The Fair Work Legislation Amendment (Secure Jobs, Better Pay) Act 2022, has attracted a significant amount of attention. With some of the biggest IR reforms in nearly two decades, this Act will re-set how unions, employees, employers, and Governments interact with one another, in the hopes of improving job security and pay equity for working Australians.
Now is the perfect time for employers to start considering what steps need to be taken in organisations to ensure they meet the legislative changes. The changes are major and sweeping, impacting on many areas of the employment relationship.
In this alert, we unpack key aspects of the Act that are relevant to employers.
Summary
The title of the Act almost says it all, with the legislation introducing a range of reforms designed to support improvements in pay and conditions, pay equity and job security.
Among other things, the IR reforms include significant changes to multi-employer bargaining, disputes, industrial action, enterprise agreement approval/termination, the Better Off Over All Test, the abolition of the Australian Building and Construction Commission and Registered Organisations Commission, the sunsetting of "zombie" agreements, pay equity, harassment and discrimination, fixed term contracts and flexible work arrangements. Oh, and pay secrecy...
The expansion of multiemployer bargaining - which essentially makes it easier for workers at different companies within one industry to band together to call for better pay and conditions - has been the most contentious element of the legislation.
However, while bargaining and collective agreements may be a hot topic, this article focuses on a handful of changes to better understand the Act’s immediate impacts on the workplace.
Flexible work in the NES – Fair Work empowered
A significant change is the Fair Work Commission’s (Commission) ability to now arbitrate disputes about flexible work arrangements.
Currently, employees have a right to request flexible work arrangements, but unless an enterprise agreement expressly grants an enforceable right to contest a refusal by the employer to agree to the request, there’s a limited ability to challenge an employer’s refusal.
Employees will now be able to go to the Commission when the employer refuses a change to their working arrangements - with the Commission having the power to ultimately order an employer to grant a request. Employers have raised concerns with this change, anticipating further disruptions in a struggling post-pandemic workplace.
The flexible work requests in the NES reflect the model term in Modern Awards, including the requirement for employers to:
- discuss requests with the employee;
- genuinely try and reach agreement prior to refusing an employee’s request;
- provide written reasons for any refusal; and
- inform the employee of any alternative working arrangements the employer would be willing to make instead to accommodate the employee’s circumstances.
The Act also allows employees to request a flexible working arrangement when they, or a family member, are experiencing family or domestic violence.
Employers will need to consider how they respond to requests for flexible work arrangements now the Act has come into force on 7 December 2022.
Fixed-term contracts
The Act now limits the use of fixed-term contracts for the same role to the shorter of:
- two years (including renewals); or
- two consecutive contracts.
Exemptions apply in some circumstances, for example:
- The employee has specialised skills that the employer does not have, but needs, to complete a specific task.
- The employee is engaged as part of a training arrangement (e.g. an apprentice or a trainee).
- The employer needs additional workers to do essential work during a peak period, such as for fruit picking or other seasonal work.
Employers are also required to provide a ‘Fixed Term Contract Information Statement’ to all fixed-term employees – failure to issue this statement gives rise to the ability for a civil penalty to be imposed.
Lastly, where a fixed-term contract is made in breach of the new provisions, the employee will become a permanent employee, with all terms of the contract, save the expiry date, continuing to apply. The new terms only apply to new contracts made after the Act comes into force – however, would apply to renewals made after the legislation is effective.
Termination of expired enterprise agreements
The Act places significant restrictions on an employer’s right to seek termination of an expired enterprise agreement. Now the Commission must (upon application) terminate the agreement if satisfied:
- continued operation would be unfair for the employees covered by the agreement;
- it does not, and is not likely to, cover any employees; or
- where each of the following apply:
o Continued operation of the agreement would pose a significant threat to the viability of the employer’s business.
o Termination of the agreement is likely to reduce the potential for redundancies, or bankruptcy/insolvency of the employer.
o Employer gives the Commission a guarantee that it will preserve the beneficial termination entitlements contained in the enterprise agreement for a period of up to 4 years if protected.
o An employee is subsequently terminated on grounds of redundancy or because of the employer’s insolvency or bankruptcy.
Sunsetting of “zombie agreements”
Sunsetting all remaining transitional agreements currently preserved by the Act, is commonly referred to as “zombie agreements”. Now Zombie agreements will automatically sunset after 12 months from the commencement of the Act, unless extended by the Commission.
Employers must give affected employees notice of the automatic sunsetting within 6 months of commencement, including information about timing and the Commission’s role in extending the default period, failure of which will be a civil penalty provision.
There is also now the ability to make an application to the Commission to extend the default period, with no limit on the number of applications that may be made. The Commission may (on application) extend the default period for a period of up to 4 years.
Pay secrecy – Possible general protections claim
The Act implements a number of measures aimed at improving gender equity, including by prohibiting pay secrecy clauses in employment contracts.
The Act provides new workplace rights allowing employees to ask one another about their remuneration, and any related terms and conditions, as well as to disclose (or not) their own remuneration to any other person.
There will also be a new workplace right in the Fair Work Act to protect against adverse action. Meaning, that if an employee is subject to adverse action because the employee disclosed their remuneration, the employee can bring a general protections claim against the employer.
Lastly, an employer that includes a pay secrecy term in a new employment contract or other written agreement will be liable for a civil penalty – and such terms in existing employment contracts or written agreements will now cease to have effect.
Sexual harassment
The Act inserts a new prohibition on sexual harassment to implement recommendation 28 of the Respect@Work National Inquiry into Sexual Harassment in Australian Workplaces. It also creates a new sexual harassment dispute resolution function for the Commission, modelled on the existing dispute resolution mechanism for general protections dismissal disputes. A person alleging they have been sexually harassed at work will have the ability to apply to the Commission to make a stop sexual harassment order.
Respect@Work
On 1 December 2022, we reported on the details of the Anti-Discrimination and Human Rights Legislation Amendment (Respect at Work) Act 2022 (the Bill) which amended the Sex Discrimination Act 1984 (Cth) (SD Act) and the Australian Human Rights Commission Act 1986 (Cth) (AHRC Act) by implementing seven of the 55 recommendations from the Australian Human Rights Commission’s (AHRC) Respect@Work Report. Significantly, the Act amends the SD Act to introduce a positive duty on all employers to “take reasonable and proportionate measures” to eliminate, as far as possible, specified forms of unlawful sex discrimination.
To read more about the recent changes to the legal framework applicable to sexual harassment in Australia please read our article‘Respect at Work’ bill passes Australian Parliament, signalling a major step in preventing harassment in the workplace by Andrew Tobin, Partner, and Adele Garnett, Senior Associate.
What’s next?
Our Workplace and Employment team at HopgoodGanim are well positioned to provide legal expertise in relation to managing general protections risks and claims and across wider employment, industrial relations and workplace health and safety matters.
Our team can advise individuals and businesses about compliance with regulation, optimising workforce engagement and outcomes, and managing and containing exposure to possible disputes or litigation. Please contact us for more information.