Enterprise agreements for residential builders: BOOT, FWC approval and agreement types

What it is

An enterprise agreement is a written workplace agreement made under Part 2-4 of the Fair Work Act 2009 (Cth) between an employer and employees, often with one or more unions involved. Once approved by the Fair Work Commission (FWC), it sits in place of the relevant modern award for the employees it covers, while still meeting the safety net of the National Employment Standards.

For residential builders, the most relevant award is usually the Building and Construction General On-site Award 2020, with the Joinery and Building Trades Award 2020 covering off-site joinery and the Clerks Award covering office staff. An enterprise agreement can replace those awards across the business for the employees it covers.

Agreement types

The Fair Work Act, as amended by the Secure Jobs Better Pay Act 2022 and the Closing Loopholes legislation, recognises several enterprise agreement streams.

Single-enterprise agreements

A single-enterprise agreement covers a single employer (or two or more employers carrying on a single enterprise) and the employees of that employer. This is the standard option for a residential builder with one operating entity. The employer initiates bargaining or receives a majority support determination from the FWC, bargains in good faith and puts an agreement to a vote of the affected employees.

Multi-enterprise agreements

A multi-enterprise agreement covers two or more unrelated employers. Since the 2022 and 2023 amendments, the multi-enterprise stream now includes cooperative workplace agreements for employers that voluntarily agree to bargain together, single interest employer agreements where employers are sufficiently common in nature and have at least 20 employees each, and supported bargaining agreements aimed at low-paid sectors.

Residential builders are most likely to encounter single-enterprise agreements. Multi-enterprise streams are unusual in this segment unless a builder is part of a group of common-interest employers and the FWC makes the relevant authorisation.

Greenfields agreements

A greenfields agreement covers a new enterprise that has not yet employed any persons. It is made between the employer and one or more relevant unions. Greenfields agreements are common on large commercial projects and less so on standard residential builds, but residential builders moving into new entities or new business lines should keep them on the radar.

The BOOT

Every enterprise agreement must pass the better off overall test (BOOT) under section 193 of the Fair Work Act. The FWC compares the agreement against the relevant modern award and asks whether each award covered employee, and each reasonably foreseeable employee, would be better off overall under the agreement than under the award.

The BOOT is a global assessment. The FWC weighs more beneficial and less beneficial terms together rather than line by line. Common BOOT pressure points in residential building agreements include hourly base rates, overtime and penalty loadings, allowances (tools, travel, follow the job, multi-storey), redundancy and the treatment of casuals.

Changes commenced in June 2023 give the FWC power to amend an agreement after it is lodged, with the employers consent, if the FWC is not satisfied the agreement passes the BOOT. The FWC can also reconsider an approved agreement where relevant circumstances were not properly considered or where circumstances have materially changed.

Bargaining and good faith

Once bargaining is initiated, the Fair Work Act imposes good faith bargaining obligations on all bargaining representatives under section 228. These include attending meetings, disclosing relevant non-confidential information, responding to proposals in a timely way, giving genuine consideration to proposals and not engaging in capricious or unfair conduct.

A Notice of Employee Representational Rights (NERR) must be given to each employee who will be covered, in the form prescribed by the regulations, within 14 days of the notification time. Failure to give the NERR in the correct form has historically been a frequent reason for agreement rejection at the FWC.

Voting and approval

After bargaining, the employer asks the affected employees to vote on the agreement. The access period is at least 7 calendar days, during which employees must be able to access the agreement and the explanatory material. The vote can be in person, by post or electronically.

If a majority of those who cast a valid vote approve the agreement, the employer applies to the FWC for approval within 14 days of the vote. The FWC checks that the agreement passes the BOOT, was genuinely agreed to by the employees, complied with the pre-approval steps (NERR, access period, explanation of terms), and complies with the NES and the mandatory terms (nominal expiry date up to 4 years, dispute settlement, flexibility, consultation).

Practical playbook for residential builders

Most residential builders run lean on industrial relations capacity. Decide early whether the volume and stability of the workforce justifies the cost of bargaining. If yes, set the BOOT comparator (usually the Building and Construction General On-site Award 2020) before drafting, model rates and allowances against realistic rosters, brief site supervisors and payroll on the operative date, and run the proposed agreement past an industrial lawyer before voting. The cheapest way to fail at the FWC is to skip the BOOT modelling and rely on a generic template.