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Australia: First Tranche of Industrial Relations Reforms – What Does it Mean for Employers and Employees?

Published: © 15-11-2022

Authors: Joellen Riley Munton and Julie Gordon

Reform to industrial relations laws has been high on the new Labor government’s agenda since its election in May 2022 and the September 2022 Jobs Summit foreshadowed changes to the Fair Work Act 2009 (FW Act).

Now, the first tranche has landed with the Fair Work Legislation Amendment (Secure Jobs, Better Pay) Bill 2022 (the Bill) tabled in Parliament on 27 October 2022 and passing the lower house on 10 November 2022, with amendments as noted below.

The Bill includes a wide array of proposed changes in the following areas:

  • Gender Equity
  • Flexible Working Arrangements
  • Sexual Harassment
  • Discrimination
  • Job Security
  • Bargaining
  • Institutional Changes

The Bill is under consultation, and further amendments are expected.

The Bill has been referred by the Senate to the Education and Employment Legislation Committee, which had not reported at the time of preparing this alert.

The Government has indicated that there will be further legislative proposals in the new year and a white paper is currently being developed by the Employment Taskforce in Treasury to be released in September 2023.

A further update will be provided in each of these areas once the dust has settled.

Gender Equity

There are some significant proposed changes in the area of gender equity.

Firstly, gender equity will be included as an object of the FW Act and the modern award/minimum wage objective.

It is also proposed that pay secrecy clauses be banned and it will be a civil penalty contravention for an employer to include such a term in a contract or written agreement.  The new provisions define employees’ entitlement to share pay information as a workplace right for the purpose of the general protections provisions in the FW Act.

The current equal remuneration provisions will be amended to incorporate the substance of Queensland’s equal remuneration principle, including the removal of the need for a male comparator. The work value provisions will be amended to include consideration of past gender-based assumptions.

To assist the Fair Work Commission (FWC), two expert panels will be created:

  • Pay Equity; and
  • Care and Community Sector.

Flexible Working Arrangements

The right to request a flexible working arrangement in certain circumstances, for example to manage carer responsibilities, is currently a national employment standard (NES). However, the present provisions have been criticised for failing to include a guaranteed dispute resolution mechanism in cases where an employer has refused a request.  The Bill proposes an amendment to enable employees to access the FWC for arbitration where disputes over requests for flexible working arrangements cannot be resolved in the workplace.

Sexual Harassment

New provisions prohibiting sexual harassment “in connection with work” will be enacted to implement Recommendation 28 of the Respect @Work: National Inquiry into Sexual Harassment in Australian Workplaces.  The new division will include a dispute resolution process modeled on the General Protections framework. The provisions allowing the FWC to make “stop sexual harassment orders”, currently sitting with the workplace bullying provisions in Part 6-4B of the FW Act, will be moved into this new division. The FWC will also be empowered to make other orders, including compensatory orders, to deal with sexual harassment complaints, if parties agree to arbitration of complaints. Complaints would need to be notified within 24 months of the most recent incident. If the FWC is unable to resolve a matter, it will issue a certificate to that effect, and the matter can progress to Court.

The lower house made the following amendments to the Bill which are relevant to the new provisions prohibiting sexual harassment:

  • the concurrent operation of State and Territory laws would be preserved;
  • the Commonwealth can be held vicariously liable for contravention of the new prohibition on sexual harassment by defence force members.

Discrimination

New grounds of discrimination of breastfeeding, gender identity and intersex status are proposed to be included for purposes of modern awards and general protections provisions.

Job Security

It is proposed that job security be included in the objects of the FW Act.

In addition, new restrictions on the use of fixed term contracts exceeding a period of two years would be introduced.  These provisions would allow several exceptions, including contracts for specialised tasks, government funded positions or as permitted by a modern award.  Modern awards would be able to include terms dealing with the circumstances in which fixed term contracts can be used.  Employers will be required to give employees a “Fixed Term Contract Information Statement” prepared by the Fair Work Ombudsman, and anti-avoidance provisions would be included to ensure that employers cannot side-step these restrictions by terminating and re-engaging employees.

The lower house made the following amendments to the Bill which are relevant to the new provisions concerning job security:

  • Employers would be allowed a period of 12 months to adjust to changes to fixed-term contracts;
  • the anti-avoidance provisions would be strengthened by adding a prohibition on failing to re-engage an employee and instead engaging another person to do substantially the same work.

Bargaining

The most contentious changes proposed in the Bill are in bargaining and this is where the majority of public debate has been focused since the Bill was tabled and where we would expect to see further amendments.  The changes proposed are:

Initiating Bargaining

A majority support determination will no longer be required when negotiating a replacement agreement where no more than 5 years have elapsed and the proposed agreement covers the same or substantially the same group of employees.

Types of Agreements

Co-operative workplace bargaining: existing provisions are to be amended for greater access to multi-employer bargaining. Participation is voluntary and industrial action is not available.

Single interest bargaining authorisation: it is proposed to extend this stream to allow employee bargaining representatives to initiate the making of multi-employer agreements with groups of employers (such as franchisees in the same franchise) who share “clearly identifiable common interests”.  Presently, single interest bargaining authorisations can only be granted on the application of employers.  Employee organisations seeking orders will need to demonstrate majority employee support but an authorisation would be able to be made by the FWC without the consent of the employers. Small businesses would be excluded from these provisions.

The lower house made the following amendments to the Bill which are relevant to the new provisions concerning single interest bargaining authorisation:

  • businesses and workers cannot be compelled to join in a single interest employer authorisation if they have agreed to bargain for a single enterprise agreement;
  • the  FWC will have a discretion to refuse an authorisation where there is a history of effective bargaining, the employer is bargaining in good faith and it has been less than six months since the nominal expiry date of the employer’s previous agreement.

Supported bargaining authorisation: “supported bargaining” will replace the low paid bargaining scheme which was introduced into the FW Act on inception to encourage bargaining in low paid sectors.  The current provisions have largely been unsuccessful with no agreements made.  It is proposed that these provisions be amended to require the FWC to make an authorisation, enabling bargaining for a multi-employer agreement, if it is satisfied it is appropriate, taking into account:

  • prevailing pay and conditions in the sector; and
  • a clearly identifiable common interests between employers.

This stream would permit greater FWC involvement in supervising bargaining, including access to arbitration where the FWC has made an intractable dispute declaration.

Unlike the low paid bargaining scheme, parties will be entitled to take protected industrial action in this stream, subject to the usual requirements of obtaining a protected action ballot, and then giving notice.  Notice in this stream would be extended from 3 to 5 days.

The lower house made the following amendments to the Bill which are relevant to all the new provisions concerning multi-employer agreements:

  • before requesting that employees vote on  a multi-enterprise agreement (including single interest, supported bargaining and cooperative workplace agreements), the employer must obtain written agreement to making that request from each employee organisation bargaining representative;
  • protected action ballots will be issued to each employer on an enterprise basis;
  • the construction and building industry will be excluded from multi-enterprise bargaining.

Industrial Action

The FWC must make an order directing the parties to attend a compulsory conference if it makes an order for a protected action ballot.

Intractable Disputes Arbitration

It is proposed that a bargaining representative can apply for an intractable dispute declaration for a proposed enterprise agreement, except a greenfield agreement.  This is not available for multi-employer agreements, except in the supported bargaining stream.

A declaration will enable the FWC to make an intractable bargaining workplace determination if it is satisfied that:

  •  the parties have engaged in a s 240 dispute process;
  •  there are no reasonable prospects of resolution; and
  •  it is reasonable in all the circumstances, taking into account the views of all bargaining representatives.

The lower house made the following amendment to the Bill which is relevant to the new provisions concerning intractable disputes arbitration:

  • The FWC must be satisfied that a minimum period of good-faith bargaining has occurred before arbitration.

Better Off Overall Test (BOOT)

There has been some controversy in the past few years about the BOOT, particularly in relation to taking into account projected work patterns and the FWC’s practice of engaging in a line by line review of agreements in applying the test.  It was a hot topic at the Jobs Summit and was flagged for immediate action by the Minister, who described a need for “removing unnecessary complexity”.

In that context the proposed changes include:

  • clarification that the BOOT requires a global assessment that considers whether the terms of the agreement overall are more beneficial to employees when compared with the applicable modern award;
  • consideration must be given to the views expressed by employers and employees covered by the agreement and bargaining representatives;
  • the FWC may only have regard to patterns or kinds of work, or types of employment, if they are reasonably foreseeable at the test time, although the FWC can re-consider its assessment at a later date if patterns of work or employment change, and remedy any concerns by accepting an undertaking or varying the agreement.

The lower house made the following amendment to the Bill which is relevant to the new provisions concerning the BOOT:

  • the better off overall test reconsideration process would be available to “new employees” engaged after the original test time where the agreement provides different terms and conditions for those employees than it does for the “original employees” and those new employees are engaging in the same patterns or kinds of work, or types of employment.

Termination of Enterprise Agreements

Another proposal canvassed at the Jobs Summit was a change to the FWC’s powers to terminate expired enterprise agreements on the initiative of employers during industrial action. The Bill proposes that s 226 be amended to require the FWC to consider whether termination of an expired agreement would be in the public interest, taking account of the following:

  • continued operation of the agreement would be unfair for employees covered; or
  • the agreement does not or will not cover employees; or
  • the continued operation of the agreement will pose a significant threat to the viability of the business and that termination of the agreement would reduce redundancies. An employer would also be required to guarantee that any employees made redundant following the termination of the agreement (and for up to 5 years) would be guaranteed the redundancy entitlements in the terminated agreement. Employers will be required to notify employees of termination of the agreement, and failure to do so would attract civil penalties.

So called “zombie agreements” that remain operational as a consequence of the original transitional provisions in the Fair Work legislation would be subject to a sunset provision so that they expire at the end of a ”grace period’” of 12 months after the commencement of the Act.

Institutional Changes

The Bill also abolishes the Australian Building and Construction Commission and the Registered Organisations Commission, with their functions transferred to the Fair Work Ombudsman.

The lower house made the following amendment to the Bill which is relevant to the new provisions concerning institutional changes:

  • a National Construction Industry Forum would be established as a statutory advisory body.

Conclusion

There are a considerable number of proposed changes and more to come.

We will keep clients updated as the bill progresses through the Parliament and in relation to future changes.

The Government has indicated that there will be further legislative proposals in the new year and a white paper is currently being developed by the Employment Taskforce in Treasury to be released in September 2023.

If you require any assistance or advice in relation to these reforms please contact our Harmers legal team on +61 2 9267 4322.

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