Getting ready for the Secure Jobs, Better Pay Changes

Articles Written by Jan Dransfield (Partner), Lucienne Mummé (Partner), Louise Russell (Special Counsel)

The Secure Jobs, Better Pay amendments to the Fair Work Act 2009 (Cth) (Act) have now been passed. Some of the changes are now in effect, while others will come into operation over the next 12 months.

The changes are far reaching, particularly in terms of enterprise bargaining, and significant in respect of flexible work, sexual harassment and fixed term contracts.

Employers have a tight time frame in which to get across the changes, and consider what steps to take in relation to their workplace relations strategies, employment contracts and policies. Please contact us if you would like to discuss the changes and how they will impact your business.

Key Changes at a Glance

Enterprise Bargaining – the amendments comprise some of the most fundamental changes to enterprise bargaining since the Act was introduced, including:

  • changes to multi-employer agreements, particularly the ability for unions to apply to the Fair Work Commission (FWC) for a single interest authorisation to commence bargaining, changes to the commencement of bargaining and the introduction of workplace cooperative agreements;
  • new Intractable Bargaining Dispute provisions which include declarations, as well as conciliation and arbitration provisions; and
  • changes to the Better Off Overall Test (BOOT), as well as protected industrial action and the termination of expired enterprise agreements.

Other Key Changes – particular changes for employers to note, include:

  • new flexible work and extension of parental leave provisions which allow for the FWC to conciliate and arbitrate disputes over such matters;
  • limits on fixed term contracts;
  • prohibition of sexual harassment and power for the FWC to conciliate disputes about sexual harassment at work and to arbitrate where a stop sexual harassment order is sought or where arbitration is agreed by the parties;
  • prohibition on pay secrecy clauses and the advertising of jobs below the minimum wage;
  • the inclusion of breast feeding, gender identity and intersex as protected attributes for the general protections provisions;
  • lifting the small claims cap to $100,000 to allow greater scope for employees to recover unpaid wages before the Courts; and
  • abolition of the Australian Building and Construction Commission and Registered Organisations Commission.

Key Amendments

A. Enterprise Bargaining and Agreements

Single interest bargaining

There is greater scope for 2 or more employers to be subject to a single interest authorisation made by the FWC on application by a union. Subject to very limited exceptions, the only type of enterprise agreement that an employer subject to a single interest authorisation can then make is the single interest agreement (now called a multi-employer agreement). Further, multi-employer agreements that have already been made may be varied to add an employer on application by a union.

In deciding whether to make a single interest authorisation, the FWC is to consider whether:

  • the employers have a clearly identifiable common interest by reference to factors such as geographical location, regulatory regime, the nature of the enterprise to which the agreement will relate, and the terms and conditions of employment in the enterprises;
  • a majority of employees support bargaining; and
  • the operations and business activities of the employers the subject of the single interest authorisation application are "reasonably comparable."

The FWC must also be satisfied that the making of the single interest authorisation would not be contrary to the public interest.

A common interest will be assumed for employers who employ 50 or more employees (which includes associated entities) unless those employers prove otherwise.  Employers with less than 20 employees cannot be the subject of a single interest authorisation application.

The FWC cannot make a single interest authorisation if an employer is covered by an in-term enterprise agreement and may decide to exclude an employer where it is satisfied that the employer is bargaining in good faith, has a history of effective bargaining, and less than 9 months has passed since the expiry date of the existing enterprise agreement.

Relevantly, protected industrial action remains available subject to meeting the requirements of the Act.

Other agreements/bargaining

Greenfields agreements and multi-employer agreements remain available under the amendments with the multi-employer stream also capturing “supported bargaining” (previously low-paid bargaining) and “workplace cooperative agreements”.

The “cooperative” bargaining stream for multi-employer agreements is voluntary and the parties can choose if and when to bargain, and can cease bargaining.  Protected industrial action is not available in this stream.

Commencement of Bargaining

In addition to the existing grounds which trigger bargaining, for single enterprise agreements, bargaining can be initiated once an employer receives a request to bargain, irrespective of whether the employer agrees with that request. This can occur when the proposed enterprise agreement replaces an agreement that has nominally expired within the last 5 years and the proposed agreement will cover the same or substantially the same group of employees. 

The obligations in relation to bargaining, such as the good faith bargaining obligations, then commence.

Intractable Bargaining Disputes

The existing provisions on serious breach declarations will be replaced with “intractable bargaining disputes” provisions which enable bargaining representatives (except in respect of greenfields agreements) to apply to the FWC for an intractable bargaining declaration.

The FWC may make a declaration if satisfied that:

  • there has been conciliation in which the applicant participated;
  • there is no reasonable prospect of agreement being reached if the FWC does not make the declaration; and
  • it is reasonable in all the circumstances to make the declaration taking into account the views of all the bargaining representatives.

If the FWC makes the intractable bargaining declaration, it can:

  • specify a period (called the post-declaration negotiating period) during which the FWC can conciliate;
  • extend the post-declaration negotiating period if it considers appropriate to do so; and
  • at the end of the original or the extended period, the FWC can determine the dispute by arbitration.

Agreement Approval Requirements

Approval processes will be simplified, including by removing the seven day access period with the FWC’s focus being on whether the employees have genuinely agreed to the terms of the agreement. The FWC will publish a statement of principles to guide employees and employers on their rights and steps to facilitate genuine agreement.

Better Off Overall Test (BOOT)

The BOOT will be a global assessment of whether the employees as at the test time would be better off having regard to whether the agreement terms are more beneficial, or less beneficial, to the employee than the relevant Modern Award.

The primary consideration on whether the agreement passes the BOOT will be any common view expressed by 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.

Where a class of employees to which a particular employee belongs is better off, the FWC is entitled (in the absence of evidence to the contrary) to assume that all employees in that class would be better off overall. 

The FWC will also have capacity, on application at a later date, to reconsider if an agreement passes the BOOT with the potential for the FWC to:

  • amend the agreement; or
  • seek an undertaking that will change the effect of the relevant provision after the agreement is approved, provided the FWC first seeks the views of the employer, the employees and any union.

Protected Industrial Action

Where the proposed agreement is a single interest (multi-employer) agreement the notice requirement for industrial action changes from 3 working days to 120 hours (or such greater period as specified in the protected ballot action order (PABO)).

Once a PABO is made, the FWC must make an order directing the bargaining representatives to attend the conference in relation to the agreement.  At this conference, the FWC may mediate, conciliate, make a recommendation, or express an opinion.

Termination of agreement after nominal expiry date

The current public interest test for termination has been replaced with the requirement for the FWC to be satisfied that the continued operation of the agreement is unfair, or that its continued operation would pose a significant threat to the viability of the business, or termination of the agreement would reduce the potential for termination of employment. If there are termination entitlements in the agreement, the employees must be given a guarantee of termination entitlements to preserve their redundancy entitlements.

Timing of changes

The restrictions on terminating agreements after their nominal expiry have come into effect, as has the amendment allowing bargaining to be initiated in certain circumstances even though the employer does not agree.  The bargaining amendments will generally otherwise commence on 6 June 2023.

B. Job Security & Gender Equity

Sexual harassment

The amendments prohibit sexual harassment, with employers vicariously liable for the acts of their employees or agents where the contravention arises in connection with the employment or duties. The FWC will be empowered to resolve disputes relating to sexual harassment at work.  Where the application seeks a stop harassment order, this can be conciliated and arbitrated by the FWC.  Where no such order is sought, arbitration of the dispute requires the parties to agree to arbitration.  This change will be effective from 6 March 2023.

Prohibiting pay secrecy

Employees have a positive right to disclose (or not disclose) information about their own remuneration and any related terms and conditions of employment, as well as ask other employees about the same. The right to both disclose, and ask, will be recognised as a workplace right, even after the employee ceases their employment, extending the protection against adverse action provided under the Act. The amendments provide that any industrial instrument or contract that is inconsistent with these rights has no effect, and expressly prohibit employers from including secrecy terms in contracts of employment. These changes have commenced.

Flexible Work Requests and Extension to Parental Leave

The current right to request a flexible working arrangement is extended to a request made where the employee or an immediate family member experiences family and domestic violence or where the employee is pregnant. An employer must now have regard to the impact of a refusal of a request on the employee, and if they intend rejecting the employee’s proposed arrangement on reasonable business grounds, the employer must genuinely try to  reach agreement on alternative changes that can accommodate the employee’s circumstances. A request by an employee for an extension of their parental leave will similarly require a written response by the employer within 21 days. It will also be subject to the requirement to discuss the request with the employee to genuinely attempt agreement in respect of the request. 

The FWC will be able to resolve flexible work disputes and disputes over refusals to grant the parental leave extension, including by arbitration.

These changes will commence on 6 June 2023.

Anti-discrimination and special measures

Breastfeeding, gender identity and intersex have been added as protected attributes under the General Protections provisions.  Special measures to achieve equality will also be permitted matters that enterprise agreements can deal with. These amendments have come into effect.

Gender Equity & Equal Remuneration

The objects of the Act now include reference to job security and gender equity. In dealing with work value the FWC must ensure its consideration is free of assumptions based on gender, and include consideration of whether there has been historical gender-based undervaluation of the work.

Limiting use of fixed term contracts

Fixed term contracts for the same role will be limited to two consecutive contracts or a maximum duration of two years unless they fall within an exception which includes training arrangements and roles which in part or are wholly funded by Government for more than two years with no reasonable prospect of receiving funding after that.  The FWC can conciliate a dispute about the fixed term provisions and, if the parties agree, arbitrate.

An anti-avoidance provision seeks to prevent an employer making changes to the timing or terms of a fixed term contract to avoid the operation of the Act. A Fixed Term Contract Information Statement must be provided to new employees entering a fixed term arrangement. 

The limitations on fixed term contracts came into effect on 6 December 2023.  Accordingly, a new fixed term contract cannot be entered into after that date with a term of more than 2 years.  In addition, a period of service under a fixed term contract that is prior to any new fixed term contract entered into, on or after 6 December 2023 may be taken into account in determining whether a renewal of a fixed term contract or a consecutive fixed term contract will result in that fixed term engagement being longer than 2 years.

C. Other Amendments

Abolition of the Australian Building and Construction Commission and Registered Organisation Commission

The Fair Work Ombudsman will become the workplace regulator for the building and construction industry and the general manager of the FWC will become responsible for management of registered organisations.

Sunsetting of ‘Zombie Agreements’

All remaining transitional instruments (“Zombie Agreements”) will terminate after 12 months, subject to an extension being granted by the FWC. After the instrument ends, it will cease to cover employees and if no replacement enterprise agreement is negotiated, a Modern Award may apply from that time. Employers will be required to give employees notice of automatic sunsetting of transitional agreements within 6 months of the commencement of the amendments.

The 12 month grace period has commenced. This means that subject to an order of the FWC, a Zombie Agreement will terminate on 6 December 2023. Employers must provide notice of this termination to relevant employees by 6 June 2023.

Small claims process

To reduce barriers to pursuing redress for underpayments in relevant Courts, the small claims cap will increase in from $20,000 to $100,000.  Filing fees can be awarded as costs from the other party. This change comes into effect on 1 July 2023.

Prohibition on contravening pay rates in advertisements

Employers are prohibited from advertising pay rates that contravene the Act or an industrial instrument. Advertisements for piecework must include any period rate of pay the pieceworker would be entitled to. This change has come into effect.

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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