Federal Government introduces workplace relations reforms — Secure Jobs, Better Pay Bill

On 27 October 2022, the Fair Work Legislation Amendment (Secure Jobs, Better Pay) Bill 2022 (the Bill) was introduced into Federal Parliament. The Bill is complex and contains the most extensive proposed changes to the Industrial Relations/Workplace Relations system since the Fair Work Act was introduced in 2010. If passed, it will have significant implications for employers of all sizes, across all industries.

The key changes relate to enterprise bargaining, pay equity, sexual harassment, flexible work arrangements, fixed term contracts, and various other changes.

This Bill is currently in the Parliamentary process and may be subject to change after further consultation and debate.

Provided below is a summary of the proposed changes outlined in the Bill and the Respect@Work Bill, as well as the new Paid Family and Domestic Violence Leave Act.

Paid Family and Domestic Violence Leave Act¹

National Employment Standards (NES) — Family and domestic violence leave

From 1 February 2023, employees will be entitled to 10 days per year of paid family and domestic violence leave entitlement. This entitlement is currently unpaid.

Respect@Work Bill²

Sexual harassment

Proposed changes: The Sex Discrimination Act (Cth) will expressly prohibit conduct that subjects another person to sexual harassment or a workplace environment that is hostile on the ground of sex. Employers and persons conducting a business or undertaking will have a positive duty to take ‘reasonable and proportionate measures’ to eliminate unlawful sex discrimination (including sexual harassment). The Australian Human Rights Commission will monitor and assess compliance with the positive duty.

Secure Jobs, Better Pay Bill³

Sexual harassment

Proposed changes: The Fair Work Commission’s (FWC) powers to deal with claims of sexual harassment at work will be consolidated into a new part of the Act. The FWC’s powers remain limited to orders to prevent harassment from occurring and do not include monetary amounts. The Bill:

• prohibits sexual harassment and empowers courts to impose penalties if it occurs; and
• makes it an offence to contravene any FWC order made in these circumstances.

Unless the aggrieved person is seeking an injunction from a court, the person must go through the FWC process before lodging a court application. FWC can conciliate and, by consent, arbitrate.

NES — Requests for flexible working arrangements

Proposed changes: Employers will be obliged to try to reach agreement with employees, including making ‘genuine efforts’ to identify alternative arrangements when a request cannot be accommodated on reasonable business grounds. Employers must consider the consequences for the employee of refusing the request and provide a written explanation of the grounds for refusal and other changes they could accommodate.

The FWC will have the power to conciliate and arbitrate if agreement can not be reached or if the employer has not provided a written response within 21 days, including the ability to:

• order the employer to provide further details;
• grant the employee’s request; or
• make other changes to accommodate the employee’s circumstances.

Non-compliance with a FWC order may result in the imposition of a civil penalty.

Gender equity — Object of Fair Work Act

Proposed changes: Gender equity will become an object of the Fair Work Act (FW Act), with the FWC required to take this into account during annual wage reviews/award variations.

Gender equity — Equal remuneration principle

Proposed changes: The Bill requires the FWC to give consideration to certain matters in deciding whether to make an Equal Remuneration Order (ERO) for what were previously discretionary considerations. The FWC must consider the following criteria:

• comparisons within and between occupations and industries to establish whether the work has been undervalued on the basis of gender; or
• whether historically the work has been undervalued on the basis of gender; or
• any fair work instrument or state industrial instrument.

The FWC needs not limit itself to considering ‘similar work’, nor need it limit itself to consideration of a male-dominated occupation or industry. Further, the FWC is not required to make a finding of gender discrimination as a condition to making an ERO.

Previously, the FWC had discretion as to whether it would make an ERO, even if it was satisfied that the remuneration was unequal. Now, the FWC is obliged to make an ERO if it is satisfied that the remuneration in question was unequal.

If the FWC decides to vary a modern award based on work value reasons, the FWC must not make gender-based assumptions, but the FWC must consider whether historically the work in question was undervalued because of gender-based assumptions.

Gender equity — Pay secrecy clauses

Proposed changes: Pay secrecy clauses in employment contracts will be prohibited. Current clauses of no effect. Penalty provision for inclusion in new contracts. Asking or disclosing pay is a workplace right.

Pay secrecy refers to the employee’s obligation not to disclose information to any other person regarding the employee’s remuneration nor any terms and conditions of the employee’s employment reasonably necessary to determine remuneration outcomes, for example, hours of work.

An employee may ask any other employee (whether employed by the same employer or a different employer) about any of the other employee’s remuneration and/or any terms and conditions of the other employee’s employment reasonably necessary to determine remuneration outcomes.

An employee’s right to ask is a ‘workplace right’ within the meaning of the General Protections division of the FW Act. This prohibits an employer, or prospective employer from taking ‘adverse action’ against an employee, or prospective employee if they exercise this new statutory right.

A pay secrecy term in a fair work instrument or employment contract has no effect. (The provision is silent on other work arrangements for example, contractor agreement and partnership agreement).

If an employer enters into an employment agreement with a pay secrecy provision, then a contravention exposes an employer to a civil remedy of 60 penalty units or 600 penalty units for a serious contravention.

Fixed and maximum term contracts

Proposed changes: Fixed and maximum term contracts greater than 2 years (as a single contract or in aggregate) will be prohibited with the exceptions being:

• if permitted under modern award;
• distinct tasks requiring specialised skills;
• training arrangements;
• cover during emergencies, peak periods or temporary absence of other employees;
• if the remuneration is above the high-income threshold when the contract is entered; and
• government-funded work where the funding is for more than 2 years and no reasonable prospect that funding will be renewed.

Employees entering into fixed term contracts must be provided with a Fixed term Contract Information Statement (including parental leave replacement employees). The FWC can deal with any dispute but only arbitrate by consent.

This proposed change would be introduced after a 12-month transition period starting after the day after Royal Assent.

Enterprise bargaining — Better off overall test (BOOT)

Proposed changes: In applying the BOOT, FWC must ‘undertake a global assessment of whether each employee’ would be better off having regard to the relevant modern award. The FWC must give primary consideration to any common view expressed by the employer and the bargaining representatives as to the agreement passing the BOOT.

If FWC is concerned the agreement does not meet the BOOT, FWC can specify an amendment to the agreement to address its concerns. It can seek the parties’ views, but ultimately FWC can make the amendment and approve the agreement regardless of those views.

FWC can reapply BOOT during the life of an agreement if the pattern of work on which approval was based has changed since approval.

Enterprise bargaining — Termination of agreements

Proposed changes: FWC must terminate an enterprise agreement (EA) that has passed the nominal expiry date if:

• no longer any employees covered;
• continued operation of EA would be unfair to employees covered; or
• continued operation of EA would pose significant threat to the viability of the business, termination would reduce redundancies AND undertaking by the employer(s) to preserve termination entitlements under EA.

The FWC must take into account the views of parties, whether bargaining is happening and whether termination would adversely affect the bargaining position of employees.

Termination application must be heard by Full Bench if termination is opposed by any union, employer or employee covered by the EA.

‘Zombie’ agreements⁴ will be automatically sunsetted (meaning that any applicable modern award will come into force) 12 months after the Bill receives Royal Assent unless an extension (up to 4 years) is granted by the FWC. The FWC can grant an extension if:

• bargaining for a new EA is happening; or
• the employees, viewed as a group, would be better off overall (compared to the award) if the agreement continued.

Enterprise bargaining — Approval process

Proposed changes: Some technical changes to the FW Act appear to be aimed at preventing small groups of employees from making agreements which will subsequently cover larger numbers of new employees.

Provision will also be made for bargaining to be formally commenced by an employee bargaining representative giving a single employer a written request to bargain in circumstances where the previous agreement is not more than 5 years past its nominal expiry date.

The new section allows for an application to be made to FWC to correct an obvious error, defect or irregularity, eg incorrect cross-referencing or clearly wrong wage rate.

Enterprise bargaining — Industrial action

Proposed changes: The FW Act will effectively limit protected industrial action by employees, and employers, to within a 3-month period from when the employee ballot results are declared. A new ballot would have to be conducted for any further protected industrial action.

There will be greater scope for the FWC to appoint persons other than the AEC to conduct protected action ballots. An eligible protected action ballot agent is essentially a person (including a union official) who the FWC considers to be a ‘fit and proper’ person.

Notice of intention to commence protected industrial action is still 3 working days for single enterprise agreements, but will be increased to 120 hours (5 days including weekends) for multi-enterprise agreements.

When FWC makes an order for the conduct of a protected action ballot, it must also make an order directing the bargaining representatives to attend a FWC conference for the purposes of mediation or conciliation. At the conference, FWC may also make a recommendation or express an opinion, however the parties are not obliged to comply with that recommendation or opinion.

Enterprise bargaining — Arbitrated outcomes

Proposed changes: The FWC’s power to arbitrate bargaining disputes (including determining the content of a new enterprise agreement) has been expanded to any proposed non-greenfields agreement (except multi-enterprise agreements without a ‘supported bargaining declaration’) where the FWC is satisfied that:

• bargaining has become intractable;
• there is no reasonable prospect of agreement being reached following unsuccessful conciliation; and
• it is reasonable to do so.

Currently, the FWC may only arbitrate after it has issued a serious breach declaration or terminated protected industrial action.

Enterprise bargaining — Multi‑enterprise agreements

Proposed changes: The FWC will be empowered to make a Supported Bargaining Authorisation in relation to a proposed multi-enterprise agreement if FWC is satisfied the employers named have, amongst other features, clearly identifiable common interests. Examples include geographic location, the nature of the enterprises, or funded by federal or state governments. If an employer is named in such an authorisation, it is prohibited from pursuing a single enterprise agreement without an exclusion granted by FWC.

Protected industrial action can be authorised and taken in support of a multi-enterprise agreement once a Supported Bargaining Authorisation has been issued.

Enterprise bargaining — Supported bargaining

Proposed changes: The current ‘low paid’ streams will be replaced by a ‘supported bargaining’ stream for multi-enterprise agreements. The FWC will be able to order that certain employers and employees will be covered by a proposed supported bargaining agreement (SBA) if satisfied this would be appropriate taking into account pay and conditions in the relevant industry (including whether low rates of pay prevail), whether the employers have common interests and provided at least some of the employees are represented by a union.

A SBA then replaces any single-enterprise agreement that would otherwise apply to the employee. Other employers can later ‘opt in’ to the SBA if a majority of employees support this. Unions may also apply for a SBA to cover workplaces where a majority of employees want to be covered (without the employer’s consent) provided employees are not covered by another agreement that is still within its nominal life.

The FWC can exclude certain unions from the ability to access SBAs and single-interest employer agreements (see below) based on a history of repeated non-compliance with the FW Act.

Enterprise bargaining — Single-interest employer agreements

Proposed changes: FWC may make a single interest employer (SIE) authorisation on application by an employer or union. FWC may make the SIE authorisation without the employer’s consent (other than small business employers or those covered by an EA still within its nominal life) if:

• supported by a majority of employees;
• the employers have common interests (eg geographical location, regulatory regime, nature of the enterprises); and
• other requirements, including a public interest test, are met.

If a SIE authorisation is made, the employer is prohibited from bargaining with any other agreement. FWC can also add employers/employees to an existing SIE agreement by consent or on application by a union.

Enterprise bargaining — Cooperative workplaces

Proposed changes: This part of the Bill deals with multi-enterprise agreements that have been made without a SBA having been made. It provides for the variation of such agreements to add or delete persons or employers from coverage.

Fair Work Commission Expert Panels

Proposed changes: A Pay Equity Expert Panel and Care and Community Sector Expert Panel to be established to assess pay equity claims.

The FWC is no longer limited to appointing a maximum of six Expert Panel members in order to fulfill a greater range of functions. An Expert Panel must be constituted by a majority of FWC members, who have the knowledge or experience as required in gender pay equity, anti-discrimination and knowledge of, or experience in, the Care and Community Sector.

The FWC must be constituted by an Expert Panel in order to make:

• an ERO in an industry including the Care and Community Sector; and
• a determination or order to vary a modern award in the Care and Community Sector.

The FWC President may:

• appoint an Expert Panel to consider ‘substantive gender pay equity matters’ in making a determination to vary a modern award;
• direct an Expert Panel to consider specified award variations, being (i) to update or omit name of employer, organisation or outworker entity, (ii) to remove ambiguity or uncertainty or correct error, or (iii) to consider a referral by the AHRC regarding a discriminatory provision of an industrial instrument;
• direct that a matter is relevant for the purposes of constituting an Expert Panel for pay equity, for the Care and Community Sector, and for pay equity in the Care and Community Sector; and/or
• direct that a matter is investigated, and that a report about the matter is prepared. Any report must be published.

Australian Building and Construction Commission (ABCC) and Registered Organisations Commission (ROC)

Proposed changes: Both will be abolished from a date to be proclaimed, but no later than 6 months after the Bill receives Royal Assent.

The Fair Work Ombudsman (FWO) will have responsibility for regulating the building and construction industries. The role of the ABCC Commissioner will be retained but essentially only to provide advice to FWO. The provisions about the Federal Safety Commissioner for the building industry will be retained.

The ROC’s functions are to be transferred back to the FWC. The FWC General Manager will have the power to issue infringement notices and accept enforceable undertakings.

Small claims

Proposed changes: The small claims procedure in the court system will be expanded to cover claims up to $100,000 plus interest. The current limit is $20,000. The court will have power to order a party to pay the court filing fee paid by the applicant but not other costs unless one of the legislated exceptions applies.

Advertising jobs

Proposed changes: The Act will impose penalties on employers if they advertise jobs at rates of pay which would contravene the Act, an award or an enterprise agreement. Special provisions apply when advertising piece work jobs.

Final comments

The 2022/23 budget includes funding for the FWC and FWO to fulfil the additional functions listed above and for the Federal Circuit and Family Court to improve the small claims process for recovering unpaid entitlements.

The above forms the ‘first tranche’ of the Federal Labor Party’s workplace relations reforms and do not deal with protection for ‘gig economy’ workers or the ‘Same Job, Same Pay’ principle which were also key planks of its election platform and are expected to be the subject of further consultation and proposed legislation.

Contact us

If you would like to discuss how the proposed changes may impact your business, or if you require assistance understanding your obligations as an employer, please contact a member our Workplace Relations team.

References
1. Fair Work Amendment (Paid Family and Domestic Violence Leave) Act 2022, which was passed on 27/10/22 and will be effective from 1 February 2023.
2. Anti-Discrimination and Human Rights Legislation Amendment (Respect at Work) Bill 2022, which implements recommendations from the Respect@Work report
3. Fair Work Legislation Amendment (Secure Jobs, Better Pay) Bill 2022, introduced on 27/10/22.
4. Those made prior to the commencement of the Fair Work Act (1/7/09) and during the bridging period (1/7/09 – 31/12/09).