On Thursday, 27 October 2022, the Federal Government introduced the Fair Work Legislation Amendment (Secure Jobs, Better Pay) Bill to Parliament. The Bill delivers on a range of commitments the ALP made in the lead-up to the May election and further explored during September’s Jobs & Skills Summit. Proposed changes deal with a range of issues – fixed term contracts, flexible work arrangements, bargaining reforms (including industry-wide bargaining), BOOT changes and pay secrecy.
The ALP has said the Bill will promote job security, help close the gender pay gap and get wages moving while employer bodies have already expressed concern at the breadth of some of the changes. Whether the Bill is ultimately passed in its proposed form, and delivers on the Government’s objectives, will be the subject of much debate over the next few months. Given the raft of announcements and amendments, this article unpacks just some of the key proposed changes to help you better understand the Bill’s possible impact on your workplace.
Ban on certain fixed term contracts
The Bill contains provisions prohibiting an employer from engaging an employee on a fixed term contract beyond two years (including extensions) or certain consecutive contracts. The references to “fixed term” contracts also include what are generally known as maximum term contracts. A breach of the provisions would attract a civil penalty. The Fair Work Commission would be given power to resolve disputes regarding an employee’s status as a fixed term employee.
There are a number of exceptions to the prohibition on fixed term contracts. Some of these exceptions include:
- where the employee is paid over the high income threshold
- where the employee is engaged under the contract to perform only a distinct and identifiable task involving specialised skills
- where the employee is covering for another employee
- where the work is government-funded and there are no reasonable prospects that the funding will be renewed
- where a modern award expressly permits the arrangements.
FWC to become involved in flexible work disputes
In what is one of the more significant changes, the Bill will empower the Fair Work Commission to arbitrate disputes about employer refusals for flexible work arrangements. As things currently stand in the Fair Work Act, employees have a right to request, and unless an enterprise agreement expressly grants an enforceable right to contest, there’s limited ability to challenge these refusals. The Bill will now allow employees to raise a dispute in the Commission where the employer refuses a change to the employee’s working arrangements and, if the dispute is not resolved, the Commission can arbitrate and ultimately order an employer to grant a request.
Concerns have been raised that these changes will increase disputation about flexible work arrangements at a time when employers are trying to deal with the challenges presented by the post-pandemic workplace.
The Bill introduces a prohibition on “pay secrecy clauses”, preventing employers restricting employees from discussing their pay and remuneration. The Government’s view is that often these clauses have been used to conceal gender pay discrepancies. The changes create a new workplace right, allowing employees to ask each other about their remuneration and conditions – with the view that employees would be able to use that information to assess whether they are being fairly paid. Employers who seek to impose pay secrecy clauses could be subject to civil penalty proceedings under the Bill.
The Bill proposes a raft of changes to the bargaining and enterprise agreement approval process. These changes are in response to criticisms that the bargaining process has become overly complex, protracted and difficult. Requirements to provide certain materials and explanatory information prior to the “access period” would be removed, and replaced with an overarching requirement that the Commission be satisfied there has been genuine agreement.
Interestingly, the Bill introduces a new requirement that employees who vote on an agreement have “sufficient interest” in the agreement and are “sufficiently representative” of its coverage. This is designed to limit circumstances when a small cohort of employees might vote up an agreement. In determining whether there has been genuine agreement, the Commission will now have regard to a “statement of principles” which includes whether genuine bargaining occurred prior to the vote and whether bargaining representatives were included in the process.
The much-maligned “Better Off Overall Test” is also set to change with confirmation the BOOT should be a global assessment, and reframing the test to allow the Commission to only deal with circumstances that are ‘reasonably foreseeable’ – which means that the Commission will no longer consider ‘hypothetical’ working arrangements when determining if workers would be ‘better off’ under a proposed agreement.
In quite a significant proposal, employers, employees or their representatives would be able to seek a reassessment of the BOOT through a “reconsideration process”. In circumstances where there have been material changes in working arrangements during the life of an agreement, parties can apply to the Commission to reconsider whether the agreement passes the BOOT. While this change is said to reduce the number of undertakings the Commission might require prior to initial approval, there’s concern the proposal could lead to further agitation of the BOOT during the life of an agreement.
‘Common interest’ and ‘supported’ bargaining
One of the more contentious elements of the Bill is the introduction of ‘supported bargaining’ or industry-wide bargaining. A ‘common interest’ test will be introduced to govern when industry-wide bargaining is used, enabling workers across multiple workplaces in a common sector to bargain collectively. These changes are designed to increase the bargaining power of low-paid and female-dominated sectors and enable more employees to access the benefits of enterprise bargaining. There’s already been commentary that the common interest test is of far broader application and could mean that other sectors would look to engage in supported bargaining. This would be the Bill’s most far-reaching reform.
Termination of enterprise agreements
It remains the case that enterprise agreements continue to apply past their nominal expiry date, unless replaced or a successful application is made to the FWC is made to terminate the agreement. The Bill makes it harder for employers to apply to unilaterally terminate an enterprise agreement after its nominal expiry date. In most cases, an employer would need to establish that the continued operation of the enterprise agreement would pose a significant threat to the viability of a business and that termination of the agreement would reduce the potential of redundancies.
Other proposed reforms
- New powers for the Fair Work Commission to arbitrate in the case of “intractable bargaining” during enterprise agreement negotiations.
- Employees provided with a longer period in which to commence protected industrial action after obtaining a protected action ballot order during an enterprise bargaining process.
- A new prohibition on sexual harassment, (despite it already being prohibited under a raft of State and Federal anti-discrimination legislation) the Fair Work Commission would have a new dispute resolution function, similar to the one for general protections dismissal disputes. How that jurisdiction would interact with the various existing avenues for the determination of such matters remains to be seen.
- Abolition of the Australian Building and Construction Commission (noting the transfer of its functions to the Fair Work Ombudsman is already well advanced).
- Sunsetting of old statutory agreements made prior to the Fair Work Act.
- A ban on employment advertisements with unlawful pay rates.
- New guidance as to how the FWC considers equal remuneration and work value cases.
The Albanese Government has sought to introduce wide-ranging reforms which it says will get wages moving and increase flexibilities in our workplace relations system. Whether the Bill can achieve that remains to be seen. There are concerns the Bill will have the opposite effect – resulting in increased disputation, arbitration and industrial action and diminish productivity by uncoupling wage rises from an enterprise’s circumstances and features – and the lobbying has already begun for changes to be made to the Bill. With further legislative changes to bargaining, the gig economy and its “same job, same pay” policy already foreshadowed, readying your business for future changes will be of paramount importance.
Want to know more about how the Federal Government’s proposed workplace relations changes will impact your organisation?
Stay tuned for our future updates or reach out to our Employment, Safety & People team for further information