Labor Government’s Workplace Relations and Diversity Agenda: What business needs to know

Articles Written by Jan Dransfield (Partner), Norah Chafardet (Senior Associate), Joseph El Hagg (Law Graduate), Rachel Zeng (Law Graduate)

With the Australian Labor Party (ALP) forming a majority government, it’s important for business to reflect on the ALP election commitments regarding diversity and workplace relations reform and consider the impact that this change of government could have on forthcoming workplace related legislation and policies.

We consider the key pre-election commitments made by the ALP and share our insights about how these may impact business in the areas of diversity, workplace relations and employment terms and conditions.

Respect@Work  

The ALP has clearly stated that this is a key priority and it will work with the Workplace Sexual Harassment Council, employers, workers, unions and legal experts to finalise and implement stronger laws as a matter of priority.

In particular, the ALP has committed to fully implement all 55 recommendations of the Sex Discrimination Commissioner’s Respect@Work Report.

This will result in legislation to make it clear that employers have a positive duty to take reasonable and proportionate measures to eliminate sex discrimination, sexual harassment and victimisation as far as possible. 

The 55 recommendations made by the Respect@Work Report cover many areas, including the need to improve education around respectful relations, the introduction of a Workplace Sexual Harassment Council and improved methods of reporting. The recommendations aim to reform how Australia responds to and actively prevents sexual harassment through positive duties.

In addition to legislative reform, the ALP has committed to ensure that Women’s Centres in Australia are properly funded and that the Australian Human Rights Commission is funded to support victim’s rights, and provide options for making complaints, and referrals to support services.

Implications

  • Employers should review their sexual harassment policies and prepare for the introduction of a positive duty to take reasonable and proportionate measures to eliminate sex discrimination, victimisation and sexual harassment. This may involve major changes to existing reporting structures and workplace policies.
  • Employers should also identify cultural and systemic factors that enable harassment to manifest in its workplace and take preventative action.
  • Businesses should also ensure that whistle-blower policies are up to date to encourage ‘protected’ reports to be made.

Wage Outcomes

In terms of wage outcomes, the ALP has proposed a 5.1% increase to the national minimum wage, with the goal of keeping wages in pace with recent surges in inflation. The Fair Work Commission (FWC)'s minimum wage panel has given the new Government until 3 June 2022 to lodge a submission as part of this year's annual wage review.

As part of its aged care policy platform, the ALP has also promised to provide real wage increases for aged care workers. The Health Care Services Union and the Australian Nursing and Midwifery Federation have brought a case before the FWC to seek to vary several Awards to increase pay for aged care workers by 25 per cent. The ALP has proposed putting a supporting submission to the FWC, and to fund the wage outcomes of this case.

Implications

  • Businesses should consider what impact an increase to wages will have on their operations and the sustainability of their current wages model.
  • Businesses in industries such as nursing, aged care, education and disability services should prepare for significant increases to employees’ wages and consider the impact of these increases in their businesses.

Same job – same pay (labour hire)

The ALP promised to introduce “same-job, same-pay” legislation, consistent with the Fair Work Amendment (Same Job, Same Pay) Bill 2021 that it had proposed in 2021. This would mandate that workers employed by labour hire firms receive the same pay and conditions as workers who are direct employees of the host.

The ALP also proposed the establishment of a national labour hire licensing scheme, similar to those currently in operation in certain States (e.g. Victoria) and Territories requiring all labour hire providers to obtain and maintain a licence in accordance with certain conditions.

Implications

The labour hire reforms are likely to be extensive and impact the cost base for labour hire companies and also businesses utilising labour hire workers. Depending on the scope of any legislation introduced by the Government, it may potentially impact service companies that provide labour to other group members.  

Gender Equity

The ALP stated that it will establish a “Pay Equity Unit” within the FWC and reform the equal remuneration provisions in the Fair Work Act 2009 (2009) (Cth) (FWA) to strengthen the FWC’s ability and capacity to address gender pay inequality. The ALP proposed:

  • Making gender pay equity an object of the FWA with the aim of closing the gender pay gap.
  • Fully implementing all 55 recommendations of the Respect@Work: Sexual Harassment National Inquiry Report 2020 (discussed above).
  • Requiring companies with more than 250 employees to publicly report their gender pay gap.
  • Prohibiting pay secrecy clauses and giving employees the right to disclose their pay if they choose to do so, including to their colleagues.
  • Addressing the gender pay gap in the Australian Public Service.
  • Strengthening the ability and capacity of the FWC to order pay increases for workers in low paid, female dominated industries.

Implications

  • Businesses should review their pay secrecy clauses where they have over 250 employees.
  • Employers need to review their sexual harassment policies and prepare for the introduction of a positive duty to take reasonable and proportionate measures to eliminate sex discrimination, victimisation and sexual harassment.
  • Businesses in female dominated industries should also consider whether a rise in minimum wages will affect their operations and whether their workers would be considered ‘low paid’.

Casual Employees

The ALP has proposed to restore the common law definition of casual workers in place prior to recent changes to the FWA and the High Court’s decision in Workpac v Rossato [2021] HCA 23.

As the FWA currently stands, a “casual employee” is an employee who has “no firm advance commitment as to the duration of the employment or the days (or hours) the employee will work”. The ALP proposal to amend this definition of casual worker would reduce the focus on the initial employment contract, and instead focus on an employee’s pattern of work.

Implications

  • Whilst the precise application of an objective test is not yet defined, businesses should review the hours of work for its casuals and consider making casual conversion offers based on a consistent pattern of work.
  • Businesses should also consider their business model and what the risks and benefits are for casual conversion or misclassification of casual workers.

Awards

The ALP has proposed that it will empower the FWC to oversee an industry-based system for selecting default superannuation funds in modern awards with input from workers, unions, employers and experts.

Implications

Businesses should review the default fund terms in applicable modern awards and look out for any industry-based changes proposed on default fund terms.

Enterprise Bargaining

The ALP has indicated support for the following:

  • providing the FWC with broader powers to arbitrate disputes in relation to, or arising in the course of, enterprise bargaining;
  • preventing unilateral termination of collective agreements if termination would reduce employee entitlements; and
  • improving access to collective bargaining, potentially by introducing multi-employer bargaining.

Implications

Businesses should consider how the prohibition of unilateral termination of collective agreements may affect its bargaining strategies and factor the potential for these changes into their ER strategy including their timetable for, and approach to, enterprise bargaining negotiations and the making of new enterprise agreements.

Limiting Use of Fixed Term Contracts

The ALP has proposed to limit the number of consecutive fixed term contracts an employer can offer for the same role or a maximum duration, up to a maximum cap of 24 months (including renewals). Once this cap is reached, the employer would be required to offer the worker a permanent position. There would be a mechanism for exceptions in limited circumstances.

Implications

Businesses should consider how the maximum cap for fixed term contracts may affect their business model, which current or future employees may be impacted and what changes may be needed to recruitment practices and contracts of employment.

Leave Entitlements (paid domestic violence leave and parental leave)

The ALP has proposed 10 days of paid family and domestic violence leave be included in the National Employment Standards (NES).

It has also indicated that it will consult with States and Territories about extending portable leave schemes for annual, sick and long service leave, allowing workers to carry various leave entitlements from one job to another.

The ALP also indicated that it would consider whether to require superannuation contributions for Paid Parental Leave payments.

The FWC has recently endorsed the ALP’s policy in its Family and Domestic Violence Leave Review [2022] FWCFB 2001, reaching a provisional view to extend 10 days’ paid family and domestic violence leave to award covered employees. In a landmark ruling, a Full Bench of the FWC expressed the provisional view that the entitlement should be paid at the base rate to permanent award covered employees.

It is possible the new Government may consider implementing casual sick pay leave, like the kind piloted in Victoria, which allows eligible casual and self-employed workers to receive carer’s and personal leave payments.

Implications

  • Businesses should prepare for the proposals by reviewing their leave entitlement clauses in agreements and policies in relation to paid family and domestic violence leave.
  • Employers should also consider what portable leave schemes and casual sick pay may mean for their business.

Job Security

The ALP committed to amending the FWA to enshrine ‘secure work’ as an additional objective. This would require the FWC to consider job security, among other existing objectives, in its decision making.

The notion of job security may encompass an assurance that that the employee will be able to work in their current employment in the foreseeable future.

Implications

Businesses that are considering or commencing bargaining, should consider how the proposed changes may impact their bargaining outcomes and strategy.

Gig Workers

The ALP has also proposed expanding the jurisdiction of the FWC to allow the FWC to make orders regarding the minimum standards of new forms of work, such as gig work, and to determine what rights and obligations may or may not apply to gig workers.

Implications

Businesses that utilise gig workers should carefully consider what structural or operational changes may be needed in light of this potential legislative change. Some businesses may wish to be proactive and extend benefits and protections for gig workers.

Superannuation

The ALP committed to enshrine superannuation in the NES which would allow employees to directly pursue employers for unpaid superannuation contributions as an entitlement. In addition, it will implement targets on the Australian Taxation Office (ATO) to improve the recovery rate for unpaid superannuation.

Individual employees currently do not have standing under superannuation guarantee legislation to pursue underpayment of superannuation contributions and need to rely on the ATO because of the way the superannuation guarantee charge operates.  The inclusion of superannuation as an entitlement in the NES was a recommendation of the March 2022 Report from the Senate inquiry into unlawful underpayment of employee remuneration.

Implications

Businesses need to have a strong and vigilant process for complying with superannuation guarantee legislation, and for detecting and rectifying any unpaid superannuation contributions given the new Government’s likely focus on enforcement and recovery of superannuation contributions.

Wage Theft

The ALP has made commitments to legislate to make wage theft a criminal offence and improve processes for recovering unpaid wages.

Wage theft happens where an employer does not pay the minimum wage, or allowances and entitlements that are stipulated in an agreement or an award. 

Implications

  • Employers will need to increase their vigilance in terms of properly classifying employees under awards and enterprise agreements.
  • Employers will need to focus on payroll processes and proactively identifying underpayment of salaries or wages, superannuation contributions and other employee entitlements
  • Business should ensure that only true ‘independent contractors’ are engaged so any sham contracting risks are minimised as much as possible.
  • Businesses may need to revise their business model and independent contractor and employment agreements in order to minimise sham contracting and underpayment risks.

Whistle-blowers

The ALP has said it will improve whistle-blower protections for the public sector and extend them to the private sector through the introduction of the National Anti-Corruption Commission (NACC).

The NACC would have the power to investigate allegations of serious and systemic corruption that occurred before or after its establishment and the power to hold hearings where the Commission determines it is in the public interest to do so/

There would be protections for migrant workers who provide evidence of exploitation, and improved protections to the public sector which extends to contractors and service providers who provide services in relation to Australian Government run immigration detention facilities as well as other protections for the private sector yet to be announced.

The NACC will have broad powers to investigate Commonwealth ministers, public servants, and staffers for government agencies and parliamentarians.

Implications

  • Businesses should ensure that their whistle-blower policies are up to date. 
  • Businesses that engage contractors and service providers to government run detention centres or other agencies should review their whistle-blower policies and consider whether migrant workers and whistle-blowers are properly protected.
Important Disclaimer: The material contained in this article is comment of a general nature only and is not and nor is it intended to be advice on any specific professional matter. In that the effectiveness or accuracy of any professional advice depends upon the particular circumstances of each case, neither the firm nor any individual author accepts any responsibility whatsoever for any acts or omissions resulting from reliance upon the content of any articles. Before acting on the basis of any material contained in this publication, we recommend that you consult your professional adviser. Liability limited by a scheme approved under Professional Standards Legislation (Australia-wide except in Tasmania).

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