Enterprise agreement changes: what small business owners need to know

Recent changes to the Fair Work Act through the Fair Work Legislation Amendment (Closing Loopholes No. 2) Act 2024 have introduced new requirements for enterprise agreements (EAs), many of which could affect your small business.

These changes, which took effect on 26 February 2025, impact how small businesses manage workplace arrangements, communicate changes, and resolve disputes.

If your business has an enterprise agreement or you are considering negotiating one, these updates will apply to you.

Each EA must now include clauses on flexibility, consultation, and dispute resolution that meet or exceed the new model terms.

What’s changing and how it affects small businesses

1. Flexibility terms and individual flexibility arrangements (IFAs)

An individual flexibility arrangement (IFA) is a written agreement between an employer and an employee to modify certain terms of an award or agreement to better suit both parties.

Previous requirements:

• Minimal documentation needed
• No obligation to explain the arrangement to employees
• No requirement for formal meetings
• Limited rules on termination procedures

New requirements:

• Employers must provide written IFA proposals
• Employers must take reasonable steps to ensure employees understand the proposal
• Employees can request a meeting to discuss an IFA proposal
• IFAs must clearly outline termination procedures
• Employers must show that the arrangement genuinely benefits the employee, not just the business

2. Workplace change consultation

Consultation rules for major workplace changes have been updated for employees under enterprise agreements.

Previous requirements:

• Consultation could begin after decisions were finalised
• Limited need to justify changes
• No obligation to document consultation outcomes
• Narrower definition of “significant impact”

New requirements:

• Employees must be involved earlier in decision-making
• Employers must provide detailed justifications for changes
• Employers must document and communicate consultation outcomes
• “Significant impact” now includes changes that reduce job security

3. Dispute resolution

Previous requirements:

• Unions had to be formally covered by an EA to represent employees
• The Fair Work Commission (FWC) only intervened after internal dispute processes were completed
• A less structured approach to handling disputes

New requirements:

• Employee unions can now represent workers even without formal EA coverage
• The FWC may intervene before internal dispute processes are completed
• Employers must have a more structured dispute resolution framework

What small businesses need to do now

1. Review and update documentation

• Compare your current EA with the new model terms
• Update IFA templates to include all required elements
• Create clear documentation for consultation processes

2. Revise your processes

• Establish formal procedures for flexibility arrangements
• Set up a structured consultation process for workplace changes
• Develop a comprehensive dispute resolution framework

3. Train your management team

• Ensure managers understand the new requirements
• Provide guidelines for documenting consultations and decisions
• Set up clear procedures for union involvement in disputes

4. Communicate with your employees

• Inform staff about workplace process changes
• Explain new consultation opportunities
• Clarify the updated dispute resolution process

Need more info on this and other small business compliance issues? Check out COSBOA’s small business peak workplace relations initiative.

Want more? Get our newsletter delivered straight to your inbox! Follow Kochie’s Business Builders on Facebook, X, Instagram, and LinkedIn.