Yesterday, the Labor Government introduced legislation which is promoted to deliver more secure jobs, better pay and a fairer workplace relations system for Australian workers.

This is the most significant proposed change to Australian industrial relations legislation for many years and will have direct implications for all workers, and require consideration on the part of federal system employers.

The Fair Work Legislation Amendment (Secure Jobs, Better Pay) Bill 2022 (Bill), seeks to also create job stability, fair pay and gender equality, and new protections for employees with a long-term aim in boosting productivity gains and economic output.

So, what are these changes, and how do they affect employers and employees alike?

1. Objects of the Fair Work Act

The Bill will amend part of the Fair Work Act (Cth) 2009 (FW Act) to include job security and gender equity in the object of the FW Act. In particular, there will be a requirement surrounding fair wages and equal remuneration for work of equal value.

2. Prohibiting pay secrecy

In line with the primary objective of gender equity, the Bill will create a new positive right for employees (regardless of any contractual term) to disclose information concerning their own remuneration structure to others. It is anticipated that openness and transparency in the workplace will eliminate pay bias between genders or other groups. That being said, the engagement and dispute risks which may arise in a workplace are obvious and will need to be proactively managed by employers.

3. Prohibiting sexual harassment at work

In another attempt to engage the right to work objective, broader protection against sexual harassment for all workers, including candidates, is being implemented.

The Sex Discrimination Act 1984 (Cth) (‘Sex Discrimination Act’) has been amended to prohibit conduct creating an adverse workplace environment, on the grounds of sex. The express prohibition to protect people from hostile workplace environments creates a positive duty upon on employers which must take reasonable and proportionate measures to eliminate sex discrimination, sexual harassment and victimisation in the workplace.

The meaning of ‘reasonable and proportionate measures’ may vary, however some possible examples include:

  • Implementing policies and procedures;
  • Collecting and monitoring gender-based data;
  • Conducting surveys (large-to-medium-sized businesses);
  • Providing appropriate support to workers and employees;
  • Developing a sexual harassment strategy;
  • Delivering frequent training and education around sexual harassment; or
  • Implementing a complaint service whereby employees can raise complaints of inappropriate workplace conduct.

As a starting point, all businesses should assess the risk in the workplace, put a prevention plan in place and communicate any changes.

4. Flexible working arrangements

At present, the FW Act permits employers to refuse requests for flexible working arrangements in line with ‘reasonable business grounds’. It has been argued that employers have no hard obligation to come to a mutual arrangement with the employee and that there are limited options for employees to effectively challenge an employer’s unreasonable refusal.

The Bill seeks to amend the flexible working provisions by requiring an employer to make ‘genuine efforts’ to identify alternative working arrangements, where a request cannot be accommodated. In the absence of an alternative, written details of the refusal and the grounds relied upon, need to be provided to the employee.

Where a dispute arises between the parties, a dispute resolution process, including conciliation has been implemented which also seeks to empower the Fair Work Commission (FWC) to make a binding decision where conciliation fails which seeks to act as a “powerful incentive” for employers to reach a mutual agreement at the workplace level.

5. Fixed-term contracts

The Bill will prohibit an employer from engaging an employee on a fixed-term contract with a period of two or more years, or on a contract which may be extended more than once. This insertion extends to contracts commonly known as maximum contracts.

In the event a fixed-term contract exceeds the limitation period, employees may have entitlements to claim permanent ongoing employment.

It is argued that a continual extension of a fixed-term contract represents a form of insecure work and enables employers to partake in ‘avoidant behaviour’. However, naturally this particular amendment will impact upon a wide range of industries that work on a project basis or in line with specific funding.

6. Industry bargaining

The newly proposed provisions aim to promote a supported bargaining stream while introducing various changes. Such changes include those surrounding processes initiating bargaining, approving enterprise agreements, and empowering the FWC to correct or amend obvious errors within such enterprise agreements.

7. Sunsetting zombie agreements

Significantly, it is proposed that all zombie agreements will automatically sunset after a grace period. However, the FWC may extend the default grace period if particular conditions are satisfied. This will have particular implications for employers operating under an industrial instrument which were not bargained and approved under the FW Act. Such employers will need to undertake a timely assessment of the implications arising for their business and options available.

8. Better Off Overall Test

Under current legislation, the FWC assesses enterprise agreements using the Better Off Overall Test (BOOT). In summary, the BOOT promotes both the right to work and favorable conditions of work, by ensuring employees covered by an enterprise agreement are better off overall when compared to the applicable modern award.

The amendments being implemented clarifies that the BOOT is applied flexibly as a global assessment rather than a line-by-line comparison, in an attempt to restore the intended operation of the BOOT.

Finally, safeguards being implemented ensure that changes to the BOOT do not leave workers worse off. A new ‘reconsideration process’ allows employers, employees or their representatives to seek to have the BOOT reconsidered by the FWC where there has been significant changes in working arrangements.

Changes in this regard may result in renewed interest in enterprise bargaining where previously there was limited perceived benefit given the restrictive BOOT application.

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While this article is unable to outline all of the proposed amendments, the nature and breadth of those proposed changes are significant and, in our opinion, require careful consideration and planning on the part of all employers.

Parliament will now debate the Bill, and the Government has already indicated that additional legislation will be introduced in early 2023 to introduce further significant amendments to employment legislation, so we will continue to provide timely information to you when it becomes available.

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Caterina Apostolakos is a Senior Workplace Relations Advisor at HR Assured, enableHR’s sister company. Caterina provides employment relations advice and support to our clients’ businesses on a wide range of matters.