You have probably seen it splashed all over the news lately… the Fair Work Act has introduced a new scheme for making enterprise agreements.

And at first, this new agreement-making process doesn’t seem to have much going for it.

For starters, you have to inform your employees immediately of their right to be represented by a union during the agreement making process. This seemingly leaves you with no way to make a non-union agreement, and certainly no way to make individual agreements like AWAs.

But despite this, there are some upsides to the new agreement-making process.

Here are 3 good reasons why you should consider making an enterprise agreement…

1. The agreement will replace awards (not just override them) – and it’s designed by you, not the Industrial Relations Commission!

The commencement of modern awards on 1 January 2010 will impose new and difficult employment conditions on many employers – and these conditions may not be suited for your business. Making an enterprise agreement is a good way to address this problem, because it will replace the relevant modern award.

2. It could be a long term investment for labour cost savings.

Making an enterprise agreement will give you the opportunity to ‘load up’ base rates of pay to such a level that you won’t have to worry about paying award entitlements to loadings, penalties, overtime and allowances separately.

While in the short-term this may lead to wage increases, that extra margin will absorb award base rate increases over time (and with no wage increase this year and the economy improving, we can expect a significant increase to minimum wages in 2010).

By making an enterprise agreement and ‘loading up’ base rates of pay now, 2 or 3 years into the life of the agreement you could only be paying the minimum wage – with no obligation to pay other award obligations.

3. It may be best to get in first!

If you don’t make an enterprise agreement now, you may be forced into making one on your employees’ (or their union representative’s) terms down the track.

Remember, if you have sections of your workforce that are union members, they have a right under the Fair Work Act to require you to negotiate in good faith with their union about making a collective agreement. It could be a good idea for you to get in first!

So there’s some food for thought…

Stay tuned for next week’s article – I’ll be showing you the other side of the argument by giving you three reasons not to make an enterprise agreement!

Regards,

Charles Power

P.S Subscribers: Don’t forget! Your most recent update contains a comprehensive chapter on the ins and outs of enterprise agreements.

Tags: award obligations, AWAs, employees, employment conditions, enterprise agreement, fair work act, Industrial Relations Commission