The Federal Government has now passed the Fair Work Legislation Amendment (Secure Jobs, Better Pay) Bill 2022 after substantial negotiations in the Senate, with the legislation receiving Royal Assent last week. The Government also recently passed the Anti-Discrimination and Human Rights Legislation Amendment (Respect at Work) Bill 2022 (Cth). These two new pieces of legislation will make significant changes to the Fair Work Act 2009 (Cth) and the industrial relations landscape more broadly.
Our previous article (available here) deals with the details of the Secure Jobs, Better Pay Bill in depth which remain largely unchanged.
This update will highlight some of the main amendments that were made to the Secure Jobs, Better Pay Bill in Parliament since it was initially introduced and explore what this means for employers.
Multi Enterprise Bargaining
After negotiations in the Senate, the Government made a significant number of changes to the bill, many of which related to the multi-enterprise bargaining provisions.
Single Interest Bargaining
The Government has now agreed to exclude employers with fewer than 20 employees from the single-interest, multi enterprise bargaining stream. This is up from the previously proposed threshold of 15 employees. Changes also included adding an additional requirement to the stream that the operations and business activities of the employers must be ‘reasonably comparable’.
In addition, unions will have the onus of proving why an employer with fewer than 50 employees should be covered by such agreements. However, employers with 50 or more employees have the onus of establishing that single interest bargaining is not a common interest employer or that its operations and business activities are not reasonably comparable with other employers in the stream.
These changes are significant as they reduce the obligations for small and medium sized employers or employers with existing enterprise agreements to participate in single interest bargaining. Although, the obligations on employers with more than 50 employees remain high.
These changes will come into effect on 6 June 2023 (or earlier date if declared).
Supported Bargaining Agreements
The Minister for Employment and Workplace Relations can now make a declaration to facilitate entry of a particular industry, occupation or sector into the ‘supported’ bargaining system. The supported bargaining system differs from the single interest system because it is targeted towards workers in low-paid industries.
These changes will come into effect on 6 June 2023 (or earlier date if declared).
Other Changes to Bargaining
Further amendments to the Bill will:
- Require the Commission to consider the significance to the employers and employees covered by a workplace determination when deciding which terms to include in a workplace determination. These types of orders essentially provide the Commission with arbitration power that allows the Commission to impose an outcome on bargaining parties about enterprise agreement content;
- Allow the Commission to compel a multi-employer agreement to be put to a vote in certain circumstances, including if a union unreasonably fails to provide their written agreement;
- Exclude work in the civil construction sector (as part of the “general building and construction” exclusion) from multi-enterprise bargaining;
- Authorise the Commission to have regard to ‘reasonably foreseeable employees’, to decide whether certain working arrangements are reasonably foreseeable and retrospectively amend an agreement if there is a concern that it does not pass the BOOT as part of the new reconsideration process; and
- Give the Commission discretion to refuse an application from an employee bargaining representative to add a new employer to a single interest employer agreement in certain circumstances, including where the Commission believes the parties are bargaining in good faith and less than 9 months have passed since the most recent nominal expiry date.
Further Amendments to the Bill
Further amendments to the Bill will:
- Expand the circumstances in which an employee can request flexible working arrangements, including where an employee is pregnant;
- Clarify the methods to be used by the Commission to resolve a dispute about a flexible working arrangement and the types of orders the Commission can make when an employer does not adequately respond to a flexible working arrangement request; and
- Make technical amendments in relation to paid family and domestic violence leave to include requirements about how the leave is to be recorded on an employee’s payslip.
Most of the other issues covered by the Act remain largely unchanged since the Bill was initially proposed. This includes provisions that:
- Limit fixed term contracts;
- Prohibit pay secrecy clauses;
- Automatically sunset zombie agreements;
- Expand flexible work and unpaid parental leave obligations.
We discuss the implications of some of these key amendments in further detail below.
Limiting the use of fixed term contracts
The Act aims to reduce the use of fixed-term contracts and ensure more employees are in permanent employment.
The Act now prohibits the use of fixed term contracts for the same role beyond two years (including extensions) or two consecutive contracts – whichever is shorter. There will be some important exceptions to this rule, including where the employee is an apprentice, trainee or engaging in seasonal type work, or if the employee’s earnings exceed the high income threshold. The new provisions will also contain anti-avoidance measures, which will seek to prevent an employer from taking steps to avoid the rights or prohibitions on the use of fixed term contracts.
Fixed term contracts which exceed the two-year threshold in breach of the new rule will still be valid. However, the term in the contract that provides for the contract expiry date will be deemed invalid and the employee will be considered an ongoing employee.
These employees will also be entitled to relevant safety net provisions either through the National Employment Standards or relevant industrial instrument (e.g. notice of termination and redundancy payments) and access to unfair dismissal proceedings.
The Act will introduce additional obligations on employers to provide a new Fixed Term Contract Information Statement to any employee that enters into a fixed term contract. Failure to provide this Statement may result in the employer incurring a civil penalty.
Where employees and employers have a dispute about a fixed term contract that cannot be resolved at the workplace level, the Commission has the power to resolve them via conciliation, mediation or consent arbitration. In addition, the Federal Circuit and Family Court of Australia and Magistrates Courts can deal with disputes.
These changes will take effect from 6 December 2023 (or earlier date if declared). However, the prohibitions will only apply to new contracts entered into on or after 7 December 2023 but any contract that was in place prior to this date will be counted towards the limits. For example, if an employer enters into a new contract with an employee after 7 December 2022, that contract will count towards assessing if there have been more than two contracts.
Prohibiting pay secrecy clauses in contracts
Employment contracts often contain provisions that require employees to keep their remuneration confidential. The Act now prohibits employment contracts from containing pay secrecy clauses that limit an employee’s right to discuss their remuneration with others. This will apply to new employment contracts entered into after 7 December 2022 but pay secrecy terms in current contracts will continue to operate (until varied or replaced). Current contracts which do not contain pay secrecy terms are not affected, with the right coming into effect immediately.
Employees will now have a workplace right to disclose their remuneration or ask other people about their remuneration. Any new contract terms which limit the right of employees to disclose their remuneration will not have any effect from 7 December 2022. Employers may be liable for a civil penalty if they have contracts with terms that limit this new workplace right.
These changes came into effect immediately, from 7 December 2022. However, the penalties associated with the pay secrecy prohibitions will be effective from 7 June 2023 (including in relation to new contracts entered into after 7 December 2022).
Sunsetting of ‘Zombie’ Agreements
The Act will automatically end ‘zombie’ agreements which existed before the Fair Work Act and Fair Work Act bridging period (generally speaking, this includes agreements made prior to 31 December 2009). In some circumstances, it may be possible to apply for the sunset period to be extended by application to the Commission.
‘Zombie’ Agreements will automatically end on 6 December 2023. For employers with zombie agreements, there is an obligation to notify employees of certain matters relating to the agreement by 6 June 2023.
After a zombie agreement has ceased to operate, minimum pay and conditions will typically be set by the relevant modern award, unless a new enterprise agreement is negotiated.
Flexible work arrangements
The Act changes the rules concerning flexible work arrangement requests and enables the Fair Work Commission to resolve disputes regarding requests.
There are now more circumstances where an employee has a right to request flexible work arrangements. For instance, an employee may request flexible work arrangements if they are pregnant. This is in addition to changes initially proposed by the Bill to enable an employee to make a request if they or a member of their immediate family or household experiences family and domestic violence (which will have an expanded definition).
The Act establishes a dispute resolution process which employees can pursue if their flexible work arrangement request is denied. The amendments have clarified that the Commission must first attempt to resolve a dispute about a flexible working arrangement by methods other than arbitration (e.g. conciliation or mediation), unless there are exceptional circumstances.
The amendments also clarify that the Commission would be enabled to make an order that the employer take further steps as considered appropriate by the Commission, in circumstances where the Commission is satisfied the employer has not responded adequately to the employee’s request.
The Act also places more obligations on employers who receive requests for an extension of unpaid parental leave, which is a right that already exists for eligible employees.
These changes will come into effect on 6 June 2023.
Other Updates
Separate to the Secure Jobs, Better Pay Bill, the Respect@Work Bill was also recently passed by Parliament. The Respect@Work Bill will make a number of amendments to the Fair Work Act. Importantly, it will introduce a duty on employers to take reasonable and proportionate measures to prevent sex discrimination, harassment, and victimisation in the workplace. It will also prohibit conduct which creates a sexually hostile work environment. The Australian Human Rights Commission will be given powers to investigate systemic unlawful discrimination and enforce the positive duty.
What next?
Taken cumulatively, the Secure Jobs, Better Pay Act and the Respect@Work Act will make significant changes to the Fair Work Act. While many of the changes introduced by the Secure Jobs, Better Pay Bill have come into effect as at 7 December 2022, there will be a phased introduction of other changes throughout 2023.
In the interim, relevant employers should consider the impact that the sunsetting of Zombie Agreements will have on their business and whether the changes to the operation of fixed term contracts requires changes to current employee contracts or reconsideration as to how new employees will be hired. Employers should also review existing processes for responding to flexible work and unpaid parental leave extension requests, ensure they have effective controls in place to prohibit and prevent sexual harassment in the workplace and remove pay secrecy provisions from new contracts of employment.
In the New Year, HR Legal will also conduct webinars to explore the new changes in more detail. Until then, if employers wish to further understand their new obligations, they should contact HR Legal.
