Once the employer has negotiated a draft agreement with the other bargaining representatives it may ask the employees who will be covered by the agreement to vote to approve it under s 181 of the Fair Work Act 2009 (Cth) (FW Act).

See Enterprise agreements — Voting process.

An employer cannot request employees to vote on a proposed agreement until at least 21 days after the last Notice of Employee Representational Rights was issued.

Further, prior to a vote taking place, the employer must take reasonable steps to provide employees with a copy of the proposed agreement and information on the terms and effects of the agreement, as well as the voting process. Employees must be given time to consider this information (the access period).

See Enterprise agreements — Preparing for a vote.

If a vote on an agreement is passed with the support of the requisite majority of employees, a bargaining representative for the agreement has 14 days to apply to the Fair Work Commisison (FWC) for its approval. Agreements cannot take effect until they have been approved by the FWC.

The FWC must approve an agreement if a number of detailed requirements set out in ss 186 and 187 of the FW Act are satisfied. There are also certain grounds on which the FWC may refuse to approve an agreement.

An agreement will take effect seven days after approval by the FWC (unless the agreement specifies a later date).

See Applying for approval of an enterprise agreement.

See Criteria for approving enterprise agreements.

The most significant safeguard that applies to the approval of an enterprise is that each employee to be covered by the agreement will be better off overall under the agreement than under a relevant modern award: ss 186(2)(d) .

The better off overall test (or BOOT) requires the FWC to conduct an analysis of the advantages and disadvantages of the proposed agreement and underling award(s) in order to make a judgment ‘as to whether, taken as a whole, all the benefits provided under [the] agreement more than make up for any loss of award conditions and entitlements’.

See Approval of enterprise agreements — Better off overall test.

Another important approval requirement is that the agreement has been genuinely agreed to by the employees covered by it: ss 186(2)(a) . This requires consideration of whether:

• the employer(s) covered by the agreement have complied with the pre-approval requirements in ss 180(2) , (3) and (5) , and s 181(2)

• the agreement was made with the requisite majority for approving a single or multi-enterprise agreement; and

• there are no other reasonable grounds for believing that the agreement has not been genuinely agreed to by the employees.

  See Approval of enterprise agreements — Genuine agreement.

Among other requirements, the FWC must also be satisfied that the group of employees covered by the agreement was fairly chosen: s 186(3) .

An agreement which covers all of the employees of the employer(s) will plainly satisfy the fairly chosen requirement. If coverage does not extend to all of the employees in an enterprise, the FWC will consider, among other relevant considerations, whether the group of employees covered by the agreement is s 186(3A) :

• geographically,

• operationally, or

• organisationally distinct.

See Approval of enterprise agreements — Fairly chosen requirement.

If the FWC considers that an agreement does not meet any of the requirements set out in ss 186 and 187 , it may still approve the agreement on the basis of an undertaking (or undertakings) provided by the employer under s 190 .

See Approval of enterprise agreements with undertakings.