If you`re in the business world or just interested in labor relations, you may have heard the term “greenfields agreement” thrown around. But what is it, exactly?
Simply put, a greenfields agreement is a type of enterprise agreement made between an employer and an employee organization (typically a union) that covers workers who are to be employed on a new project or at a new site. This can include everything from a brand new factory to a major expansion of an existing business.
Greenfields agreements are named for the idea that they represent a “greenfield” – a piece of undeveloped land or a previously untapped market. They are particularly common in industries such as mining, construction, and infrastructure development, where large-scale projects often require significant numbers of new employees.
One of the key features of a greenfields agreement is that it allows the employer and employee organization to negotiate the terms and conditions of employment from scratch, without being bound by any existing agreements or industrial awards. This can be advantageous for both parties – the employer gains more flexibility in terms of pay rates, working hours, and other employment conditions, while the employee organization has more power to negotiate collective benefits and protections.
In order to be approved by the Fair Work Commission (the Australian industrial relations authority), a greenfields agreement must meet certain requirements. These include:
– A declaration that the agreement will cover new employees working on a specific project or at a specific site
– Consultation with relevant employee organizations during the negotiation process
– A requirement that the agreement will not disadvantage existing employees covered by other agreements or awards
– A no-disadvantage test, which ensures that the agreement provides employees with overall terms and conditions that are no less favorable than the relevant award.
Greenfields agreements can be a powerful tool for employers and employee organizations alike, providing a framework for negotiating fair and flexible employment conditions for workers on new projects. If you`re involved in a new venture or construction project, it`s worth considering whether a greenfields agreement could be the right choice for your organization.