Last week, the Federal Government tabled the Fair Work Legislation Amendment (Secure Jobs, Better Pay) Bill 2022, which if passed through the Senate will significantly change the Fair Work Act. In this update, we highlight the key changes that have been proposed.
Many of the changes go well beyond the outcomes suggested at the Government’s Jobs Summit in September.
While some of the changes are controversial, others are practical improvements that will be welcomed by employers.
Overhaul of Enterprise Bargaining
The Federal Government has proposed extensive amendments to the Fair Work Act’s procedures relating to enterprise agreements. These include:
- Simplifying pre-approval requirements for agreements. The current Fair Work Act requires employers to take many technical procedural steps prior to an agreement being approved, and a failure to do so can invalidate an agreement. The Bill intends to remove most of these technical obligations. For example, the obligation for an employer to provide all employees with access to a proposed agreement for 7 days prior to voting will be removed. Instead, the Fair Work Commission must merely be satisfied that an agreement was “genuinely” agreed to by employees.
- Modifying the “Better Off Overall Test”. Instead of requiring the sometimes painstaking comparison of each provision of a proposed agreement and applicable modern award, the BOOT will be applied in a holistic way, with the Commission undertaking a “global assessment” of both instruments. The Commission must also give particular weight to the parties’ views on whether the agreement passes the BOOT. However a proposed change that is likely to cause concern and uncertainty for employers, is a reconsideration process that while an agreement is in operation would allow employees or Unions to seek a reassessment of the BOOT in certain circumstances. This may include where there has been a material change in working arrangements, or where the relevant circumstances were not properly considered during the approval process.
- Enhancing the Commission’s ability to intervene and arbitrate in bargaining disputes, with the power to make a range of orders including determinations to resolve any matters on which agreement had not been reached by the parties.
- One of the more controversial changes are the proposed amendments relating to making multi-enterprise agreements (to be called “cooperative workplace agreements”). The concern is that many small and medium sized businesses that have not traditionally had enterprise agreements, or Union coverage, will be caught up in these agreements – and the potential industrial action in support of them. The Federal Government is already making some concessions to the original bill, that will require that a majority of employees within each workplace would need to vote in support of multi-employer bargaining before they become part of it.
- Enhancing the Commission’s ability to modify agreements to correct obvious errors, such as typographical errors as opposed to requesting undertakings from the employer.
- Restricting the circumstances in which the Commission can terminate agreements after the nominal expiry date has passed by unilateral application of a party. This change is also controversial as it will prevent employers from applying to terminate an expired agreement that contains terms that may no longer be economically or commercially viable, and will mean it is unlikely that Unions would agree to make concessions in future bargaining, if the previous expired agreement continues to operate.
- Providing for the automatic sunsetting of “zombie agreements” which are agreements that pre-date the Fair Work Act, but continue to apply. This means that any zombie agreements will automatically terminate within 12 months of the commencement of the legislation. For employers who still operate under these older expired agreements, they will then become bound by the terms of applicable awards.
Expanded Flexible Work obligations
The Bill seeks to expand the circumstances in which an employee can request flexible work arrangements, beyond those already contained in the National Employment Standards. This includes enabling employees to make such a request where they have experienced family and domestic violence (which will have an expanded definition).
Employers will also have greater obligations to consider flexible work requests, requiring them to discuss the request with the employee and provide written reasons for a refusal, which is similar to the procedure already contained within modern awards.
The more controversial aspect of the proposed changes is that the Fair Work Commission will be given the power to resolve any disputes, including through mandatory arbitration, a power that does not currently exist for requests made under the National Employment Standards. With this change, employers refusing to agree to requests for flexibility arrangements will need sound reasons to do so – for many roles where employees could work from home during lockdowns this may be difficult.
Prohibition of Pay Secrecy Clauses
While many employment contracts dictate that employees are required to keep information about their remuneration confidential, this is set to change. The Bill proposes to grant employees the right to disclose information about their pay and employment conditions to any other person, including fellow employees, and will enable employees to ask other employees about their pay and conditions too. Employers will also be expressly prohibited from inserting pay secrecy clauses into employment contracts and fair work instruments and any such clauses would have no effect, as well as potentially attracting civil penalties for contraventions of the prohibition. While the underlying objective of this is to address gender pay equity issues, it may have unintended consequences of creating disharmony in many workplaces.
Limits to Fixed Term Contracts
The Bill will prohibit employers from engaging employees on fixed term contracts with a period of two or more years (including extensions) or prevent multiple extensions.. This would include maximum term contracts or outer limit contracts. However, some exceptions will apply, including where the employee is engaged under a training arrangement (for example, an apprentice or a trainee), and where the employee’s earnings exceed the high-income threshold.
The Bill will also introduce a new Fixed Term Contract Information Statement which will need to be provided to an employee when entering into a fixed term contract. The Commission will have the power to deal with disputes about an employee’s status as a fixed term employee.
These types of contracts are used to provide many employers with workforce flexibility, but are disliked by Unions, who consider fixed term employees are less likely to become members.
Changes to Sexual Harassment in the Fair Work system
The Fair Work Act is also set to be amended to include an explicit prohibition on sexual harassment, as recommended in the Respect@Work Report, which is largely consistent with the existing prohibitions under federal sex discrimination legislation. Further, the Commission’s jurisdiction to deal with sexual harassment disputes will be expanded, enabling it to deal with disputes under similar dispute resolution frameworks as general protections dismissal disputes and provides applicants with the opportunity to commence Court proceedings if the matter is not resolved at the Commission. If the parties consent to the Commission arbitrating the dispute, the Bill proposes that the Commission will be able to make a range of orders, including orders for compensation.
Takeaways for Employers
Although the Secure Jobs, Better Pay Bill is likely to be amended through the Senate, it is likely that most of these changes will be passed. We will provide updates as the Bill progresses through Parliament. In the meantime, if you have any questions about the Bill and how its proposed amendments may affect your business, do not hesitate to contact HR Legal.
Other updates – 10 days paid Family and domestic violence leave
Separate to the Bill, on 27 October, the legislation introducing a new National Employment Standard for 10 days paid family and domestic violence leave per year for all employees passed through Parliament.
This replaces the current entitlement to 5 days’ unpaid family and domestic violence leave and provides some improvements to the existing unpaid entitlement. This includes broadening the definition of family and domestic violence to include conduct of a current or former intimate partner or a member of the employee’s household and making the new entitlement available to casual employees who don’t normally get paid leave.
The new entitlement will take effect for most employers from 1 February 2023.
Our previous article (available here) summarised the details of the new entitlement, which remain largely unchanged from what was initially proposed.
Employers who wish to understand their new obligations as well as how to effectively support employees experiencing family and domestic violence can contact HR Legal.