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Enterprise agreements

Employees of a business may derive their entitlements from an enterprise agreement, which has been lodged with, and approved by, the Fair Work Commission1. Where an enterprise agreement exists, employee entitlements come from the enterprise agreement and the modern award does not apply. However, the ordinary hourly base rate of pay cannot be less than the modern award rate, and the National Employment Standards also apply2.

During the Inquiry it was identified that 20 of the businesses audited (42%) derived their employee entitlements from an enterprise agreement rather than the Security Award. Of the 21 agreements in place (one business had two agreements for different types of security employees), nine (43%) were negotiated in conjunction with one of the relevant employee associations.

Depending on when an enterprise agreement was lodged, there were various assessments that it may have undergone prior to approval. The table below details the history of the enterprise agreement approval process for those businesses subject to the Inquiry:

Table 1. History of the enterprise agreement approval process for those businesses subject to the Inquiry
Timeframe when agreement was lodged/approved # of Inquiry agreements lodged during this time Assessment agreement was subject to at time of lodgement Organisation that assessed and/or approved the agreement
Up to 26 March 2006 1 No Disadvantage Test Australian Industrial Relations Commission or relevant state industrial relations department
27 March 2006 (Workchoices) to 6 May 2007 3 No Assessment - agreement applied on lodgement exactly as written Office of the Employment Advocate
7 May 2007 to 27 March 2008 3 Fairness Test Workplace Authority
28 March 2008 to 30 June 2009 (Forward with Fairness) 3 No Disadvantage Test
1 July 2009 (Fair Work Act) - No Disadvantage Test
1 January 2010  1 Better Off Overall Test Fair Work Australia
 1 January 2013 10 Better Off Overall Test Fair Work Commission

Once an agreement is approved it continues to apply until terminated or replaced, with agreements made prior to 1 January 2010 (pre-Fair Work Agreement) potentially providing entitlements lower than the modern award as they were assessed under previous legislation. Such agreements must provide at least the base ordinary hourly rate of pay from the modern award, but do not have to match the various penalty rates such as weekend, public holiday, overtime, and night shift. In this Inquiry, the FWO found that four of the 21 agreements (19%) were approved prior 7 May 2007, and were therefore not subject to assessment against the full award entitlements (compared to the remaining 81% which were compared to the relevant awards before approval).

Case study of a pre-Fair Work Agreement

One of the audited businesses, Securecorp VIC Pty Ltd [SCV] contracted directly to Melbourne City Council (MCC). The inspector conducting the audit identified that SCV pays their security employees under the Securecorp (VIC) Workplace Agreement 2007 [the SCV Agreement]. The legal rates SCV had to pay at the time of the Inquiry under the SCV Agreement were as follows:

SCV Agreement rates per hour:

  • Security Officer Level 1, ordinary hours $19.42
  • Security Officer Level 1, Saturday $21.27
  • Security Officer Level 1, Sunday $21.27
  • Security Officer Level 1, Public Holiday $27
  • Security Officer Level 1, Night Shift $19.42

The Inquiry found that SCV was fully compliant with the FW Act and the SCV Agreement, and paid their employees correctly. SCV’s subcontractors Global Manpower Solutions Pty Ltd [GMS] and ACS Services Pty Ltd [ACS], who were engaged and paid by SCV to assist in providing security services to MCC, were required to pay their security employees the legal rates specified in the Security Award:

  • SCV Agreement rates per hour:
  • Security Officer Level 1, ordinary hours $19.42
  • Security Officer Level 1, Saturday $29.13
  • Security Officer Level 1, Sunday $38.84
  • Security Officer Level 1, Public Holiday $48.55
  • Security Officer Level 1, night shift $23.63

The inspectors conducting the audits of GMS and ACS found that they had both underpaid their employees. Both businesses fully cooperated with the FWO and rectified the underpayments, and have committed to continuing to pay correct entitlements.

This MCC supply chain demonstrates that a contractor with an older agreement may have a financial advantage when tendering for a contract, however if they then subcontract to businesses who pay under a modern award, there may not be enough money to pay the total cost of workers and for businesses to make a profit further down the supply chain. 


  1. Making an agreement page on the Fair Work Commission website external-icon.png
  2. Agreements page