Which type of enterprise agreement fits your business

The moment the decision shows up

The trigger is usually the same. Your team has grown past a handful of employees, rosters are getting complicated, payroll is eating more time than it should, and someone has suggested an enterprise agreement as the way to simplify things. Or you are tendering for work where clients expect consistent conditions, or you are about to hire for a new project and want wage certainty locked in before you start.

That is the moment a choice appears that will shape your wage costs and workplace rules for years. This guide sets out the types of enterprise agreements available under Australian law, the questions that actually decide which one fits, and where the process commonly goes wrong.

The options, and the question underneath them

Enterprise agreements are made under Part 2-4 of the Fair Work Act 2009 (Cth) (the Act) and must be approved by the Fair Work Commission before they can operate. There are three types under s 172 of the Act:

Single-enterprise agreements: made between one employer, or employers that are related to each other, and the employees who will be covered.
Multi-enterprise agreements: made between two or more employers that are not all related, and their employees.
Greenfields agreements: a single- or multi-enterprise agreement made with employee organisations for a genuinely new enterprise, before any employees are hired.

Most small and medium businesses assume the question is which type to pick. In practice the first question is narrower: do we need an enterprise agreement at all, or does award compliance plus well-drafted contracts get us most of the way? The second question is which type, and for most businesses the honest answer is a single-enterprise agreement or none at all.

Two options look available but usually are not. Greenfields agreements are only available for a genuine new enterprise where the employer has not yet employed any of the people the agreement will cover, so an established business hiring into a new team generally cannot use one. And a multi-enterprise agreement means bargaining alongside other employers whose priorities are not yours, which is why the Act restricts when these agreements can be made and how they are approved.

Factor 1: Whether you need an agreement at all

An enterprise agreement sits on top of the National Employment Standards and replaces the relevant modern award for the employees it covers while it operates, as long as it passes the legal tests. That is the whole appeal: a single document setting out your rates, rosters, penalties and processes, tailored to how your business actually runs.

But the same features are the cost. Bargaining, drafting, employee voting and Commission approval take time and money, and the agreement then has to be administered and kept compliant for its life. For many businesses the same outcome is available more cheaply by staying on the award, getting classifications right, and writing clear employment contracts and policies.

Signs an enterprise agreement might genuinely be worth it:

Complex rosters and penalties: your rostering patterns and penalty structures are complicated enough that award interpretation keeps coming up.
Consistency across sites: you run multiple sites or departments and want the same conditions everywhere.
Above-award arrangements: you already pay above the award and want to formalise trade-offs in a way the award does not allow.
Tendering: a contract or framework you are bidding for expects a particular agreement structure.

If none of those apply, the cheaper and lower-risk move is usually to fix award compliance first and revisit the question when the business grows.

Factor 2: The shape of your workforce and operations

If you do move, a single-enterprise agreement is the default for one business because it is built around your operations alone. You can design terms around your actual roster patterns, your trading hours, and your peak and quiet periods, and lock in conditions that are already working well.

There are limits on the shape of the deal. An enterprise agreement cannot be made with a single employee, so a one-person workforce does not qualify. And if the agreement does not cover all of your employees, the Fair Work Commission must be satisfied that the group covered was fairly chosen, taking into account whether it is geographically, operationally or organisationally distinct (s 186(3) and (3A) of the Act). A group carved out to dodge obligations will not pass that test.

Related employers can make a single-enterprise agreement together, which matters if you operate through a group of companies, a joint venture, or a franchise network (s 172(5A)). But if the employers are not related, the only route to a shared agreement is the multi-enterprise path, which brings other people into your bargaining.

Factor 3: Who you would be bargaining with

This is the factor that most changes the feel of the project, because each type brings different people to the table:

Single-enterprise: you bargain with your own employees, and any union that chooses to be involved. You control the process and the pace.
Multi-enterprise: you bargain alongside other employers. There are three pathways in the Act, and each changes who you deal with:
- Cooperative workplace agreements: where employers choose to bargain together. If the agreement is not a greenfields agreement, the Commission must be satisfied that at least some of the employees covered were represented by an employee organisation in the bargaining (s 186(2A)).
- Supported bargaining: where the Commission makes a supported bargaining authorisation after considering the prevailing pay and conditions in the industry, including whether low rates of pay prevail, and whether the employers have clearly identifiable common interests (s 243). At least some of the employees must be represented by an employee organisation.
- Single interest employer agreements: where employers with common interests are specified in a single interest employer authorisation. Franchisees of the same franchisor are a common example, and once an employer is in an authorisation, the only enterprise agreement it can make with those employees is a single interest employer agreement (s 172(5)).
Greenfields: you bargain with the employee organisations that will represent the future workforce. There are no employees to vote, so the agreement is made by signature instead.
Option A (single-enterprise): full control over the process, terms tailored to your business, and your own employees vote on the outcome.
Option B (multi-enterprise): shared terms across businesses, but union representation requirements, a Commission pathway to enter, and reduced freedom to change conditions later.

Multi-enterprise agreements that are not greenfields also cannot cover employees doing general building and construction work (s 186(2B)), so that pathway is closed for construction businesses.

Factor 4: The safety net you cannot trade away

An enterprise agreement does not let you set terms below the National Employment Standards, which cannot be excluded (s 55). On top of that, every agreement covering award-covered employees must pass the better off overall test (BOOT) in s 193 of the Act.

BOOT is a package test. The Commission must be satisfied that each award-covered employee, and each reasonably foreseeable employee, would be better off overall under the agreement than under the relevant modern award. It is not a line-by-line comparison: a term that is worse than the award can be offset by terms that are better, as long as the overall package leaves employees better off. For greenfields agreements the test is applied to the reasonably foreseeable employees the agreement will cover.

There is also a floor under the base rate itself. Even apart from BOOT, the base rate of pay under an enterprise agreement must not be less than the rate that would apply under the modern award or the national minimum wage, and the agreement operates as if it matched that rate (s 206).

This is where most drafts fail. If the Commission has a concern that the agreement does not meet the approval requirements, it may still approve the agreement with written undertakings from the employer, provided the undertakings do not cause financial detriment to employees or substantially change the agreement (s 190). Otherwise the application fails, and the time and cost of the bargaining process is lost.

Option A (simpler penalties, higher base rate): a common trade-off. It can pass BOOT if the package is genuinely better overall, but it needs careful modelling of every classification and roster pattern.
Option B (award-plus): each term at or above the award. Easier to pass, but it buys less flexibility, so the administrative payoff is smaller.

Factor 5: The approval process, and what it takes to get there

Approval is a statutory process, and most of the steps are prescribed. For a non-greenfields agreement:

The employer must take all reasonable steps to give employees a notice of employee representational rights (s 173).
Employees cannot be asked to vote until at least 21 days after the last notice is given (s 181(2)).
The employer must take all reasonable steps to ensure the terms of the agreement are explained to employees before the vote (s 180(5)).
The agreement is made when a majority of the employees who cast a valid vote approve it (s 182(1)).
An application for approval goes to the Fair Work Commission (s 185), which must be satisfied of the requirements in s 186: genuine agreement, no exclusion of the National Employment Standards, the better off overall test, a fairly chosen group, no unlawful terms, a dispute resolution procedure, and a nominal expiry date no more than 4 years after approval.

Once approved, the agreement operates from 7 days after approval, or a later date if the agreement says so (s 54). It keeps operating after its nominal expiry date until it is replaced or terminated, so an expired agreement does not simply lapse.

Multi-enterprise agreements have an extra wrinkle: the agreement is made when a majority of the employees of at least one of the employers approve it, and it is then varied to cover only the employers whose employees voted yes (s 182(2) and s 184). Greenfields agreements skip the vote entirely; they are made when signed by each employer and each relevant employee organisation (s 182(3)).

Factor 6: Cost, administration and the years after approval

Approval is not the end of the work. Once an agreement operates, your payroll system has to apply its rates, penalties and allowances correctly, classifications have to match the agreement's coverage, and new starters have to be brought in under the right terms. Disputes run through the agreement's dispute resolution procedure, and variations and terminations have their own approval requirements.

There is also a date in the calendar you should plan around: the nominal expiry date, which cannot be more than 4 years after approval. Replacing or terminating an agreement brings you back to bargaining, so the decision you make now includes a decision about the negotiation you will run again in a few years' time.

How an employment lawyer helps you make the call

The point where most businesses waste money is not the drafting. It is the decision made before drafting: whether an agreement is worth having at all, and which type and pathway the business actually qualifies for. A lawyer can stress-test that logic before you commit.

An Artificer Legal employment lawyer would start by mapping your workforce against the relevant modern award, so the baseline for the better off overall test is clear before a word of the agreement is written. From there they can model the trade-offs you are considering, confirm which type of agreement and which bargaining pathway applies to your situation, and draft an agreement that matches how the business actually runs. When the vote and the Commission application happen, they can manage the process, respond to concerns with undertakings where that is the right fix, and set up the payroll and compliance work that follows approval. Getting that advice before you circulate a draft is far cheaper than reworking an agreement after employees have already voted on it.

The award stays the benchmark, whatever you choose

The mistake that costs the most is treating an enterprise agreement as a way to get out from under the award. The modern award is not something an agreement replaces into irrelevance. It is the benchmark the better off overall test is measured against, and the safety net the agreement must sit above. An agreement is a trade-off exercise, not an escape hatch, and the businesses that come out ahead are the ones that understood their award position first and designed the agreement as a deliberate package on top of it.

If you are weighing up an enterprise agreement, start by getting your award compliance and classifications in order, then test whether an agreement genuinely improves your position. For most small businesses the realistic options are a single-enterprise agreement built around your own operations, or no agreement at all, with multi-enterprise and greenfields paths reserved for shared-interest groups and brand-new enterprises. Wherever you land, the process is prescribed and unforgiving of shortcuts, so the questions that matter are the ones to answer before you start bargaining, not after.