A multi-enterprise agreement is one enterprise agreement made by two or more separate employers, covering employees across all of their businesses. It exists so that businesses facing the same industry conditions, the same talent pool or the same award can negotiate a single set of pay and conditions together, instead of each running its own bargaining process and ending up with different outcomes for identical roles. This article explains who is involved, how the three bargaining streams operate, what happens between bargaining and approval, and where the risks concentrate.
What a multi-enterprise agreement is
The legal framework sits in Part 2-4 of the Fair Work Act 2009 (Cth) (the FW Act). Under s 172(3), two or more employers that are not all related to each other may make a multi-enterprise agreement with the employees who will be covered by it. Employers that are related only because they run similar business activities under the same franchise can also make one. The agreement must be about "permitted matters": the employment relationship, the relationship with employee organisations, wage deductions authorised by employees, and how the agreement operates.
This is the alternative to the single-enterprise agreement, made by one employer or by employers that are related, meaning joint ventures or common enterprises, related bodies corporate, or franchisees of the same franchisor (s 172(2) and s 172(5A)).
The distinctive feature of a multi-enterprise agreement is not the document itself. It is the path to getting one. Since the Secure Jobs, Better Pay reforms, that path splits into three streams with different triggers, different levels of Fair Work Commission (FWC) involvement, and different amounts of control for the employers involved.
Who sits at the table
Four groups are involved in any multi-employer bargaining process:
- The employers: Two or more separate businesses, usually unrelated. The FWC must be satisfied that the agreement was genuinely agreed to by each of them, not just by their employees.
- The employees: The staff who will be covered by the agreement. They receive the notice of employee representational rights, are given the proposed agreement and an explanation of it, and vote on whether to approve it.
- Bargaining representatives and employee organisations: Employees are entitled to be represented in bargaining, often by a union. This is not optional colour. A cooperative workplace agreement cannot be approved unless at least some covered employees were represented by an employee organisation during bargaining (s 186(2A)), and both authorisation pathways require at least some employees to be represented by an employee organisation.
- The Fair Work Commission: The FWC makes the authorisations that switch on the compulsory streams, can make voting request orders, and must approve any enterprise agreement before it operates.
The three bargaining streams
Since 6 June 2023 there are three kinds of multi-enterprise agreement, and which one applies depends on whether the FWC has made an authorisation (FWC, Changes to making agreements).
Cooperative workplace agreements
This is the default and the only fully voluntary stream. Unless the FWC has made a supported bargaining or single interest employer authorisation, a multi-enterprise agreement is a cooperative workplace agreement (FWC, About single and multi-enterprise agreements). The employers choose to bargain together and no order compels them. Approval still requires that at least some covered employees were represented by an employee organisation in the bargaining, and the FWC will not approve a non-greenfields multi-enterprise agreement that covers employees in relation to general building and construction work (s 186(2B)), but there is no authorisation to obtain and no lock-in.
Single interest employer authorisations
A single interest employer authorisation lets two or more employers bargain as one group. It can be applied for by the employers or by a bargaining representative, and the FWC must make it if the requirements in s 249 are met. Two routes qualify:
- The franchise route: Employers carrying on similar business activities under the same franchise, as franchisees of the same franchisor or related bodies corporate of that franchisor (s 249(2)).
- The common interest route: Employers with clearly identifiable common interests, where making the authorisation is not contrary to the public interest (s 249(3)). Common interests can come from geographical location, the regulatory regime the employers operate under, or the nature of their enterprises and the terms and conditions of employment in them (s 249(3A)). Where this route is used, the FWC must also be satisfied that the operations and business activities of each employer are reasonably comparable with the others (s 249(1)(vi)).
The FWC must also be satisfied that at least some of the employees who will be covered are represented by an employee organisation, and that the employers and the employees' bargaining representatives have had the opportunity to express their views. Where a bargaining representative applies on behalf of employees, the employer must have employed at least 20 employees at the time of the application and a majority of the relevant employees must want to bargain (s 249(1B)).
An authorisation comes into operation when it is made and ceases at the earlier of the agreement being made or 12 months passing, unless the period is extended (s 249(4) and s 252). The significant consequence is the lock-in: while the authorisation is in operation, an employer specified in it can only make a single interest employer agreement with those employees, and must not initiate bargaining, agree to bargain, or be required to bargain for any other kind of enterprise agreement (s 172(5)). Bargaining that began as a choice becomes compulsory in form.
Supported bargaining authorisations
Supported bargaining is the stream for employers and employees who find bargaining difficult, typically in low-paid sectors. The FWC must make a supported bargaining authorisation if it is satisfied that it is appropriate for the employers and employees to bargain together, having regard to the prevailing pay and conditions in the relevant industry or sector (including whether low rates of pay prevail), whether the employers have clearly identifiable common interests, and whether the likely number of bargaining representatives would still allow a manageable collective bargaining process (s 243). At least some covered employees must be represented by an employee organisation.
The FWC must also make an authorisation where the Minister has declared the industry, occupation or sector, and where a proposed agreement will replace an earlier supported bargaining agreement that has passed its nominal expiry date; in the replacement case the FWC must make the authorisation as quickly as possible (s 243(2A) to (2D)). Once a supported bargaining authorisation is in operation, the same lock-in applies: the employer can only make a supported bargaining agreement with the specified employees (s 172(7)).
Where the streams came from
The three-stream structure arrived with the Fair Work Legislation Amendment (Secure Jobs, Better Pay) Act 2022 (Cth), which received royal assent on 6 December 2022 (Department of Employment and Workplace Relations), with the new bargaining framework operating from 6 June 2023. The reforms were designed to make multi-employer bargaining easier to access, and the practical effect has been to widen the circumstances in which an employer can be drawn into collective bargaining with other businesses. That is why small businesses that never expected to see collective bargaining sometimes now do.
From bargaining to a vote
Once the stream is known, the process runs through a sequence of steps that apply to all enterprise agreements, with extra requirements for multi-enterprise agreements:
- Notice of employee representational rights: Before bargaining starts, each employer must take all reasonable steps to give its employees a notice explaining that they can appoint a bargaining representative (s 173).
- Bargaining: The employers and the bargaining representatives negotiate the terms. In a multi-enterprise context this means coordinating across businesses: consistent positions, agreed bottom lines, and a single agreement text.
- Pre-approval steps: Before asking employees to vote, each employer must give the covered employees a copy of the proposed agreement and any documents incorporated into it, and explain the terms and their effect in a way that takes into account the circumstances and needs of those employees (s 180). There must be an access period of at least 7 clear days before the vote, during which employees can consider the material (FWC, What to give employees during the access period).
- The multi-enterprise extra step: An employer must not ask employees to vote on a proposed multi-enterprise agreement unless every employee organisation that is a bargaining representative has given written agreement to the request, or the FWC has made a voting request order permitting it (s 180A). This gives unions a practical say over the timing of the vote, and it is one of the least expected requirements for businesses new to multi-employer bargaining.
- The vote: An employer must not request the vote until at least 21 days after the last notice of employee representational rights was given (s 181(2)). Employees vote by ballot or electronic method, and the agreement is made if a majority of the employees who cast a valid vote approve it. In a multi-enterprise agreement each employer runs its own vote among its own employees, which means coordinated timelines and communications across the businesses.
An alternative route exists for a genuine new enterprise that the employers are establishing or propose to establish: a greenfields multi-enterprise agreement made with one or more relevant employee organisations rather than with employees (s 172(3)(b)).
Approval by the Fair Work Commission
The FWC must approve the agreement before it operates, and approval is not automatic. Under s 186 the FWC must be satisfied of a series of requirements:
- the agreement was genuinely agreed to by the employees. This is assessed by whether the employees who voted had a sufficient interest in the terms and were sufficiently representative of the employees the agreement covers, taking into account a Statement of Principles made by the FWC (s 188). Minor procedural or technical errors can be disregarded if the employees were not likely to have been disadvantaged;
- for a multi-enterprise agreement, that it was genuinely agreed to by each employer, and that no person coerced, or threatened to coerce, any employer into making the agreement (s 186(2)(b));
- that the terms do not exclude the National Employment Standards;
- that the agreement passes the better off overall test (BOOT): each award-covered employee, and each reasonably foreseeable employee, would be better off overall under the agreement than under the relevant modern award (s 193). The assessment is a global one that weighs the terms more beneficial and less beneficial to each employee (s 193A);
- for a cooperative workplace agreement, that at least some covered employees were represented by an employee organisation in the bargaining (s 186(2A));
- that a non-greenfields multi-enterprise agreement does not cover employees in relation to general building and construction work (s 186(2B));
- that the group of employees covered is fairly chosen, that the agreement contains no unlawful terms, that it specifies a nominal expiry date no more than 4 years after approval, and that it includes a term setting out a procedure for settling disputes (s 186(3) to (6)).
If the FWC has a concern, it can accept written undertakings from the employers to address it, so long as accepting the undertaking is not likely to cause financial detriment to any employee or result in substantial changes to the agreement (s 190). Undertakings are common in practice, but they are not a drafting strategy: the FWC must seek the views of the bargaining representatives before accepting one, and an undertaking that changes the deal can reopen negotiations.
Life after approval: expiry, exit and change
An approved agreement operates until it is replaced or terminated. After its nominal expiry date it does not lapse; it continues to apply. The employers, a covered employee or an employee organisation covered by the agreement can apply to the FWC to terminate it once it has passed its nominal expiry date (s 225), but until then it keeps operating.
Since 27 February 2024, an employer covered by a supported bargaining agreement or a single interest employer agreement that has not yet passed its nominal expiry date can transition out and make a single enterprise agreement instead (FWC, Changes to making agreements). The catch is the same one that applies to the vote: the employer needs written agreement from all relevant employee organisations covered by the existing agreement, or a voting request order from the FWC.
There are also ways to change the group mid-life. A cooperative workplace agreement can be varied to add an employer and its employees, with the affected employees voting on the variation and the FWC approving it (s 216C). A multi-enterprise agreement made under the current framework can be varied to remove an employer and its employees, with the consent of the employer and the affected employees and FWC approval (s 216E).
Where it bites: the risks that catch businesses out
The recurring traps fall into six groups:
- The lock-in: Once an authorisation is in operation, the employer cannot bargain for any other kind of agreement with the specified employees. A business that ignored a single interest or supported bargaining application can find itself unable to pursue its own single-enterprise agreement, and the authorisation can run for up to 12 months.
- Structural union involvement: Every pathway requires at least some employees to be represented by an employee organisation, cooperative agreements need union representation at approval, and the unions must consent to the vote or be overridden by a voting request order. Businesses should not plan on a union-free process.
- The BOOT across different employers: One set of terms must pass the better off overall test for every award-covered employee of every employer. If the employers operate under different modern awards, or have different classifications or penalty structures, a term that works for one business can fail for another. The global assessment does not allow the FWC to average the good and bad across employers; each employee must be better off overall.
- Misaligned employers: Wage increases, allowances and flexibility that one business can afford may be unaffordable for another. Differences in payroll systems, cost bases and HR capacity surface quickly when one agreement must be implemented consistently across several businesses.
- Payroll and classification errors: Enterprise agreements carry detailed pay rules, and a multi-enterprise agreement multiplies the points of failure: different payroll platforms, different roster patterns, and managers across different businesses interpreting the same clause differently.
- Escalating disputes: A dispute about one clause at one employer becomes a shared problem for the whole group, because the agreement text is common. Poorly drafted clauses get stress-tested across every workplace covered.
How a lawyer helps
The points at which professional advice earns its keep track the process:
- Before anything is filed: Identify which stream applies or could be triggered, and whether an application for an authorisation is likely from employees or a union. This assessment determines whether bargaining will be voluntary or compulsory, and whether the lock-in will apply.
- During bargaining: Coordinate positions across the employers, manage the representation requirements, and draft the agreement text with the BOOT in mind from the start rather than after the vote.
- Around the vote: Handle the notice, access period and explanation requirements, and apply for, or resist, a voting request order.
- At approval: Respond to the FWC's concerns, negotiate undertakings, and fix defects that would otherwise sink the application.
- After approval: Implement the agreement across payroll and rostering, and plan the exit strategy, whether transition to a single-enterprise agreement, variation, or termination after expiry.
Why the stream question comes first
The whole scheme turns on one question: is this voluntary, or is an authorisation in play? A cooperative workplace agreement leaves the employers in control of pace, scope and timing. An authorisation changes the character of the process: bargaining becomes time-limited, union participation is guaranteed, and the employers lose the ability to walk away or to make a different kind of agreement with the same employees. That is where the value, and the risk, concentrate. An employer that understands its stream before an application lands keeps choices that are expensive to recover later. A lawyer can map the situation in a consultation long before the FWC is involved, and that early read is usually far cheaper than undoing an authorisation.