The implications of the Fair Work Legislation Amendment (Secure Jobs, Better Pay) Bill 2022.
In what shapes up to be the most significant reform to the workplace relations framework in over a decade, it is yet to be seen if the promise of more ‘secure jobs’ and ‘better pay’ will be fulfilled.
The Albanese federal government had always planned to change some parts of the Fair Work Act 2009 (Cth) (Act) as it campaigned to win government earlier in 2022.
However, major workplace relations change was not a central election promise. That may be why the details of the proposed changes in the Fair Work Legislation Amendment (Secure Jobs, Better Pay) Bill 2022 (Bill), released over a week ago, took many by surprise. The changes are not law yet but they passed the first hurdle late last week by moving through the House of Representatives. Over 150 changes were made to the original Bill to secure that passage.
The next step is the conclusion of the Senate Inquiry, fast tracked over a three week process, and consensus amongst the cross benches. The Bill may be passed in early December in the last sitting week before Parliament breaks for the year.
There is much commentary out there already about the key changes. You can click here to watch a webinar we presented as soon as the Bill was released.
Key changes
We’ve broken down the key changes as follows.
Reigning in fixed term contracts
Rolling fixed term contracts may be a thing of the past for some employers.
The changes will limit a fixed term contract for more than two years as well as limiting how many times the contract can be renewed.
There will be exceptions to the restrictions including where:
- an award permits the fixed term length or renewal;
- the employment relates to a training arrangement;
- the employee earns over the high income threshold;
- the term is linked to government funding and funding is for more than two years but there are no ‘reasonable prospects’ of funding renewal; and
- the position relates to governance.
The changes will affect new contracts entered into after the legislation takes effect and may impact some existing contracts in place where there has been a renewal of a fixed term, in some circumstances, prior to the legislation taking effect.
Pay secrecy
Pay secrecy clauses in employment contracts and related practices will be banned.
The changes include an express right for employees to discuss pay and pay related terms with other employees. Any term in an employment contract that is ‘inconsistent’ with the employee’s ability to discuss their pay with another person will be unlawful.
The reforms aim to improve pay transparency which is viewed as an underlying factor that contributes to pay disparity, particularly disadvantaging women.
While many employment contracts do not expressly state that the employee is banned from disclosing their pay or pay increases, the effect of broad confidentiality clauses can impose pay secrecy obligations.
The changes will impact new employment contracts after the legislation takes effect and current employment contracts which do not contain pay secrecy terms (in that they cannot be varied to include such terms).
Sexual harassment prohibition
The Act is set to include a new express prohibition on sexual harassment in the workplace.
Building on current protections through the ‘Stop Bullying and Sexual Harassment’ framework in the Act and the definition of serious misconduct (which now includes sexual harassment) in the Act, the changes will provide a new avenue for a ‘worker’ to raise a sexual harassment dispute in the Fair Work Commission. The process is similar to the general protections disputes avenue and enables disputes about past conduct and/or the risk of future conduct. The Fair Work Commission will have a role to play to resolving a dispute. Where a dispute cannot be resolved, an employee will have the option to make a court application.
The new rights will operate in conjunction with existing state and federal legislation regulating unlawful sexual harassment and the redress mechanisms available through those frameworks.
Flexible work arrangements (FWAs)
Currently part of the National Employment Standards, FWA requests currently remain at the workplace level if there is any disagreement. The proposed changes will see a FWA available for arrangements required to support family violence circumstances and the enhanced ability for the Fair Work Commission to conciliate and arbitrate disputes about a FWA.
The changes will also require an employer to make ‘genuine efforts’ to identify alternative arrangements where a FWA request cannot be accommodated, as well as to discuss and give reasons to an employee if the FWA request is refused.
Enterprise bargaining
Much of the public commentary about the reforms has focussed on the changes to enterprise bargaining.
Some of the changes are welcome by many employers including the changes to remove some of the pre-approval steps to make a new enterprise agreement and provide the Fair Work Commission with a broader discretion to approve a new agreement where employees have ‘genuinely agreed’ to the terms.
The ‘better off overall test’ (BOOT) is set to move away from a line by line assessment by the Fair Work Commission that often involves assessing if an individual employee will be better off or not. The new test will enable the Fair Work Commission to consider whether employees are better off having regard to the types of employees and their patterns of work at the time of the application (ie. ‘test time’) and that are reasonably foreseeable at the test time.
Changes secured in the House of Representatives last week will see a limited ability for the Fair Work Commission to re-visit the BOOT once an agreement has started operating. That reassessment will however be available where there are different circumstances that may apply to new employees after the BOOT was first assessed.
In a significant change to how employers can be required to bargain and be bound by an enterprise agreement, it is proposed that multiple employers can be joined to enterprise agreement bargaining or an agreement that has been made where there is a ‘single interest’ that applies to the employers. That ‘single interest’ requires a ‘common interest’ between the employers (or ‘commonality’ for franchises and related companies).
Factors relevant to that test include ‘geographic location, regulatory regime as well as the nature of the enterprises to which the agreement will relate and the terms and conditions of employment in those enterprise’. The joinder must also not be contrary to the public interest. The construction sector will have limited access to multi-employer agreements. Employers who can also demonstrate a history of bargaining for a single enterprise agreement may seek to avoid being joined in one of the single interest multi-employer agreements.
It is expected that the Senate inquiry and debate process in the coming weeks will result in further changes to the Bill, particularly to bargaining and single interest multi-employer agreements.
Other changes in the bargaining space include:
- the sunsetting of ‘zombie enterprise agreements’ (those made prior to the Act coming into force in 2009) after 12 months; and
- employers who are party to an enterprise agreement that has passed its nominal expiry date may be compelled to commence bargaining at the initiation of the employee bargaining representative (eg. union) even where it is not ready or willing to commence bargaining for a new agreement.
Getting prepared
Your organisation should be keeping up to date on the likely changes. Some employment contracts will need to be reviewed to ensure compliance following the enacting of the Bill and enterprise bargaining plans may need to be brought forward to respond to the new landscape.
This article is current as at 14 November 2022 and it is expected that there will be more changes to Bill before it is passed. Moores will be closely watching these developments and updating clients in the coming weeks.
How we can help
For further assistance including auditing your existing employment contract templates, reviewing current enterprise agreements and planning your enterprise bargaining strategy, please reach out to our Workplace Relations team. Our team is well equipped to provide advice on your obligations and conduct reviews of your internal policies and procedures.
Contact us
Please contact us for more detailed and tailored help.
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