Termination of Enterprise Agreements: What You Need to Know
Enterprise agreements are legally binding documents that govern the employment relationship between an employer and its employees. These agreements contain provisions related to pay, working hours, leave entitlements, and other important employment-related matters. However, there may come a time when either party wishes to terminate the enterprise agreement. In this article, we will discuss the process of terminating an enterprise agreement and what you need to know as an employer or employee.
Grounds for Termination
An enterprise agreement can be terminated by mutual agreement between the employer and employees covered by the agreement, or on certain grounds as set out in the Fair Work Act 2009. These grounds include:
– The agreement has passed its nominal expiry date
– The parties agree to terminate the agreement
– The agreement is replaced by a new enterprise agreement or a modern award
– The employer is insolvent or bankrupt
– The agreement is terminated by the Fair Work Commission due to public interest reasons
Process of Termination
If the employer or employees wish to terminate the enterprise agreement, the following steps must be taken:
1. Consultation: The employer must consult with the employees covered by the agreement. This could include holding meetings or sending out surveys to gauge the opinions of employees.
2. Notice of termination: The employer must provide written notice of the intention to terminate the agreement to the employees covered by the agreement and the Fair Work Commission.
3. Vote: The employees covered by the agreement must be given the opportunity to vote on whether they support the termination of the agreement. A majority of employees who cast a valid vote must vote in favour of termination for it to take effect.
4. Application to the Fair Work Commission: If the vote is successful, the employer must apply to the Fair Work Commission for approval to terminate the enterprise agreement.
Implications of Termination
Terminating an enterprise agreement can have significant implications for both employers and employees. If the agreement is terminated, the terms and conditions of the agreement will no longer apply, and employees will revert to the relevant award or minimum wage. Employers will need to negotiate new terms and conditions with their employees, which can be a time-consuming and complicated process.
In summary, terminating an enterprise agreement is a complex process that requires careful consideration and consultation with employees. If you are considering terminating an enterprise agreement, it is important to seek advice from an experienced employment lawyer or HR consultant to ensure you comply with the Fair Work Act 2009 and related legislation.
