Author:
Australia | Publication | December 2022
This article was co-authored with Jessica Kamleh.
The Federal Government’s highly anticipated Fair Work Legislation Amendment (Secure Jobs, Better Pay) Bill 2022 (Bill) passed Parliament on 2 December 2022.
A snapshot of the key changes are set out below.
We have highlighted in grey the amendments to the Bill which have been negotiated between the Government and key cross-benchers.
To note: The provisions are not yet in operation.
In a bid to encourage secure, permanent employment, and limit the use of rolling fixed term contracts, the Bill introduces prohibitions against engaging employees on fixed term contracts:
| Subject to the two year limit, parties to a fixed term contract are permitted to exercise an option to renew or extend their first fixed term contract, but are prevented from subsequently entering a consecutive fixed term contract (i.e. a contract can be renewed or extended at least once but not more). |
While multi-enterprise bargaining is currently permitted under the FW Act in circumstances of ‘low-paid bargaining’ and ‘single interest bargaining’, multi-enterprise agreements are not commonly utilised by employers. The Bill looks to increase the limited take-up of multi-enterprise agreements by:
| The Minister will also have the power to make a declaration in relation to a particular industry, occupation or sector in order to facilitate access to the supported bargaining stream. If employees specified in an application for a supported bargaining authorisation are employees in an industry, occupation or sector declared by the Minister, the FWC must make a supported bargaining authorisation (i.e. the FWC does not need to be satisfied of the general requirements for entry into the supported bargaining stream). However, this subsection is still subject to the restrictions on making supported bargaining applications that relate to employees covered by an in-term single enterprise agreement and general building and construction work. |
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The proposed amendments to the single-interest employer authorisations and agreements provisions of the Bill were highly contested and debated in the Senate.
While the concept of single-interest employer authorisations and agreements is not new, the Bill expands the single-interest agreement stream.
Currently, the FW Act permits two or more employers to agree to bargain together for an enterprise agreement. However, as a result of the amendments, a union or another employee bargaining representative will have the ability to effectively compel certain employers to bargain for a single-interest agreement (subject to bargaining being supported by a majority of employees).
Following the Bill’s initial introduction to Parliament, the following amendments were agreed to by the Government and key cross-benchers:
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The proposed changes are intended to simplify the agreement-making process and approval requirements, and include:
Employees (via a bargaining representative) will be permitted to write to their employer to initiate bargaining for a proposed single-enterprise agreement in the following circumstances:
The better off overall test (BOOT) will be amended to address inflexibilities in its implementation which have arisen over time, including ensuring that it is applied as a global assessment (not as a line-by-line comparison) as well as ensuring that the FWC will only have regard to patterns of work or types of employment (and not hypothetical working patterns), for both existing and ‘reasonably foreseeable’ employees (being a person who if he or she was an employee of an employer covered by the agreement at the ‘test time’ would be covered by the agreement and the relevant modern award).
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When considering reasonably foreseeable employees, and when applying the BOOT, the FWC must only have regard to the patterns or kinds of work, or types of employment, that are reasonably foreseeable at the test time. When determining what is ‘reasonably foreseeable’ the FWC must have regard to the nature of the enterprise or enterprises to which the agreement relates. The FWC will no longer be required to consider hypothetical working arrangements that are not reasonably foreseeable. However, if a view is expressed by either the employer, employee or bargaining representative as to whether a particular pattern or kind of work (or type of employment) is reasonably foreseeable, then the FWC must determine the matter. |
A new ‘reconsideration process’ will enable the BOOT to be reassessed. This would allow the employer, employees or the employee organisation(s) covered by the agreement to seek a ‘reassessment’ of the BOOT if there has been a material change to working arrangements or where relevant circumstances were not properly considered during the approval process.
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If the FWC has a concern that the agreement does not pass the BOOT as part of the reconsideration process, it must amend the agreement with retrospective effect if it considers it necessary to address the concern. New provisions have been inserted to the FW Act to ensure that any amendment to an agreement that has retrospective effect does not create liability to pay a pecuniary penalty for past conduct if, but for the retrospective effect of the amendment, the conduct engaged in before the amendment was made would not have contravened a term of the agreement. |
Dealing with errors in enterprise agreements
The Bill will empower the FWC to correct obvious errors, defects or irregularities in enterprise agreements and address situations where the incorrect version of an enterprise agreement has been mistakenly submitted to, and approved, by the FWC – removing the current complexity in rectifying these issues.
The FWC will have the power to issue an intractable bargaining declaration if it is satisfied there is no reasonable prospect of bargaining parties reaching an agreement. If this declaration is made, the FWC would consider whether to exercise its discretion to provide the parties with a further period to negotiate (a post-declaration negotiation period), taking in account the relevant circumstances and whether the post-declaration negotiation period would assist the parties in reaching an agreement. Following this period the FWC will have the power to make a workplace determination to resolve matters still in dispute.
| When deciding which terms to include in a workplace determination, the FWC must take into account the significance to the employers and employees of any arrangements or benefits in an enterprise agreement that applies to any of the employers in respect of any of the employees. |
Current provisions regarding serious breach declarations and bargaining-related workplace determinations will be repealed.
Various amendments are proposed to the industrial action provisions of the FW Act that will:
The Bill proposes to amend the FW Act to enable an employer and affected employees to make a variation to a single interest employer agreement or multi-enterprise agreement so they cease to be covered. The variation must be approved by the FWC.
All remaining transitional instruments currently preserved under the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 (Cth) will automatically sunset (i.e. be abolished). These instruments include, collective agreement-based transitional instruments made under the predecessor legislation to the FW Act (e.g. collective agreements, workplace determinations, preserved collective State agreements, pre-reform certified agreements, old IR agreements, Australian Workplace Agreements), Division 2B State employment agreements, and enterprise agreements made during the bridging period (from 1 July 2009 to 31 December 2009).
The Bill also proposes amendments to the existing powers of the FWC to terminate enterprise agreements that have passed their nominal expiry date, including the insertion of specific provisions to address situations where termination of the existing agreement is proposed in the context of bargaining (including prospective bargaining) for a replacement agreement.
In an environment where aggressive salary negotiations and job hopping for higher pay has become the new normal, Australian employers have increasingly relied on their ability to direct employees not to disclose their salary with their co-workers in order to prevent employees from agitating for higher pay.
While pay secrecy has enhanced bargaining powers for employers during salary negotiations, it is argued it has led to actual and perceived wage inequality in the workplace contributing to entrenched gender and racial pay disparity.
In a bid to achieve pay transparency and equity, the Bill introduces new prohibitions on pay secrecy terms in contracts of employment. These new terms create new workplace rights:
These changes will be a civil remedy provision – meaning that employers who insert these clauses into new contracts of employment or attempt to enforce them will be exposed to monetary penalties.
The Bill implements some of the recommendations in the Respect@Work Report, including recommendation 28, by introducing a broad prohibition against sexual harassment in connection with work.
The prohibition applies to the wider definition of ‘worker’ under the Work Health and Safety Act 2011 (Cth), including individuals carrying out work in any capacity for a person conducting a business or undertaking (including, for example, employees, trainees, apprentices, contractors and volunteers).
Additionally, in line with recommendation 29 of the Respect@Work Report, the stop sexual harassment order jurisdiction of the FWC will be expanded and will enable prospective workers to seek such orders.
The Bill also creates a new dispute resolution function for the FWC, modelled on the FWC's general protections dispute resolution process. In particular, if an application for the FWC to deal with a sexual harassment dispute does not consist solely of an application for a stop sexual harassment order, the FWC can deal with the dispute by mediation, conciliation or by making a non-binding recommendation.
The Bill extends the protections against discrimination under section 351 of the FW Act to include the attributes of breast feeding, gender identity and intersex status.
The Bill introduces important mechanisms to support employees experiencing family and domestic violence and pregnant employees to access flexible work arrangements.
The amendments will require employers to provide employees with reasons for any decision to refuse a flexible work arrangement request and inform employees of alternative changes that the employer is willing to make to accommodate the employee.
| In circumstances where the FWC is satisfied that the employer has not responded adequately to the employee’s request for flexible work (e.g. the employer has not engaged in adequate discussion with the employee or responded at all) the FWC is empowered to make an order that the employer take further steps as considered appropriate by the FWC. |
In addition, an employee will now have the ability to dispute the refusal of a flexible work arrangement where they consider the refusal is unreasonable – with the FWC being empowered to resolve disputes regarding flexible work arrangements.
| Unless there are exceptional circumstances, in the first instance when dealing with disputes about flexible working arrangements, the FWC must deal with the dispute through non-binding dispute resolution. |
Equal Pay
The Bill amends the requirements relied upon by the FWC to make a determination varying modern award minimum wages, requiring that the FWC consider:
In an attempt to ensure that wage assessments are judged with sufficient expertise and to promote the above objectives, the Bill also provides for the constitution of Expert Panels within the FWC in relation to pay equity and the Care and Community Sector. These newly constituted Expert Panels will be required to preside over substantive pay equity matters in the FWC.
Under the FW Act, employees can currently take legal action in a small claims court to resolve claims about underpayments that are for $20,000 or less. Small claims proceedings have the benefit of allowing claimants and Courts to dispose of small claims quickly, flexibly and cheaply – with employees easily able to make claims without legal representation if they choose.
The Bill aims to make small claims for employees more accessible by increasing the monetary cap on the amounts that can be awarded in small claims proceedings under the FW Act from $20,000 to $100,000. The monetary cap for small claims will not include any amount of interest that may be awarded.
Employees who are successful in the small claims court will also be able to apply to claim their filing fees back from the opposing party (as costs) to ensure they are not penalised for claiming back their entitlements.
The Bill introduces provisions which abolish:
The role of the ROC will be absorbed by the General Manager of the Fair Work Commission, and the Fair Work Ombudsman will oust the ABCC to become the sole workplace relations regulator for the building and construction industry.
The Bill will also repeal the Code for the Tendering and Performance of Building Work 2016, which was significantly stripped back earlier this year, as well as repeal other parts of the Building and Construction Industry (Improving Productivity) Act 2016, such as provisions providing for higher penalties and the broader circumstances under which penalties may apply to building industry participants.
For assistance in understanding how these changes impact your business, please contact our Employment and Labor Team.
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