occupation. Modern awards establish the minimum wage in a specific industry, overtime rates, and other allowances and entitlements. Modern awards apply to all employers and employees within the specified industry or occupation, regardless of the size of the business or the individual employee`s qualifications.
What are the key differences between enterprise agreements and modern awards?
The key differences between enterprise agreements and modern awards are as follows:
1. Scope and Coverage
Enterprise agreements are specific agreements between an employer and their employees or their representatives, while modern awards apply to all employers and employees within a particular industry or occupation.
2. Flexibility
Enterprise agreements offer more flexibility in terms of the terms and conditions of employment, as they are tailored to the specific needs of the business and its employees. Modern awards, on the other hand, have a set minimum standard of employment conditions that apply to all employers and employees within a particular industry or occupation.
3. Approval Process
Enterprise agreements require approval from the Fair Work Commission before they become legally binding. The approval process involves ensuring that the agreement complies with the Fair Work Act 2009 and any other relevant legislation. Modern awards, however, are already approved by the Fair Work Commission and do not require any further approval.
4. Duration
Enterprise agreements can have a duration of up to four years, while modern awards are typically reviewed and updated regularly.
Conclusion
In conclusion, both enterprise agreements and modern awards are crucial for employers and employees in Australia. Enterprise agreements offer more flexibility and are tailored to the specific needs of a business and its employees. In contrast, modern awards establish minimum employment standards for a particular industry or occupation. Employers must understand the key differences between enterprise agreements and modern awards to make informed decisions based on their business needs and industry standards.