Part 2-4 of the Fair Work Act 2009 (Cth) (FW Act) includes provisions dealing with the coverage and application of enterprise agreements that have been approved by the Fair Work Commission (FWC).

The distinction between an enterprise agreement covering a person and applying to a person is critical to the legal effect of the agreement. This is because an enterprise agreement does not impose obligations or provide entitlements unless it applies to a person, but it cannot apply to a person unless it covers them.

See Coverage, application and operation of enterprise agreements.

Once an enterprise agreement has been approved by the FWC and it comes into operation, it will exclude the application of any otherwise applicable modern award.

An enterprise agreement must not exclude the National Employment Standards (NES), but may include terms that are expressly permitted under the NES or applicable regulations, or terms that are ancillary, incidental or supplementary to the NES, but only to the extent that such terms are not detrimental to the employees in any respect. An enterprise agreement could, for example provide redundancy entitlements in excess of those set out under the NES.

A person must not contravene an enterprise agreement that applies to them, and civil remedies may be imposed for a contravention.

See Legal effect of enterprise agreements and interaction with other instruments/laws.

One of the requirements for FWC approval of an enterprise agreement is that the agreement includes a dispute settlement term.

Dispute settlement terms in enterprise agreements must set out a procedure by which the FWC or an independent person may settle disputes about any matters arising:

• under the agreement, or

• in relation to the NES.

This is a minimum requirement only, and the parties are free to include a dispute resolution term in their agreement which provides for the settlement of a wider range of disputes.

Parties negotiating enterprise agreements may choose to adopt the model dispute resolution term in the Fair Work Regulations 2009 (Cth), or reach agreement on their own dispute settlement term.

See Dispute resolution under enterprise agreements.

Part 2-8 of the FW Act deals with the effect of a “transfer of business” on (among other things) the operation of an enterprise agreement covering employees of the “old” employer who take up employment with the “new” employer. Generally speaking, and subject to the operation of detailed rules in Pt 2-8 , the enterprise agreement will transfer to the new employer.

See Effect of transfer of business on an enterprise agreement.

All enterprise agreements must include a ‘flexibility term’ enabling an employer and individual employee to enter into ‘individual flexibility agreements’ (IFAs). The effect of an IFA is to vary the effect of terms of the agreement in order to meet the genuine needs of the employer and employee concerned. Certain safeguards of employees’ interests apply in relation to the making of IFAs, most notably the requirement that any IFA must result in the employee being better off overall than would have been the case if no IFA was agreed.

Parties negotiating enterprise agreements may draft their own flexibility term or adopt the model flexibility term set out in the Fair Work Regulations 2009 .

See Individual flexibility arrangements .

The Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 (Cth) includes detailed rules relating to the operation, variation and termination of a wide range of “agreement-based transitional instruments” — ie individual and collective workplace agreements that were made under the Workplace Relations Act 1996 (Cth) and other pre-FW Act legislation.

See Transitional arrangements for pre-FW Act agreements.