The Fair Work Legislation (Secure Jobs, Better Pay) Amendment Act 2022 (Cth) (‘the Act’) received royal assent on 6 December 2022. The Act amends the Fair Work Act 2009 (Cth) (‘FW Act’) and represents the largest industrial relations reform since commencement of the FW Act, with some changes already taking effect. The changes seek to enhance job security and promote gender equality in the Australian labour market and also expand the multi-enterprise bargaining system. Changes to the enterprise bargaining system will require employers to adopt new strategies to ensure industrial outcomes are tailored to their operations. Overall, the amendments will affect employees and employers across a range of industries. In this Insights article we break down the changes and how they impact both employers and employees.
Job Security
Objects of the Fair Work Act
The objects of the FW Act have been expanded to include:
promoting job security; and
promoting gender equality.
Resultingly, the Fair Work Commission (FWC) will need to consider these new objectives alongside the National Employment Standards when it determines minimum terms and conditions in Modern Awards. Consideration will also need to be given to the new objects when interpreting and applying the FW Act.
These changes came into effect on 7 December 2022.
Prohibiting Pay Secrecy – Disclosing Pay and Workplace Conditions
Employees can now disclose the following:
the employee’s remuneration; and
any terms and conditions of the employee’s employment that are reasonably necessary to determine remuneration outcomes.
Employees are now also entitled to:
ask any other employee about the employee’s remuneration; and
terms and conditions of employment necessary to determine remuneration.
These changes prohibit secrecy about employee’s pay and improves transparency. These new entitlements are enshrined as ‘rights’ and where exercised, the employee is protected from adverse action.
These entitlements apply irrespective of any pay secrecy clauses that might be contained in employment agreements as well as any terms or directions designed to stop employees discussing or revealing their pay and conditions or making wage comparisons with others undertaking work of equal or comparable value. Providing the opportunity for employees to understand and gather more information about their remuneration aims to reduce discrimination and narrow the gender pay gap.
These changes came into effect on 7 December 2022.
Prohibiting Pay Secrecy – Pay Secrecy Terms
Pay secrecy terms inconsistent with the new workplace right to disclose pay terms described above can’t be included in employment contracts or other written agreements entered into on or after 7 December 2022.
The effect of these changes is that any terms of a fair work instrument or contract of employment has no effect to the extent that the term would be inconsistent with the right to disclose or enquire about an employee’s remuneration.
The Fair Work Ombudsmen (FWO) has the power to commence court proceedings against employers for alleged breaches of this new prohibition and employer could face penalties in findings of breach.
These changes came into effect on 7 December 2022.
Job Ads
Job advertisements can’t include pay rates that breach:
the FW Act, or
a fair work instrument.
The effect is that job ads can’t include pay rates that undercut employee’s minimum entitlements. The FWO has the power to commence court proceedings against employers for alleged breaches of these provisions.
These changes came into effect on 7 December 2022.
Flexible Work
The FW Act has been amended so that employees have a right to request flexible working arrangement which also apply to:
employees, or a member of their immediate family or household, experiencing family and domestic violence; and
employees who are pregnant.
The changes have expanded the scope for employees to request flexible working arrangements. Before an employer can refuse a request for flexible working arrangements, there are new obligations to do the following:
discuss the request with the employee;
make a genuine effort to find alternative arrangements to accommodate the employee’s circumstances;
consider the consequences for refusal for the employee; and
provide a written response that includes an explanation of the reasonable grounds for refusing the request and how those grounds apply as well as other changes the employer is willing to make that would accommodate the employee’s circumstances.
The FWC will have arbitration powers to deal with disputes.
These changes come into effect on 6 June 2023.
Fixed Term Contracts
The amendments to the FW Act concerning certain fixed term contracts are designed to reduce certain types of “insecure” work or instances of exploitation through the use of fixed term contracts in certain situations.
Employers can no longer employ an employee on a fixed term contract that:
is for 2 or more years in duration (including extensions);
can be extended more than once; and
is a new contract that is for the same or substantially similar role as previous contracts or with substantial continuity of the employment relationship.
Employers will also need to give employees on fixed term contracts a Fixed Term Contract Information Sheet. The FWO will have the power to commence proceedings for alleged breaches of these provisions.
These changes come into effect on 6 December 2023.
Gender Equality Measures
Equal Remuneration
The FW Act has been amended to expand the scope of the FWC to make equal remuneration orders under a new equal renumeration principle to tackle low pay in female dominated industries. The FWC can now make an equal remuneration order on its own initiative as well on application. On application, the FWC:
can consider comparisons between occupations and industries;
isn’t limited to comparing similar work;
can consider whether historically the work has been undervalued because of assumptions based on gender;
doesn’t need a male comparator; and
isn’t required to find discrimination based on gender.
These changes came into effect on 7 December 2022.
New Expert Panels
Establishment of new expert panels in the FWC – one for Pay Equity and one for the Care and Community Sector – to hear wage-related matters and help address low wages and challenging workplace conditions face in the care and community sector. Previously, the FWC was not required to have members appointed with specific expertise in pay equity or the care and community sector. These amendments are designed to ensure pay equity claims, equal remuneration orders and relevant award variation applications are considered by FWC members with knowledge and experience in these areas.
These changes came into effect on 6 March 2022.
Anti-Discrimination
Employers are prohibited from taking adverse action against current or future employees because of these new protected attributes:
breastfeeding
gender identity; and
intersex.
This flows through to several parts of the FW Act, including provisions dealing with discriminatory terms in agreements and awards, and the general protections. These changes have expanded the protections employees are afforded against workplace discrimination. Employees or future employees who experience adverse action because of these attributes can make a complaint to the FWC.
The FWO has also been given the power to commence proceedings for alleged breaches relating to the new protected attributes.
These changes came into effect on 7 December 2022.
Prohibiting Workplace Sexual Harassment
The FW Act now includes Part 3-5A which prohibits sexual harassment of a worker in connection with work, which includes in the workplace. This amendment contributes to the Australian Government’s commitment to fully implement all 55 recommendations of the Respect@Work: Sexual Harassment National Inquiry Report (2020) Report and complements other legislative amendments made by the Anti-Discrimination and Human Rights Legislation Amendment (Respect at Work) Act 2022.
The amendment protects workers, prospective workers and persons conducting or undertaking a business from sexual harassment. An employer will be vicariously liable for an employee or person that contravenes the prohibition, unless the employer can proves it took all reasonable steps to prevent the sexual harassment. Workers will have the choice to pursue their dispute through the FWC, the Australian Human Rights Commission or applicable state and territory anti-discrimination processes.
These changes came into effect on 6 March 2022.
Unpaid Parental Leave
The FW Act has been amended to change how employers can respond to requests for extending unpaid parental leave. The changes strengthen the right to request an extension of unpaid parental leave by expanding the obligations of the Employer in response to requests for extending unpaid parental leave.
Accordingly, when an employee makes a request to extend their unpaid parental leave, the employer can:
agree to the request; or
discuss and agree with the employee to a different extension period.
The employer’s answer to the request must be put in writing to the employee within 21 days of the request. If the employer refuses the request, the employer must follow the relevant provisions under the FW Act.
These changes came into effect on 7 December 2022.
Enterprise Agreements and Enterprise Bargaining
Termination of Enterprise Agreements After Their Nominal Expiry Date
The FW Act has significantly reduced the ability to apply to terminate expired enterprise agreements. To terminate an expired enterprise agreement the FWC needs to be satisfied that the application meets one of the set criteria under the FW Act, namely that:
the continued operation of the agreement would be unfair for the employees covered;
the agreement does not, and isn’t likely to, cover any employees; or
all of the following apply:
the continued operation would pose a threat to the viability of a business;
termination would likely to reduce the potential of terminations of employment due to redundancy, insolvency, or bankruptcy; and
each employer has given the FWC a guarantee of termination entitlements contained within the agreement.
The effect of the change is significant as it shifts the power balance between employers and employees. It will be incredibly difficult to terminate expired enterprise agreements during bargaining, and it will be more difficult for employers to unwind agreements that have become unsustainable.
These amendments are intended to promote good faith negotiations by stopping agreement terminations from being used as a bargaining tactic, while ensuring that legitimate termination applications can continue to be made.
These changes came into effect on 7 December 2022.
Sunsetting of ‘Zombie’ Agreements
Agreements made before the commencement of the FW Act commonly known as ‘Zombie Agreements’ that are still in force will automatically terminate, which include:
agreement-based transitional instruments
division 2B state employment agreements; and
enterprise agreements made between 1 July 2009 and 31 December 2009.
Unlike enterprise agreements made from 2010, zombie agreements were not required to be compared against modern awards. Employees covered by zombie agreements are likely to have less beneficial terms and conditions of employment than they would otherwise receive under the relevant modern award. Without these amendments, zombie agreements would continue to operate until they are terminated or replaced.
Employers who have employees covered by these agreements need to let those employees know, in writing, that the agreement will be terminating on 7 December 2023 unless an application for extension is made to the FWC. The written notice needs to be provided before 7 June 2023 (within 6 months of 7 December 2022).
These changes come into effect on 7 December 2023.
Initiating Bargaining – Single Enterprise Agreements
There are new changes for how bargaining for a new agreement can be initiated. Previously, bargaining only commenced when an employer agreed to bargain or initiated bargaining, or where a majority support determination was made under the FWC. These amendments aim to improve access to single-enterprise agreements by reducing barriers to commencing bargaining. This new method for initiating bargaining broadly only applies where the proposed and replacement agreements are both single-enterprise agreements.
Under the changes, a bargaining representative who will be covered by a proposed single enterprise agreement can give an employer a written request to bargain if:
the proposed agreement will replace an earlier single-enterprise agreement that has passed its nominal expiry date
a single interest employer authorisation did not cease to be in operation because of the making of the earlier agreement
no more than 5 years have passed since the nominal expiry date, and
the proposed agreement will cover the same, or substantially the same, group of employees as the earlier agreement.
When these requirements are met, employers are required to bargain with employees for a new enterprise agreement in good faith.
These changes came into effect on 7 December 2022.
Bargaining Disputes
The FWC will now be able to make an intractable bargaining declaration on application by a single bargaining representative. If an intractable bargaining declaration is made, the FWC will consider whether to provide the parties with a further period to negotiate (a post-declaration negotiation period). Following a post-declaration negotiation period, the FWC may make an intractable bargaining workplace determination to resolve any matters that have not been agreed by the parties.
The effect of the changes is that the FWC is empowered to resolve intractable bargaining disputes sooner, reducing the prospect of industrial action, and providing a strong incentive for parties to negotiate in good faith and reach agreement more quickly. These changes support the FWC to assist parties bargaining for a new enterprise agreement to resolve disputes. There continues to be a high bar for access to arbitration for intractable bargaining disputes, however, the changes encourage parties to bargain reasonably and in good faith.
These changes come into effect on 6 June 2023.
Better Off Overall Test
The amendments have simplified the operation of the Better Off Overall Test (BOOT). The intention of the BOOT is to ensure that each employee covered by an enterprise agreement is better off overall when compared to their relevant modern award. The amendments are intended to provide employers with greater certainty about how the BOOT is applied, while ensuring that employees are protected by appropriate safeguards and will not be “worse off”. The changes mean that:
BOOT is clarified to be a global assessment to ensure each employee is better off overall;
the FWC will consider the views of the parties and give primary consideration to any common view shared by employee organisations and employers about whether the agreement passes the BOOT, however the FWC must still undertake its own independent assessment in applying the BOOT;
the FWC can amend an agreement where it is necessary to address a concern that it does not meet the BOOT; and
an agreement can be reassessed against the BOOT if relevant circumstances were not properly considered during the approval process.
These changes come into effect on 6 June 2023.
National Construction Industry Forum
The amendments establish an ongoing National Construction Industry Forum as a statutory advisory body to the Government. The body is to advise the Government on issues relation to work in the building and construction industry including workplace relations, industry culture, skills and training, gender equity and productivity. These changes come into effect on 1 July 2023.
Other Matters
There are a range of other amendments, including removing barriers to the Single Interest Bargaining Stream, changes to the multi-enterprise agreement regime now known as the Cooperative Workplace Agreement Stream, abolition of the Australian Building and Construction Commission and the Registered Organisations Commission, improving workers compensation for firefighters, and an expansion of the small claims proceedings division in the FW Act from $20,000 to $100,000.
The Act requires a review of these changes, which will likely include their impact on modern awards, to be commenced within two years. We will provide further updates on the details of this review as they are announced.
If you would like to discuss the amendments in detail to understand exactly how they will apply to your circumstances, and to consider how best to adapt and respond, please get in touch with BlackBay Lawyers using hello@blackbaylawyers.com
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