When it comes to hiring employees in Australia, employers have several options in terms of legal agreements. The most common ways to employ staff members are through an enterprise agreement, a common law employment contract, or an award. While all three are valid options for hiring employees, there are significant differences between them that both employers and employees should be aware of.
An enterprise agreement, also known as an enterprise bargaining agreement (EBA), is a legally binding agreement between an employer and its employees, or a group of employees, that sets out terms and conditions of employment. An EBA is generally created through negotiations between an employer and a union or employee bargaining representative. An EBA can cover a wide range of employment matters, including pay rates, working hours, overtime, leave entitlements, and dispute resolution procedures. An EBA is applicable only to the employees covered by the agreement and the employer(s) who signed the agreement.
A common law employment contract, on the other hand, is an agreement between an employer and an individual employee that outlines the terms and conditions of employment. It is a flexible agreement that allows employers and employees to agree on specific terms and conditions, such as salary, annual leave, notice periods, and termination rights. A common law contract can be verbal or written, but it is important to note that a written contract is always advisable, as it can help avoid misunderstandings or disputes in the future.
Lastly, awards are industry or occupation-based minimum standards, which specify the minimum wages and working conditions for employees in a particular industry or occupation. They are created by the Fair Work Commission and are legally binding on employers and employees covered by the award. Awards are generally based on the industry or occupation, the type of work performed, and the level of experience and qualifications of the employee. The conditions set out in an award can include pay rates, working hours, overtime, leave entitlements, and dispute resolution procedures.
It`s worth noting that awards and EBAs can overlap, as EBAs can include conditions that are less favorable than what is offered in the relevant award. In such cases, the EBA will take precedence over the award. In contrast, a common law employment contract must meet or exceed the legal minimums established in the relevant award.
In summary, while all three types of employment agreements are valid options for employers and employees, they have significant differences that should be carefully considered before choosing one. An EBA is a formal agreement between an employer and a group of employees, a common law contract is a flexible agreement between an employer and an individual employee, and awards are minimum standards established by the Fair Work Commission for a particular industry or occupation. Employers should carefully consider the contractual obligations they want to take on, and employees should be aware of their rights and entitlements under the agreement they enter into.