As Australian employers and employees bargain for terms and conditions of employment, two terms that often come up are “modern awards” and “enterprise agreements.” While they are both legally binding agreements, there are significant differences between the two. In this article, we will explore these differences, and why it is important for businesses to understand them.
Modern Awards vs. Enterprise Agreements
Modern awards are industry or occupation-based awards that outline the minimum pay rates, working conditions, and other entitlements for employees in a particular industry or occupation. They are set by the Fair Work Commission (FWC) and are legally binding on employers and employees.
On the other hand, enterprise agreements are agreements made between an employer and its employees, or a group of employees, which set out the terms and conditions of employment. These agreements can cover a wider range of matters than modern awards, including pay rates, working hours, leave entitlements, and dispute resolution procedures.
Key Differences
The main difference between modern awards and enterprise agreements is how they are made and who they apply to. Modern awards are made by the FWC, and they apply to all employers and employees covered by the award. In contrast, enterprise agreements are made by the employer and its employees, or a group of employees, and they only apply to those employees who are covered by the agreement.
Another key difference is the level of flexibility they provide. Modern awards are generally less flexible than enterprise agreements. They set out minimum terms and conditions of employment, which must be met by employers. In contrast, enterprise agreements can provide more flexibility as they allow employers and employees to negotiate terms and conditions that best suit their needs.
Benefits of Enterprise Agreements
Enterprise agreements are often preferred by employers and employees who want more flexibility in their workplace arrangements. They can provide tailored solutions to particular workplaces, allowing for innovation and change that can improve productivity, efficiency, and profitability. They can also help build stronger relationships between employers and employees, as they involve both parties in the negotiation and agreement-making process.
Benefits of Modern Awards
Modern awards, on the other hand, provide a clear set of minimum standards that must be met by all employers in a particular industry or occupation. They provide a level playing field for all employers, and ensure that employees receive a certain minimum level of pay and working conditions. They also provide a level of protection for employees, as they outline their entitlements and rights.
Conclusion
In summary, both modern awards and enterprise agreements are legally binding agreements that set out the terms and conditions of employment. However, modern awards are industry or occupation-based, and are made by the FWC, while enterprise agreements are negotiated between employers and employees. Enterprise agreements provide greater flexibility, while modern awards provide a level playing field and a minimum level of standards for employers and employees. Understanding these differences can help employers and employees choose the best option for their needs.