When it comes to employment in Australia, there are two types of agreements that employers will come across – enterprise agreements and modern awards. Both of these agreements set out minimum employment conditions and wages, but they differ in a few key ways. In this article, we’ll explore the differences between enterprise agreements and modern awards so that employers can make an informed decision when choosing which agreement to go with.

First, let’s define what these agreements are. Enterprise agreements are negotiated between employers and employees, or their bargaining representatives, and cover a specific group or groups of employees. They can vary the modern award provisions that would otherwise apply. On the other hand, modern awards are industry or occupation-based awards that set out the minimum conditions and wages for employees in a particular industry or occupation.

One of the key differences between enterprise agreements and modern awards is that enterprise agreements are tailored to the specific needs of a business, whereas modern awards are industry-wide. This means that employers have more flexibility with enterprise agreements and can negotiate terms that suit their business model. For example, an enterprise agreement may provide for different working hours or overtime rates than a modern award.

Another difference between the two is that modern awards are updated regularly, while enterprise agreements are only reviewed and renegotiated when they expire or if there is a significant change that warrants a renegotiation. This means that modern awards always reflect the current state of the industry, while enterprise agreements may become outdated if they are not updated frequently.

When it comes to the minimum wage, modern awards provide a safety net for all employees in a given industry, while enterprise agreements can offer higher wages and benefits to employees. This means that employers may choose to offer an enterprise agreement with higher wages and benefits to attract and retain top talent.

In terms of legal requirements, employers must ensure that they comply with either an enterprise agreement or modern award. However, if an employer chooses an enterprise agreement, they must also ensure that the agreement meets the requirements set out in the Fair Work Act 2009. This includes ensuring that employees are better off overall under the agreement than they would be under the relevant modern award.

Overall, both enterprise agreements and modern awards have their advantages and disadvantages. Enterprise agreements offer more flexibility and the ability to negotiate terms that suit a particular business, while modern awards provide a safety net for all employees in a given industry. Employers should carefully consider their options and seek legal advice to ensure that they comply with the relevant requirements.