Support Material

Awards and Enterprise Agreements

The NSW Industrial Relations Act 1996 No 17 (the "Act") regulates employment in New South Wales by permitting the NSW Industrial Relations Commission (the "Commission") to make awards and approve enterprise agreements specifying the conditions of employment for employees doing particular types of work.

What is an award?

An award is a legal document setting out the minimum rates of pay and conditions of employment, which apply, to employees in a particular industry or occupation. An award sets out the rights and obligations of employers and employees engaged in particular types of work. There are many different types of awards to cover different industries and occupations. Awards deal with conditions of employment such as hours of employment, pay rates, penalty rates, loadings, allowances, leave entitlements, employment protection provisions, and part-time or casual work.

The Industrial Relations Commission must approve the award. An award is legally enforceable. This means that if a person or an organisation breaches the award, legal penalties may be imposed.

How are NSW awards made?

The Commission makes state awards applying in NSW ("NSW awards"). Most commonly, this occurs because the organisations representing employers ("employer organisations") or employees ("unions") have applied to the Commission to have an award made. An award can also be made to settle an industrial dispute.

Who is covered by a NSW award?

A NSW award covers all employers and employees in the industry or occupation to which it relates, whether or not they were parties to the making of the award. Every NSW award has a clause, which sets out the industry or occupation covered by the award. The Act requires an employer to exhibit a copy of all relevant NSW awards in the workplace.

What about federal awards?

Some employees, who work in NSW, are covered by federal awards. Sometimes, both federal and NSW awards apply to the one workplace, although to different categories of employees. The conditions of employment specified in a NSW award apply to all the employees doing the type of work to which the award refers, unless covered by a federal award. A federal award will specify the category of employee to which it applies and, in addition, will indicate which employers are covered (either individually or through their membership of an employer organisation). Information on federal awards can be obtained from WageNet.

What happens if employees are award free?

If there is no award covering the employees, the employer and individual employee can mutually agree to the terms and conditions of the contract of employment. The exceptions are annual holidays, long service and parental leave which are covered by NSW employment laws.

Award-free employees are also subject to common law. If a contract is unfair, harsh, unconscionable, against the public interest or designed to avoid the provisions of an award or agreement, the Industrial Relations Commission of NSW may declare the contract void or make variations to the contract.

What is an enterprise agreement?

An enterprise agreement also sets out the rights and obligations of employers and employees engaged in particular types of work in an enterprise. It may be negotiated between an employer and either the employees concerned or a union on behalf of those employees ("the parties"). The terms of an enterprise agreement override any inconsistent award provisions. An enterprise agreement may cover some or all of the employment conditions applicable to the employees concerned. However, an enterprise agreement must comply with all NSW laws, which provide employment rights and obligations, such as minimum entitlements to parental, annual and long service leave. Every enterprise agreement must be in writing and signed by or on behalf of the parties. The parties to the agreement must be named and the agreement must state the employees who will be covered by the agreement. Generally, all enterprise agreements must be for a nominal term of not more than three years. However, an enterprise agreement continues in force beyond that term until terminated.

How is an enterprise agreement approved?

An application to approve an enterprise agreement can be made to the Industrial Registrar of the Commission. An enterprise agreement is not enforceable unless the Commission has approved it.

When will the Commission approve an enterprise agreement?

In deciding whether to approve the agreement, the Commission must be satisfied that:

• the agreement complies with all relevant statutory requirements;
• the agreement does not, on balance, provide a net detriment to the employees;
• the parties understand the effect of the agreement;
• the parties are entering into the agreement free from duress; and
• the agreement does not unfairly exclude some employees.

Must an employee enter into an enterprise agreement?

No one can be forced to sign an enterprise agreement. However, where an enterprise agreement has been approved in a secret ballot of the employees concerned, an employee who did not vote in favour of the agreement is still covered once the agreement has been approved by the Commission. Similarly, any new employee to a workplace where there is an enterprise agreement is covered by the agreement, where it applies to the work the employee will be doing. However, employers are required to notify new employees of the existence of the agreement and must provide a summary of the agreement to that employee.

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