Insights & News

February 7, 2024

Around eight months have passed since the introduction of the intractable bargaining provisions into the Fair Work Act 2009 (Cth). These provisions create a process for the Fair Work Commission (FWC) to arbitrate enterprise bargaining disputes, and to facilitate the making of enterprise agreements, in circumstances where bargaining has become ‘intractable’ (the trusty Macquarie Dictionary says this means: “hard to deal with”).

So how did we get here? Where to from here? And what does this all mean?

How did we get here?

On 6 June 2023, the intractable bargaining provisions replaced the old schemes of issuing ‘serious breach declarations’ and ‘bargaining related workplace determinations’.

Under the old schemes, the FWC could make ‘serious breach declarations’ (i.e. where there were serious and sustained contraventions of a good faith bargaining order that significantly undermined the bargaining process), which then gave the FWC scope to make ‘bargaining related workplace determinations’ if negotiations remained unfruitful.

The language in the old schemes (think “serious and sustained”, “significantly undermined”, “exhausted all other reasonable alternatives to reach agreement” and “agreement… will not be reached”) created a high bar for applicants to meet in order to satisfy the FWC that a ‘serious breach declaration’ should be made.

The upshot is that the old schemes were not used and the FWC was never called on to make a ‘serious breach declaration’.

However, under the current intractable bargaining scheme, the new standard of ‘reasonableness’ significantly lowers the bar for employees, unions and employers to request the FWC’s intervention in making bargaining determinations.

The current law

The current intractable bargaining scheme is similar to its predecessor in that a ‘declaration’ comes first.

The FWC may grant an ‘intractable bargaining declaration’ in relation to a single or multi-enterprise agreement (excluding greenfield agreements), which then allows it to arbitrate a bargaining dispute, with the arbitrated outcome being an ‘intractable bargaining workplace determination’.

The FWC may grant an ‘intractable bargaining declaration’ if:

• an application has been made (noting that an application cannot be made until the later of 9 months after the nominal expiry date of a previous enterprise agreement or after 9 months of bargaining has elapsed);
• the FWC has dealt with the dispute under section 240 of the FW Act and the applicant participated in the process – section 240 allows the FWC to “deal with” a bargaining dispute upon application by a bargaining representative through mediation, conciliation, the making or recommendations or opinions, or arbitration (if consent to do so is provided);
• there are no reasonable prosects of the relevant enterprise agreement being reached if the FWC does not make a declaration; and
• it is reasonable to make the declaration, taking into account the views of all parties.

Notably, since the introduction of the intractable bargaining provisions in June 2023, it has been largely employers (not employees and unions) that have applied for ‘intractable bargaining declaration’.

Presumably, these employers found negotiations with union to be ‘intractable’ and then sought the FWC’s assistance in arbitrating a deal with more restrained wage and condition improvements (given the FWC must take into account the interests of all parties and the terms of an applicable enterprise agreement when making a determination).

It appears that the Greens and the Labour government have caught wind of this.

Further proposed changes – ‘no lose deals’ for Unions and employees 

Part 2 of the Closing Loopholes bill could be passed any day now.

The federal Government has signalled that it intends to accept an amendment proposed by the Greens to the intractable bargaining provisions, which provide that if an ‘intractable bargaining declaration’ is made, then any ‘intractable bargaining workplace determination’ made by the FWC cannot result in any term in the determination being ‘less favourable’ for an employee or any union than the terms of an applicable enterprise agreement.

Effectively, the proposed changes mean that once the FWC is arbitrating an intractable bargaining dispute, employees and unions cannot lose – they get to keep everything they currently have, and the FWC can only make a determination that improves upon those conditions.

The Coalition highlighted their concerns in a dissenting report included within the Senate Education and Employment Legislation Committee’s report following its inquiry in respect of the Fair Work Legislation Amendment (Closing Loopholes No. 2) Bill 2023 (published on 1 February 2024, reiterating the Victorian Labor Treasurer’s comments that the:

“… no less favourable test… removes the incentive for unions to reach an agreement as they know that they will be no worse off on a clause by clause basis as against a current enterprise agreement. The amendment also seems at odds with how bargaining works – that is, that it’s a package and during the course of bargaining trades offs are considered and made”.  

If introduced, the ‘no less favourable’ test returns us to a version of centralised wage fixing – akin to that of the 1980s and prior, where the Australian Industrial Relations Commission (the predecessor to the current FWC) had the power to arbitrate disputes which were notified by a union and as history showed, largely only resulted in improved conditions for employees and unions.

In the meantime, the FWC continues to grapple with the new intractable bargaining scheme introduced in 2023. Just this week, a Full Bench of the FWC held in United Firefighters Union of Australia v Fire Rescue Victoria (trading as FRV) [2024] FWCFB 43 that ‘agreed’ terms are those where there is a meeting of the minds or consensus, and terms that were acceded to during bargaining, but subject to a conditional reservation (i.e. approvals etc), are not ‘agreed’ terms, and parties should be able to resile from terms that were not definitely ‘agreed’.

Perhaps the only deviation from returning to 1980s industrial relations is that the crippling industry wide stoppages that were a feature of that period are unlikely to occur with these changes – because why would a union seek to take industrial action at all given the way the deck has now been stacked in their favour? They don’t need to convince their members of the virtues of taking industrial action to further their bargaining interests, and the corresponding loss of pay that results from taking protected industrial action during bargaining. Instead, they can look to the FWC and realise all of the gain, with none of the pain.

Quick takeaways

• Easier access to arbitrated bargaining outcomes means that employers need to revise their approach to bargaining and the traditional strategies that they may have used (where the threat of an arbitrated outcome was never very likely). This requires a renewed consideration of things like an employer’s internal communication strategy with employees, the timing around which an organisation will commence bargaining, and when to use the FWC’s s.240 bargaining dispute provisions.
• That said, applying for an intractable bargaining declaration does not automatically result in arbitration before the FWC. Instead, it could put pressure on the parties to come to the table and negotiate a deal. This was the case when Virgin Australia Airlines Pty Ltd made an application. The Australian Licenced Aircraft Engineers Association filed a statement that said “one matter remains unresolved” in bargaining (maximum redundancy payments). This prompted Virgin to put a revised agreement to the vote (presumably with the redundancy issue resolved) and they withdrew their application.

For further Kingston Reid commentary in relation to the making of the first intractable bargaining declaration under the current intractable bargaining scheme, please click here.

 

Michael Mead Partner +61 2 9169 8428 [email protected]

Jia Pan Xiao Senior Associate +61 2 9169 8430 [email protected]

Some years ago, I had an experience during a conciliation at the Fair Work Commission (FWC) that left a bad taste in my mouth.

I was representing an employer in a conciliation, and the applicant was being represented by a paid agent. The conduct of the paid agent was so concerning that both my instructor and I spent most of the conciliation perplexed.

It was clear the applicant had no idea about the process they were involved in and had a severe misunderstanding of the legal principles at play. It was also very clear that the applicant was being pressured by their paid agent to accept a settlement, to ensure the agent would be able to collect their fee under the “No Win No Pay” scheme the applicant had agreed to. The agent also asked for the funds from the settlement to be paid into the agent’s bank account, and not the applicant.

“And there’s nothing we can do to stop what’s happening?” my instructor asked incredulously.

“No” I said, explaining the lack of regulation in this space.

The matter ultimately resolved, but it was concerning for both me and my instructor. In my experience, while employers are usually keen to resolve matters, they are less keen when it is blatantly obvious that a paid agent is not acting in the best interests of who they represent. We like to know that we are operating in a system that offers a fair process for all, regardless of size and bank balance.

Thankfully, I am not the only one with concerns about the misleading and unethical conduct by some paid agents and the FWC is finally responding in an attempt to address the issue.

Representation in the FWC

The FWC is designed to be easily accessible and informal, meaning individuals and businesses can represent themselves if they want. However, it is not uncommon for people involved in matters before the FWC to be represented by a union or employer association, or by a lawyer or paid agent subject to permission requirements in the Fair Work Act 2009 being met.

On one hand, lawyers are required to be admitted to the legal profession and are subject to regulation of qualifications, conduct, ethics and financial dealings as well as ongoing mandatory continuing professional development.

But paid agents are non-lawyers who charge a fee for their services of representing an individual in the FWC and do not have any qualification requirements, nor are they subject to any professional scheme that regulates their conduct, ethics, financial dealings or professional development.

The issue

If you do a quick Google search, you will find several sophisticated-looking businesses offering services as paid agents to disgruntled and former employees. These businesses usually offer free initial consults and services on a “No Win No Fee” basis and make lofty claims about their track records in the FWC. It is not hard to see why someone who may be vulnerable would sign up.

However, the reality is that lawyers and paid agents are vastly different when it comes to how they can be held professionally responsible and accountable for their conduct, thus setting the stage for a greater likelihood that the applicant who uses a paid agent will be taken advantage of. While not all paid agents would seek to do this, there is worrying evidence that suggests this is a widespread issue.

FWC takes notice

There are a growing number of cases where the FWC has found that paid agents have:

• demonstrated a lack of care and attention and the necessary expertise;
• acted contrary to the client’s instructions;
• engaged in misleading and deceptive conduct; or
• not acted in the best interests of who they represent.

Most recently, on 24 January 2024, President Hatcher delivered a scathing assessment of a paid agent company called Employee Dismissals. In his recommendation in Samuel Howell v Elite Elevators Corporation Pty Ltd [2024] FWC 206 (Howell v Elite Elevators), President Hatcher did not hold back in his damning description of Employee Dismissals’ conduct while representing Mr Howell, which included:

• providing incorrect and misleading information to Mr Howell about the FWC’s role and powers and the applicable process;
• the complex terms and conditions contained in the engagement agreement Mr Howell signed, particularly as they relate to the No Win No Fee arrangement;
• the false claims Employee Dismissals made about their ‘win rate’ of having dismissals “reversed”; and
• the way in which, post conciliation, Employee Dismissal directed Elite Elevators to make the settlement payment directly to them, and not Mr Howell, without him agreeing to this as part of the settlement or discussing this with him.

President Hatcher then went on to identify 30 other cases since 2020 in which the conduct of Employee Dismissals’ agents had been “problematic”, and concluded his recommendation by saying that:

“… on the basis of the above facts, my opinion is that. . . Employee Dismissals has engaged in misleading and unethical conduct in connection with its representation of Mr Howell as paid agent in this matter and has not acted in his best interests”.

A welcome announcement

In very welcome news (and no doubt as a direct and immediate response to the conclusion President Hatcher reached in Howell v Elite Elevators), the FWC announced on 30 January 2024 that it will establish a Paid Agents Working Group to look at this very issue.

President Hatcher will lead the Working Group, which also includes senior Commission Members and senior FWC staff.

Key Takeaways

Following President Hatcher’s recommendation in Howell v Elite Elevators, the stated purpose of the Working Group is to identify and guide the implementation of measures with the aim of ensuring that all paid agents appearing before the FWC:

• conduct themselves in an ethical and honest manner;
• act in the best interests of the parties they represent; and
• generally operate in accordance with standards that are broadly consistent with what would be expected of a lawyer in the same circumstances.

The Working Group will not look at any one matter in isolation and have indicated that they will consult with regular representatives involved in individual dispute matters before the FWC, as well as with law societies, peak bodies, and other interested parties.

The FWC has not provided any indication of what measures it is looking at or how long the process will take. At a minimum, the FWC should implement guidelines or require paid agents to adhere to protocols or undertakings as a condition of representation.

Whatever the outcome, I am not alone in welcoming President Hatcher’s formation of the Working Group as a step in the right direction and one which validates the concerns and frustrations that I and many of my colleagues and clients regularly express following interactions with paid agents.

It is comforting to know that the IR system within which we operate will not allow for vulnerable people to be taken advantage of, addresses unconscionable conduct, and holds people to account.

 

Rachel Bevan Special Counsel +61 2 9169 8410 [email protected]

Since our last edition of Kingston Reidable in November 2023, several significant legal developments have taken place (even during the traditionally quiet new year period in January!).

Here we outline two key developments to keep a watch on over the coming weeks as we head into another year of significant workplace reforms.

Closing Loopholes (Part 2)

Unless you’ve been on a solo pilgrimage in some far-flung region of the world for the last few months (and if so, lucky you!), you will be well aware that Government introduced the Fair Work Legislation Amendment (Closing Loopholes) Bill 2023 in September 2023, which included a raft of proposed changes to the Fair Work Act 2009 (Cth) (FW Act), intended to implement the majority of the Government’s remaining election commitments, together with the outcomes of the Jobs and Skills Summit held in September 2022.

After several months of intense debate over some of the Bill’s more contentious proposals, the Government split the Bill on 7 December 2023 and passed the Fair Work Legislation Amendment (Closing Loopholes) Act 2023 (CL Act), which included significant labour hire reforms, expanded union delegate rights and the introduction of a federal wage (and superannuation) theft offence, amongst others (check out our previous commentary here).

As we’ve indicated in our previous coverage of the CL Act, the first few months of 2024 will continue to present as a period for further change, as those aspects of the Bill which were not passed in December 2023 come back up for debate and resolution in Parliament, including:

• changes to the existing definition of casual employment(as well as the casual conversion provisions to allow for employee-initiated conversion);
• introducing a new ‘ordinary’ meaning of ‘employee’ and ‘employer’ (to return to the ‘multi-factorial test’ and overcome the effect of two decisions of the High Court from 2022[1], in which the High Court held that where a comprehensive written contract exists, the characterisation of the relationship between the parties should be determined by reference to the terms of the contract);
• increased protections for ‘employee like’ workers – including, for example, the setting of minimum standards for ‘employee-like workers’, such as workers in the gig economy and road transport industry, where those workers have lower bargaining power;
• changes to the defence to ‘sham contracting’ (misrepresenting an employment relationship as one of independent contracting) from a test of recklessness to reasonableness (liability will not arise if at the time of the misrepresentation, the employer reasonably believed the contract of employment was instead one for services);
• amended right of entry provisions to allow registered organisations to obtain an exemption certificate from the FWC to investigate underpayment of wages or other monetary entitlements;
• changes to bargaining and the multi-employer bargaining framework, including changes to to intractable bargaining workplace determinations;
• expansion of new workplace delegates rights to regulated workers; and
• increases to the maximum civil penalties that can be ordered for standard (and serious contraventions) of the civil remedy provisions in the FW Act,

 amongst others.

Just last week, the Senate Committee inquiring into the Bill tabled its report, which (given the splitting of the Bill), was confined to those proposals not passed as part of the CL Act in December 2023. The Committee received 178 submissions and conducted 7 public hearings, at which just shy of 200 witnesses gave evidence as part of the inquiry. Subject to some amendments, the Committee has recommended that the Bill be passed.

A “right to disconnect”?

In addition, the Government has signalled its intention to consider including provisions creating a ‘right to disconnect’, in order to secure Greens’ support for the Bill. It is presently unclear whether these anticipated provisions will appear in a similar form to the Fair Work Amendment (Right to Disconnect) Bill 2023 (Cth) tabled by the Greens back in March 2023.

In relation to the proposed ‘right to disconnect’, it’s also worth noting that this is also being considered by the Fair Work Commission as part of its 2023/24 Modern Award Review, currently underway.

At the request by Minister Burke (Minister for Employment and Workplace Relations) in September 2023, the FWC is presently reviewing modern awards in relation to four key areas, including awards that cover workers in the arts and culture sector, job security, work and care and also, making awards easier to use.

In the “work and care” stream of this review, a discussion paper prepared by FWC staff and released last week on 29 January 2024 considers the right to disconnect in the context of modern award terms, inviting comment on the question as to whether there are any changes (to modern awards) needed in respect of a right to disconnect, which are necessary to ensure modern awards continue to meet the modern awards objective. Submissions are due by 11 March 2024.

Stay tuned for our further commentary on the passage of the Bill (and the various reforms contained within it) over the coming weeks.

Costs in Anti-Discrimination matters

In November 2023, the Australian Human Rights Commission (Costs Protection) Bill 2023 (the Bill) was introduced into federal Parliament.

One might be tempted to think that a proposed law related only to legal costs is not much of an issue and really only important to lawyers. But think again. The way that legal costs can (or cannot) be awarded in matters – particularly those involving employees – is a very important issue which drives behaviour and indeed the level and type of claims made.

Prior to the Bill, the position was that discrimination claims (including sexual harassment claims brought under the Sex Discrimination Act) were subject to the usual orders as to legal costs. That is, if you win you get your costs paid, if you lose you pay the other side’s costs. This is very different to claims brought under the FW Act including claims in respect of the expanded sexual harassment provisions introduced last year, which are (except in very limited circumstances) free from costs orders. That is, everyone needs to pay their own costs, regardless of outcome.

One of the recommendations of the Respect@Work Report was that discrimination matters which go to the Court following the Australian Human Rights Commission (AHRC) process should have the same costs regime as the FW Act – that is, everyone pays their own way. This recommendation was based on a conclusion that the threat of paying the prohibitive costs of the other side stopped employees from bringing discrimination claims in the Court. This would make these claims consistent with treatment of general protections and sexual harassment claims that arise from the Fair Work Act.

Instead of adopting this recommendation, the Government has instead taken a different approach, proposing through the Bill to implement what they have called an “equal access” costs approach, meaning that while employees can apply to have their costs paid by the employer if they win, an employee will never be required to pay the costs of the employer if they lose.

While this may be called an “equal access” approach, the impact is anything but equal.

There are a number of potential impacts of this proposed change, including that it is unfair for employers which are not well resourced, it encourages unmeritorious claims and significantly impacts settlement discussions.

What does this mean for employers?

If the Bill passes, the impact of this change will, in our view, be twofold:

• it’s going to encourage claims which otherwise would not have been made; and
• secondly, it also will dramatically impact early settlement discussions as the employer will know that even if the case against them has no merit at all, there is a commercial benefit in financial settlement.

Traditionally, fewer cases have been brought by employees through the AHRC, as opposed to the State Tribunals and the Fair Work Commission. This Bill – if passed – looks likely to change that statistic.

Note: The Australian Human Rights Commission Amendment (Costs Protection) Bill 2023 (Cth) was referred to the Senate Legal and Constitutional Affairs Legislation Committee on 30 November 2023. The Senate Committee’s report is due on 9 February 2024.

[1] CFMMEU v Personnel Contracting Pty Ltd [2022] HCA 1 and ZG Operations Australia Pty Ltd v Jamsek [2022] HCA 2

 

Alice DeBoos Managing Partner +61 2 9169 8444 [email protected]

Jane Silcock Executive Counsel – Knowledge +61 2 9169 8419 [email protected]

Are you complying with your Work Health and Safety duties?

There has been a growing trend of enforcement activity within the workplace health and safety (WHS) space across Australia in recent years.

According to data collected by SafeWork Australia, 2022 saw a total of 279 successful WHS prosecutions with aggregate fines totalling over $31M and an average fine of $116,840.

Amongst these 279 prosecutions:

• Victoria had 118 successful prosecutions with an average fine of $49,700;
• New South Wales had 58 successful prosecutions with an average fine of $235,700;
• Queensland had 58 successful prosecutions with an average fine of $56,020;
• Western Australia had 22 successful prosecutions with an average fine of $246,140;
• South Australia had 17 successful prosecutions with an average fine of $161,090; and
• Tasmania had 6 successful prosecutions with an average fine of $116,060.

These numbers have increased in 2023, notably across Victoria and New South Wales. Victoria saw a total of 153 successful WHS prosecutions with fines totalling just over $16M.

Further, New South Wales saw a total of 75 successful prosecutions with aggregate fines totalling $16.3M.

Both jurisdictions had a number of matters that were yet to be completed (as at the end of 2023).

WHS regulators are clearly increasing their enforcement activities and 2024 will see even higher rates of successful WHS prosecutions and larger fines imposed, based on the level of activity we are seeing.

It is also important to note the Work Health and Safety Amendment Act 2023 (NSW) that commenced in October 2023 saw a significant increase to maximum penalties across a range of offences under the Work Health and Safety Act 2011 in New South Wales, which suggests the average fine is likely to increase.

Further to this, while the average fine in Victoria is notably lower than that of other states, a current review of Victorian WHS legislation is being undertaken which looks to increase maximum penalties for WHS offences in Victoria.

Readers will also be aware of the Industrial Manslaughter provisions which have been enacted in nearly all jurisdictions.

This increased enforcement activity can be linked to the Australian Work Health and Safety Strategy 2023-2033 published by SafeWork Australia. This strategy represents a national vision for WHS, agreed to by the various state WHS regulators, which outlines targets that aim to achieve national WHS improvements and a goal of reduced worker fatalities, injuries and illnesses. One of the actions focuses on compliance and enforcement across WHS legislation and Regulations.

What does this mean for duty holders?

Duty holders must continue to be vigilant in ensuring that they are taking reasonably practicable steps to comply with their WHS responsibilities. They must be aware of the hazards and risks present at their workplace and the appropriate control measures to eliminate or reduce them. These control measures must ensure, so far as is reasonably practicable, the health and safety of their workers and other persons as to not expose them to a risk of death, serious injury or illness.

The duties extend to Officers of PCBU’s (Persons Conducting a Business or Undertaking) who must exercise due diligence to ensure that the PCBU has the appropriate systems and processes to comply with its safety duties.

Common risks that WHS Regulators are targeting include:

• Psychosocial risks;
• Vulnerable workers;
• Falls from height;
• Falling loads or objects;
• Working around moving plant;
• Appropriate plant use and adequate machine guarding; and
• Working on or near live electricity.

Enforcement alternatives

If a duty holder finds themselves faced with an alleged WHS contravention, there are other enforcement options available, such as Enforceable Undertakings (EUs). EUs provide an opportunity for a duty holder to engage with the state safety regulator in developing an agreed proposal to address the relevant breaches and implement significant work health and safety reform at their workplace to prevent future contraventions.

While an EU is a great enforcement alternative, they are becoming increasingly difficult to get. While they are difficult to get, they are not impossible, seen by the recent EU proposal by Fortescue Limited that was accepted by WorkSafe Western Australia in December 2023, the first of its kind under the recent WA harmonised style laws.

Given the current level of enforcement and compliance activity, we strongly urge businesses and their leadership teams to review their systems and processes and satisfy themselves that they are being effectively implemented in the workplace.

If you have any questions, please do not hesitate to give our WHS team a call to discuss.

 

John Makris Partner +61 2 9169 8407 [email protected]

Salim Daoura Lawyer +61 2 9169 8415 [email protected]

February 6, 2024

In this article, Geoff Fowlstone, founder of strategic communications firm Fowlstone Communications, specialising in crisis management, media relations, investor relations, government affairs and internal communications and Shelley Williams, a Partner in Kingston Reid’s Brisbane office, provide practical insights on how reporting Australian organisations can prepare for the publication of gender pay gap data later this month.

The issue of gender pay equity is never far from the public agenda but is now poised to rise to the fore of national headlines, courtesy of the inaugural release of the Workplace Gender Equality Agency’s (WGEA) gender pay gap analysis.

On 27 February 2024, for the first time, WGEA will publish private sector gender pay gap data of employers with more than 100 employees. This development comes as part of a raft of legislative changes introduced in 2023 intended to address Australia’s gender pay gap (currently 21.7%, according to WGEA’s employer census data as at November 2023).

Every Australian company that falls within this category needs to have a plan to respond to the imminent release of this first ever look ‘under the hood’ at gender pay performance, across a vast cross section of industries and occupations. This will create a minefield of legal and reputation challenges for organisations who may (depending on the data) be seen to be laggards in gender pay performance, some quite unfairly.

As Mark Twain famously opined “There are three kinds of lies: Lies, Damned Lies, and Statistics”.

WGEA’s methodology can best be described as blunt (average pay for men divided by average pay for women) and leaves little room for context. For example, there is no differentiating between industries across different Australian states and territories, and different organisational or remuneration structures.  The United Kingdom, by contrast, takes a more nuanced approach, reporting in quarterly bands, based on seniority.

WGEA will not differentiate between, for example, a consulting firm with a high level of junior support roles (typically dominated by women) and a manufacturing business which does not.  This is hard to defend in a sound bite!

However, employers will be given the opportunity to provide an Employer Statement which explains their gender pay gap results. This will need to be carefully considered and drafted to provide much- needed context, which will otherwise be missing without any public statement.

The data will also not pay heed to shifts in performance over time, that is, those organisations which acknowledge they have a gender pay gap issue and are making inroads to address it.  Implementing meaningful change takes time to gain traction.

Importantly, WGEA is not reporting on pay equity (that is, do men and women at the same level of seniority get paid equivalent amounts) which many regard as a more insightful measure.

The Workplace Gender Equality Act 2012 (Cth) (which governs WGEA and its functions), contains provisions relating to employer non-compliance with the Act. The only power WGEA has under the Act is to name and report non-compliant employers publicly and to the Minister for Women, (currently Katy Gallagher). Any attempt to avoid the reporting obligations or potential public scrutiny will therefore be misguided.

The experience in the United Kingdom, where mandatory gender pay gap reporting has been in place since 2017, provides some useful insights into what issues arise and how organisations can prepare.

Firstly, the publication of the data generated strong media interest sparking a fresh debate on gender pay.  Companies which had never before seen public profile suddenly found themselves in the limelight and under pressure to explain their performance.  This included Australian companies with a large UK employee cohort.

Secondly, industries which performed poorly received significant focus, with a detailed trawling through the results and analysis of the drivers of underperformance.

Organisations that responded effectively were prepared well in advance and had a simple narrative to explain their results and place them in the most effective context.

Australian companies preparing to face the gender pay blowtorch need to focus on five key things:

• Demonstrate clearly, with language and actions, that they are taking gender pay equity seriously and that it is a priority across the organisation, with positive examples that support this contention.
• Have a clear statement about the support for these changes at the most senior levels of management. People need to see that this is not a ‘lip service’ attempt to deflect the issue and that there is buy-in at the highest levels of the organisation.
• Communicate strategies in place to address this issue over time and, where possible, show how these are delivering measurable outcomes over time.
• Have a plan in place well in advance – organisations need to consider who is important to communicate with and the most effective strategy to engage. For example, employees, customers, suppliers, strategic partners.
• Consider and plan for the possibility of an increase in discrimination complaints and general protections applications following the release of the gender pay gap data. While the data will provide an overall organisational score, employees now have a workplace right to ask other employees about what they get paid and there is also a prohibition on pay secrecy. This means these different data sets could be used by an employee to form the view that they are paid less than their colleagues at the same level of seniority based on their gender.

If you would like to learn more about these changes and how you can best position your organisation to respond to the publication of gender pay gap data on 27 February 2024, please contact us for further information.

 

Shelley Williams, Partner, Kingston Reid +61 439 268 928 [email protected]

Geoff Fowlstone, Principal, Fowlstone Communications +61 413 746 949 [email protected]

December 12, 2023

At the beginning of 2023, we wrote that the Fair Work Legislation Amendment (Secure Jobs, Better Pay) Act 2022 (Cth) (SJBP Act) (which was passed in December 2022) represented the “most substantial reforms to workplace legislation in over a decade”. That statement may have been premature.

On 7 December 2023, the Government passed several parts of the Fair Work Legislation Amendment (Closing Loopholes) Bill 2023 (Bill), which includes significant labour hire reforms, expanded union delegate rights and the introduction of a federal wage (and superannuation) theft offence, amongst other changes. These changes will result in a significant change for many businesses. Some of these changes will come into effect almost immediately.

In this insight, the Kingston Reid team take a closer look at each of the key areas of reform that have been passed and what they mean for employers.

 

Same Job, Same Pay

Regulated labour hire arrangement orders

The new labour hire provisions create a right for various parties to apply to the Fair Work Commission (FWC) for a regulated labour hire arrangement order (RLHAO).

The FWC must make a RLHAO if:

1. an employer supplies or will supply, either directly or indirectly, one or more employees of the employer to a host to perform work for the host;
2. a ‘covered employment instrument’ – generally an enterprise agreement – that applies to the host would apply to the employees if the host employed the employees directly to perform work of that kind; and
3. the host is not a small business employer.

If a RLHAO is made by the FWC, the employer cannot, subject to limited exceptions, pay its employees less than the relevant rate of pay which would apply to the employee under the host’s covered employment instrument. The rate of pay is the full rate (including bonuses, loadings, allowances, overtime and penalty rates).

RLHAOs can take effect on or after 1 November 2024.

A host employer must give notice of the RLHAO to any employer covered by an RLHAO and must, at the request of the employer, provide information to the employer to enable the employer to determine the rate of pay to be paid.

Where an enterprise agreement that is the subject of an RLHAO is replaced, or a new labour hire employer is engaged, the host must apply to the FWC for a variation of the RLHAO to apply in those new circumstances.

Some exceptions apply

Employers will not need to comply with RLHAO to the extent it captures employees to whom training arrangements are in place. Employees performing work for the host for less than 3 months will also fall outside the scope of a RLHAO.

Hosts, employers, employees and unions can apply to the FWC for extended exemption periods and can also apply for the exemption periods to be reduced (even down to no exemption period applying). These applications will only be granted if the FWC is satisfied that there are exceptional circumstances that justify making a variation to the general 3 month exemption.

RLHAO must be fair and reasonable in the circumstances

The FWC must not make a RLHAO if it is not satisfied that it is fair and reasonable in all the circumstances to make a RLHAO. There are a variety of matters for the FWC to consider, including:

• pay arrangements;
• the nature and scope of the host’s covered employment instrument;
• the history of industrial instruments applying to the host and employer;
• the terms and nature of the arrangement under which the work will be performed (including duration of the arrangement, location where the work is being performed, number of employees performing the work, and industry where the work is being performed); and
• any other matter the FWC considers relevant.

Service based contractors

The saving grace of the recent amendment package relates to service-based contractors. Such entities are excluded from the RLHAO regime, however a party relying on such an exclusion would need to satisfy the FWC that the arrangement is one for the provision of a service, and not the supply of labour.

In order for the exemption to apply, the following will be considered:

• the involvement of the employer in matters relating to the performance of the work;
• the extent to which, in practice, the employer or a person acting on behalf of the employer directs, supervises or controls (or will direct, supervise or control) the regulated employees when they perform the work, including by managing rosters, assigning tasks or reviewing the quality of the work;
• the extent to which the regulated employees use or will use systems, plant or structures of the employer to perform the work;
• the extent to which either the employer or another person is or will be subject to industry or professional standards or responsibilities in relation to the regulated employees;
• the extent to which the work is of a specialist or expert nature.

It will be important that employer assess their work arrangements against this criteria to consider whether they are exempt from the labour hire scheme.

Alternative Protected Rate of Pay Orders

If the FWC makes a RLHAO, or a party has applied to the FWC for a RLHAO, a second application can be made for an alternative protected rate of pay order (APRPO).

The effect of an APRPO is that instead of applying the rates of pay in the host’s covered industrial instrument (which would cover the employees if they were employed by the host), the FWC can order that the rates payable are the rates that exist in an industrial instrument (again, generally an enterprise agreement) that applies to:

1. a related entity of the host and would apply to a person employed by the related entity to perform the relevant work; or
2. the host and would apply to a person employed by the host to perform the relevant work in circumstances that do not apply to the employees covered by the RLHAO.

The FWC will be empowered to deal with disputes about RLHAOs, including by arbitration. Before the FWC gets involved, parties to the dispute must attempt to resolve the dispute at a workplace level.

Anti-avoidance provisions

Anti-avoidance provisions have been included centring around arrangements and schemes being entered into which preclude or restrict the FWC’s ability to make RLHAOs, whether or not those schemes would otherwise be enforceable.

An employer must not try to enliven the exemption that an RLHAO will not apply to work of less than 3 months by engaging different employees to perform the same or similar work, while a host must not enter into such short-term arrangements where different people perform the same or substantially the same work in order to avoid the requirement of the employer to pay the required rate of pay. Employees should not be terminated and reengaged as independent contractor in order to avoid the provisions.

The anti-avoidance provisions apply retrospectively from the date the Bill was introduced. That is, from 4 September 2023. This means that employers or hosts should not be taking steps to try any avoid the operation of the labour hire provisions.

Key takeaways

• One of the requirements the FWC must be satisfied of before making a RLHAO is that the ‘employer supplies or will supply, either directly or indirectly, one or more employees of the employer to a regulated host to perform work for the regulated host…’

Where an application for a RLHAO is made, a party will have to actively resist an application for a RLHAO if the employer is providing a service, rather than labour to the host.

At this stage, there is no scope for the employer to make or be notified of an application for an RLHAO. It is yet to be seen the scope of their involvement as a respondent or someone named in the RLHAO, however, it is likely that the employer in some, if not all cases, will need to be involved in the process to ensure that the FWC is appropriately appraised of all the matters that go towards whether or not the RLHAO should be made.

• The ability for the FWC in making a APRPO to import rates from the host’s other agreements is concerning. The proposed provisions would allow the FWC to enforce the rates of pay payable to the host’s employees in completely separate geographically locations, where market rates are much higher and wage expectations are different.
• The anti-avoidance provisions are retrospective, backdated to 4 September 2023. Employers and hosts should be cautious to ensure that they are not entering into arrangements to avoid the application of an RLHAO.

 

Wage and Superannuation Theft

The Bill introduces a new criminal offence of intentional wage and superannuation theft (wage theft) which will take effect from 1 January 2025.

Not all instances of underpayment will be regarded wage theft.  Wage theft will occur where an employer intentionally engages in conduct that results in the failure to pay an employee their minimum statutory entitlements (that is, entitlements arising under the Fair Work Act 2009 (Cth) (FW Act), or a fair work instrument such as a modern award or enterprise agreement) – defined in the Bill as “required amounts”.

Standard of Proof

Given the seriousness of a finding that wage theft has occurred, for a prosecution of a wage theft offence to be successful, fault must be proved to the requisite criminal standard – being “beyond reasonable doubt”. To that end, intention must be proven in relation to the conduct elements – that is, that there is proof beyond reasonable doubt that the employer intended for their conduct to result in the non-payment of the required amount.

For example, if an employer mistakenly misclassifies an employee under a modern award, or makes an inadvertent payroll error, they will not be guilty of an offence, even though the misclassification has resulted in the employee receiving less than they ought to have. On the other hand, if an employer deliberately misclassified an employee in order to pay them a lower rate, it would be an offence under the Bill.

Penalties

Penalties include a term of up to 10 years imprisonment, or a fine up to the greater of 3 times the underpayment amount (being the difference between the required amount and the amount actually paid to the employee) and 5,000 penalty units (currently $1,565,000) for an individual or 25,000 penalty units (currently $7,825,000) for a body corporate.

Where a person is guilty of committing two or more offences and the aggregated offences arose out of a course of conduct by the person, the person is taken to have been found guilty of a single offence.

Related Offences

The Bill also includes penalties for “related offences” includes offences which are associated with a failure to pay a required amount, such as:

• being an accessory after the fact;
• attempting to commit the offence;
• being complicit;
• joint commission;
• procuring another person to commit the offence;
• inciting the commission of an offence; and
• conspiracy to commit an offence.

The Voluntary Small Business Wage Compliance Code

It is proposed that a Voluntary Small Business Wage Compliance Code may be developed.  If a small business employer complies with the Compliance Code in rectifying an underpayment that has occurred, the Fair Work Ombudsman (FWO) will be precluded from referring conduct resulting in the failure to pay a required amount to the DPP for prosecution as wage theft or entering into a cooperation agreement with the employer.

Cooperation Agreements

The FWO will be able to enter “cooperation agreements” with a person which relates to conduct engaged which may amount to an offence if that person has reported that conduct to the FWO. The effect of the cooperation agreement is that the FWO cannot refer the conduct to the Australian Federal Police or Director of Public Prosecutions whilst the agreement is in place.

Key Takeaways

• A new criminal offence applies to employers in relation to intentional underpayments. Employees, officers and agents of employer may be implicated by the “related offences’ provisions.
• Genuine mistake such as an inadvertent payroll error does not constitute an offence under the Bill.
• Significant penalties will apply but small businesses that rectify underpayments in accordance with the Voluntary Small Business Wage Compliance Code should avoid prosecution and penalties.

 

Work Health & Safety

There are a range of work health and safety (WHS) changes contained within the Bill. We’ve summarised the key changes below.

Industrial Manslaughter Offence

The Bill also includes significant WHS reforms. In particular, the amendments pose major changes to criminal liability under the Commonwealth Work Health and Safety Act 2011 (WHS Act) by introducing:

• a new offence of industrial manslaughter; and
• increasing increase all penalties in the WHS Act by nearly 40 per cent and provide for future indexing.

This means an increase in potential jail time for workplace deaths of up to a maximum of 25 years imprisonment for individuals, or a fine of up to $18 million for companies.

Notably, the federal WHS legislation will now mirror the Victorian state legislation, while a maximum penalty of 20 years imprisonment for individuals is currently imposed in Queensland, Western Australia and the ACT.

Proposed section 30A provides an offence of industrial manslaughter is committed where a person is conducting a business or undertaking (PCBU), or is an officer of a PCBU and:

• the person has a health and safety duty;
• the person intentionally engages in conduct;
• the conduct breaches the health and safety duty;
• the conduct causes the death of an individual (including where conduct substantially contributes to the death);
• the person was reckless, or negligent, as to whether the conduct would cause the death of an individual.

If the offence does not meet the threshold for industrial manslaughter, an alternative verdict can be decided following a hearing for industrial manslaughter and defendants are at risk of being found guilty of a Category 1 or 2 offence. The changes further clarify that Category 1 offences apply to officers of persons conducting a business undertaking. There is no limitation period for industrial manslaughter or Category 1 and 2 offences.

Corporate Criminal Liability

Another big change in respect of work health and safety are the changes which amend criminal liability provisions for bodies corporate, the Commonwealth and public authorities.

A corporation will be taken to have committed the physical elements of the offence if, it can be established that the board of directors, officers, employees or agents engaged in the in conduct through express or implied authorisation.

The mental state or fault component of an offense—excluding negligence—will be attributed to the corporation if:

• the board or an officer, employee or agent of the corporation had the relevant state of mind or expressly, tacitly or impliedly authorised or permitted the relevant conduct;
• a corporate culture exists that directed, encouraged, tolerated or led to the conduct constituting the offence.

Broadly, corporate culture may be a summation of one or more attitudes, policies, rules, courses of conduct or practices existing within the corporation generally or in the part of the corporation in which the relevant activity takes place; and

• with respect to conduct of officers, employees or agents, if the corporation is unable to establish it took all ‘reasonable precautions’ to prevent the conduct or the relevant authorisation or permission.

Organisations captured by the federal WHS Act will need to review their corporate WHS strategy and mechanisms of accountability to ensure adequate management of officers, employees and agents to ensure they are able to demonstrate the existence of a corporate culture that prioritises the health, safety and wellbeing of its workforce – actively led from the C-suite – and that all reasonable precautions are taken consistently.

Asbestos and Silica Safety and Eradication Agency

The key changes introduced by the Bill are to rename the Agency to refer to silica (as well as asbestos), to align to its broadened functions of coordinated action at a national level in relation to silica safety and silica-related diseases.

The rebadged Agency will act as a national coordination mechanism, intended to better align efforts across Australian states and territories in relation to preventing, controlling and managing occupational dust diseases (including silicosis) in Australia, as well as having responsibility for silica coordination, awareness raising, research, reporting and advising the Government in relation to silica.

The Agency will also take over responsibility for the Silica National Strategic Plan, (from the Department of Health and Aged Care).

 

Workers Compensation and Comcare

First Responders and PTSD Reforms

Amendments have been made to the Safety, Rehabilitation and Compensation Act 1988 (SRC Act) which will mean that first responders who sustain post-traumatic stress disorder (PTSD) will not have to prove their employment significantly contributed to their PTSD for the purpose of their workers’ compensation claim.

The changes have introduced a reverse onus of proof for first responders with PTSD, to increase accessibility to recovery support and rehabilitation.

This will establish a rebuttable presumption that unless there is compelling contrarian evidence, the PTSD endured by ambulance officers, paramedics, emergency services communications operators, firefighters, the Australian Federal Police and members of the Australian Border Force, is presumed to have been significantly influenced by their occupational duties.

Comcare Guide for Arranging Rehabilitation Assessments and Requiring Examinations

The changes further insert a new section 57A to the SRC Act, which requires Comcare to develop a document called the “Guide for Arranging Rehabilitation Assessments and Requiring Examinations” (Guide).

The purpose of the Guide is to ensure accountable decision making in relation to arranging a rehabilitation assessment or requiring an employee to undergo an independent medical examination.

Section 57A requires a set of prescriptions for the development of the Guide, aimed at limiting the overuse of independent assessments which has been criticised for the downplaying of medical issues on the basis of a short assessment being completed by a practitioner that is unfamiliar with the patient taking precedence over medical advice from the patient’s long-standing practitioner.

 

Other Changes

Workplace Delegates’ Rights

There are also important changes to the rights of workplace delegates (a person appointed or elected in accordance with the rules of a union to be a delegate or representative for members who work in a particular enterprise). These changes operate at the Award, enterprise agreement and individual rights level for a workplace delegate.

At the Award level…

At the Award level, the FWC, in addition to the other work it is carrying out in reviewing Awards in response to a request from the Minister in September 2023, will be required by 30 June 2024 to have included within all Awards a “delegate’s rights” term.

These terms must ensure that a workplace delegate is entitled to:

• reasonable communication with members and persons eligible to be members in relation to their industrial interests;
• reasonable access to the workplace and workplace facilities for the purpose of representing member and potential members interests; and
• unless the business is a small business, reasonable access to paid training during normal working hours for the purpose of their role as a workplace delegate.

Whilst the availability of workplace delegates training for the purpose of dispute resolution training is a feature currently of some Awards, it is not generally a feature across the Award system. Nor are the new “delegate’s rights” concerning reasonable access to facilities and communication with members and potential members.

Such entitlements were more commonly reflected in the terms of enterprise agreements with highly unionised workforces. In the area of enterprise agreements there are also some important changes.

At the enterprise agreement level…

At the enterprise agreement level, all enterprise agreements commence their access period from 1 July 2024 (that is the employer has asked employees to vote on the enterprise agreement before that date), need to have a “delegate’s rights” clause that is at least as favourable as the clause within any Award that would otherwise apply to the employee.

If there is no term in the proposed enterprise agreement, or the term is not as favourable as any aspect of the Award clause, then the Award clause applies as a term of the enterprise agreement.

At an individual delegate’s rights level…

At an individual delegate’s rights level, there are new “workplace rights” under the banner of “industrial activities” defined for workplace delegates. An employer of a workplace delegate must not:

• unreasonably fail or refuse to deal with the workplace delegate;
• knowingly or recklessly make a false or misleading representation to the workplace delegate; or
• unreasonably hinder, obstruct or prevent the exercise of the rights of the workplace delegate (i.e. the right to reasonable communication, reasonable access to facilities and reasonable access to training for their role as a delegate).

It can be expected that these new “delegate’s rights” will form a basis for new general protections claims agitated by Unions not only as delegates seek to test the limits of these new privileges, but also one could expect that they find their way into the strategies that Unions might adopt for traditional industrial disputes and those that arise in bargaining.

Small Business redundancy exemption

The small business redundancy exemption is intended to remove the redundancy pay carve out for small businesses for circumstances where a larger business incrementally downsizes to become a ‘small business employer’ (with 15 or less employees) due to insolvency. Employees of small business employers are not generally entitled to redundancy pay.

When a business incrementally downsizes in the lead up to liquidation or bankruptcy, the residual employees who are helping with the winding-up of the business (e.g., payroll and bookkeeping staff) can lose their entitlement to redundancy pay due, notwithstanding that the employees who were made redundant before the employer was a ‘small business employer’ did receive redundancy pay.

Strengthening protections against discrimination for employees subjected to family and domestic violence

These changes extend existing anti-discrimination provisions within the FW Act to offer better protection for employees who have been, or continue to be, subjected to family and domestic violence (FDV), in the following ways:

• prohibit the creation and enforcement of ‘discriminatory’ terms within modern awards and enterprise agreements that discriminate against an employee on the basis of FDV or reasons relating to FDV;
• include subjection to FDV as a matter that the FWC must take into account when performing its functions or exercising powers; and
• expressly making subjection to FDV a ‘protected attribute’ (for the purposes of the FW Act’s general protections provisions), to offer more express protection for employees (and prospective employees) against adverse action (and unlawful termination) because they have, or are currently, being subjected to FDV.

These changes follow on from the changes introduced early this year (under both the SJBP Act and the subsequent Fair Work Legislation Amendment (Protecting Worker Entitlements) Act 2023 (Cth) reforms), which introduced:

• paid FDV leave for employees experiencing FDV (including casual employees);
• confidentiality requirements in relation to notice and evidence that may be requested in relation to taking such leave;
• specific requirements to ensure FDV leave is not recorded on payslips; and
• the ability for affected employees to request flexible working arrangements due to subjection to FDV.

Amendments regarding (bargaining) mediation and conciliation conference orders

Earlier this year, the SJBP Act introduced new provisions requiring bargaining parties to attend a FWC facilitated conference in attempt to resolve issues before industrial action occurs.

The provisions operate so that where the FWC makes a protected action ballot order in relation to a proposed enterprise agreement, it must also make an order directing the bargaining representatives to attend a mediation conference which must occur either before, or on the day on which voting on the protected action ballot, closes.

However, in a decision[1] earlier this year, the Full Bench identified a significant flaw – an employee bargaining representative’s non-compliance with an order to attend a FWC facilitated conference could render any subsequent employee claim action unprotected – not just for those represented by the non-complying bargaining representative, but for all others participating in the action.

These changes address this issue by clarifying exactly who is required to attend a conciliation conference in order for any subsequent employee claim action to be protected.

 

What’s coming in 2024?

Whilst the Government has succeeded in delivering itself an early Christmas present with the passing of this first section of the Bill, the first few months of next year will continue to present as a period for further change as the Senate Committee inquiring into the Bill provides its report (due on or before 1 February 2024), and those aspects of the Bill which were not passed in December come back up for debate and resolution.

Some of those key areas of potential change are:

• changes to the definition of casual employment as well as the casual conversion provisions to allow for employee initiated conversion;
• new provisions aimed at providing protections for regulated workers – including road transport industry and digital platform ‘gig economy workers’;
• independent contractors and the defence to “sham contracting”; and
• changes to the multi-employer bargaining framework,

amongst others.

For further commentary on the key areas of reform that will be revisited by Parliament in the new year, please check out the guidance previously published by Kingston Reid which can be accessed here.

Additional changes

Members of the Senate are also likely to push their own changed agenda in exchange for providing support to the Government to have the residual aspects of the Bill passed.

In this respect, there are two notable areas of change which have already been tabled by the Greens, in relation to the intractable bargaining provisions, and also the “right to disconnect”. These proposals have the potential to profoundly change employer rights and obligations.

In relation to the Greens’ intractable bargaining proposal, if the FWC is called on to arbitrate an intractable bargaining dispute, any determination made by the FWC cannot result in any term in the determination being less favourable for an employee or any union than the terms of an enterprise agreement that applies to the employees, prior to the determination.

Effectively, once the FWC is arbitrating an “intractable bargaining dispute”, employees and the union cannot lose – they get to keep everything they currently have, and any changes can only be to improve existing conditions.

Finally, Minister Burke has signalled a willingness to discuss the Greens’ “right to disconnect” proposal in the new year, which revives the Fair Work Amendment (Right to Disconnect) Bill 2023 tabled by the Greens in March 2023 and contains a prohibition on employers contacting employees outside of their hours of work (including during leave), except in certain limited circumstances.

Stay tuned for further updates by the Kingston Reid team, and don’t hesitate to contact us if you require advice about the implications of these changes for your organisation.

[1] CEPU v Nilsen (NSW) Pty Ltd [2023] FWCFB 134

 

Michael Mead Partner +61 2 9169 8428 [email protected]	Duncan Fletcher Partner +61 8 6381 7050 [email protected]	Liam Fraser Partner +61 7 3071 3113 [email protected]
Katie Sweatman Partner +61 3 9958 9605 [email protected]	Emily Baxter Special Counsel +61 2 9169 8411 [email protected]	James Parkinson Special Counsel +61 8 6381 7053 [email protected]
Xavier Burton Lawyer +61 8 6381 7068 [email protected]	Beth Silverman Associate +61 3 9958 9603 [email protected]	Emma McCarthy Lawyer +61 2 9169 8422 [email protected]
Jane Silcock Executive Counsel – Knowledge +61 2 9169 8419 [email protected]	Frank Daly Paralegal +61 8 6381 7051 [email protected]	Krystina Sader Paralegal +61 8 6381 7072 [email protected]

December 1, 2023

The NSW Government has introduced significant amendments to state industrial relations legislation. Those amendments follow significant promises the Government made to the Union movement prior to its election, and the recommendations made to the Government by the Industrial Relations Taskforce it established shortly after its election. This week, the Industrial Relations Amendment Bill 2023 (NSW) (Bill) passed through both houses of parliament, and it is expected to soon receive royal assent and come into effect. Our summary of the key changes is below.

Wages Cap Repealed

The Bill repeals the provision of the Industrial Relations Act 1996 (NSW) which requires the Commission to give effect to the Government’s declared wages policy. This wages cap has been seen as a restriction on the Commission’s ability to exercise its discretion taking into account all factors relevant to a dispute in circumstances the resolution of a dispute would lead to increased employee-related costs which were not offset by employee-related costs savings. The repeal of this provision was foreshadowed before the election and was a core commitment that was made by the new Government. The removal of this limitation on the Commission’s powers is likely to lead to additional claims by unions in respect of public sector conditions of employment.

The apparent trade-off for this amendment is the inclusion of the fiscal position and outlook of the Government as a mandatory consideration for the Commission in respect of the Commission’s function in determining public sector conditions of employment. It is not yet know what comparative weight will be given to this factor by the Commission, amongst the various factors in any given dispute.

Mutual Gains Bargaining

The Bill introduces the new concept of ‘mutual gains bargaining’ in respect of public sector and local government employers. Where a union and employer agree to engage in mutual gains bargaining, the Industrial Relations Commission will be required to act as a facilitator of these bargaining processes unless the parties appoint an alternative third party facilitator. The bargaining is underpinned by principles of collaboration and identification of areas of mutual need and desire and aims to build consensus. The process is underpinned by good faith bargaining obligations. This is similar to the federal system.

The facilitator or any party to the bargaining may declare the bargaining unresolved and give a report to the Commission regarding the conduct of the parties during bargaining and the outstanding issues. This will be treated by the Commission as a notice of dispute and will proceed through the Commission’s ordinary processes. Any arbitration following this process will take into account the parties’ conduct during mutual gains bargaining.

Reintroduction of the Industrial Court

In a change which has the potential to affect both public sector and private sector employers across the state, the Bill re-establishes the Industrial Relations Commission in Court Session, also known as the Industrial Court. The Industrial Court will resume its pre-2016 jurisdiction, and will have broad power to:

1. deal with offences and civil contraventions under work health and safety, worker’s compensation, workplace surveillance and explosives legislation;
2. make declarations and award remedies in respect of unfair contracts of employment;
3. make declaration of law in respect of any matters over which the Industrial Relations Commission has jurisdiction;
4. deal with appeals in accordance with certain superannuation legislation; and
5. make orders in respect of underpayment claims in excess of the small claims limit.

These changes consolidate in the Industrial Court work-related enforcement mechanisms which were previously allocated variously to the District Court and Supreme Court. The Industrial Court will be a superior court of record with equivalent status to the Supreme Court.

Reintroduction of Regional Allocations for the Industrial Relations Commission

The Bill reintroduces the practice of allocating members of the Industrial Relations Commission to particular regional areas of responsibility. This allows a greater level of local knowledge in respect of peculiarly regional matters to be relied upon.

 

Christa Lenard Partner +61 2 9169 8404 [email protected]

Luke Maroney Senior Associate +61 2 9169 8433 [email protected]

November 27, 2023

Restrictions on the use of fixed and maximum term contracts were one of the significant and well-publicised reforms introduced by the Fair Work Legislation Amendment (Secure Jobs, Better Pay) Act 2022 (Cth) (Amendment Act) in late 2022 which are set to commence in just a week’s time, from next Wednesday 6 December 2023.

Throughout 2023, employers across Australia have been taking steps to review their hiring practices and existing workforce composition to ensure compliance with the new provisions on and from 6 December. These reforms have a particular impact on employers with uncertain funding arrangements, particularly in the tertiary education and not-for-profit sectors.

Last Friday afternoon, Minister Burke introduced the Fair Work Amendment (Fixed Term Contracts) Regulations 2023 (Regulations), which create further exceptions for the purposes of the limitation on fixed term contracts provisions which apply in respect of organised sports, live performance industry employees, philanthropic entities and – as anticipated – higher education employees.

In effect, the Regulation essentially operates as a ‘stay’ of the commencement of the application of the new restrictions for fixed term contracts in the abovementioned areas for a limited period of 6 months – that is, until 1 July 2024. However, only contracts entered into on or after next Wednesday 6 December 2023 (and before 1 July 2024) will be exempted from the restrictions.

The challenge that the Regulations respond to is that employers in these sectors are typically (significantly) dependent on government or other funding to operate their core functions. In relation to tertiary education, the current manner in which funding is allocated creates significant difficulties in applying the new provisions of the FW Act relating to fixed term contracts. For example, where funding is allocated to particular projects under largely recurrent government schemes, but in variable amounts, or where the funding is allocated on an annualised basis, the exceptions to the restrictions introduced by the Amendment Act are unlikely to apply. This creates a difficulty which would appear to require employers to engage employees on ongoing contracts, despite not having certainty from Government that the positions will, in fact, be funded on an ongoing basis.

While the tertiary education sector provides a particularly sharp example of this issue, it is not alone. In the not-for-profit sector, projects are often funded by recurrent short-term government grants, with employment contracts fixed to a duration reflecting the funding. These recurring grants cause the same issue as those faced in the community sector.

The purpose of the Regulations is to allow for additional time for relevant employers to continue discussions with DEWR in relation to the application of the fixed term contract limitations, and it remains to be seen what will emerge from those discussions in the lead up to 1 July 2024 – importantly, whether any new (permanent) exceptions will be introduced.

For comprehensive discussion of the reforms introduced under the Amendment Act, including but not limited to the new limitations on fixed and maximum term contracts, please see our Insight here.

As we communicated last week (in a separate Insight article looking at recent developments arising in respect of the Government’s Closing Loopholes Bill), Minister Burke has now agreed to certain amendments in respect of the Bill’s gig-economy provisions as well as the “same job, same pay” provisions. A revised Bill reflecting certain amendments to these provisions (arising whilst the Senate inquiry into the Bill continues) is expected to be tabled in the House of Representatives this week.

To understand whether your organisation may be able to take advantage of the reprieve in the regulation of its fixed and maximum term contracts, please contact a member of the Kingston Reid team.

 

Luke Maroney Senior Associate +61 2 9169 8433 [email protected]

Katie Sweatman Partner +61 3 9958 9605 [email protected]

 

Jane Silcock Executive Counsel – Knowledge +61 2 9169 8419 [email protected]

November 22, 2023

Outside the developments we have seen in relation to the Government’s proposed “Closing Loopholes” laws, and the looming dates for aspects of the “Secure Jobs, Better Pay” reforms to take effect – including the sunsetting of “Zombie Agreements” and limitations on the use of fixed term contracts – the past month or so has seen a number of important court and Commission decisions come down.

Federal Court finds enterprise agreement capable of retrospective operation

In Murtagh v Corporation of the Roman Catholic Diocese of Toowoomba [2023] FCAFC 172, the Full Federal Court determined that enterprise agreements are capable of operating retrospectively to confer entitlements upon former employees whose employment had ended before the relevant agreement was ever made.

In that case, the employer was found to have contravened its agreement by not paying a back payment to former employees in these circumstances – even to an employee that had left around 12 months earlier.

This is at odds with the long-accepted orthodoxy that enterprise agreements cannot operate in this way, given that the Fair Work Act provides that “an enterprise agreement does not give a person an entitlement unless the agreement applies to the person.

As the Court observed, this is an issue of “considerable systemic importance and related difficulty”, given that enterprise agreements commonly include terms for back-payment of retrospective pay increases (which these generally understood to provide an entitlement only to current employees).

In our view there is room for significant doubt about the correctness of this judgment, and it remains to be seen whether or not it will be challenged.

“Holding discussions”: scope of right of entry provisions clarified by Full Federal Court

The Full Federal Court in Communications Electrical Electronic Energy Information Postal Plumbing and Allied Services Union of Australia v Austal Ships Pty Ltd [2023] FCAFC 180 has overturned a first instance judgment of the Federal Court from late 2022, concerning the right of entry provisions of the Fair Work Act.

At first instance, Colvin J held that although the Act allows right of entry permit holders to enter premises for the purpose of “holding discussions” with relevant employees, an entry is unauthorised if part of the purpose is to seek some form of agreement, commitment or pledge.

On this basis, it would not be lawful for a permit holder to exercise right of entry to seek signatures on a petition, or to recruit members, as these things would be outside the boundaries of a “discussion”.

The Full Court accepted that this was an unduly narrow construction of the relevant provisions, and that discussions will often be had for the very purpose of achieving a particular outcome. The Court held that it was artificial to distinguish holding a discussion from the realisation of the purpose or objective of those discussions.

In light of the Full Court’s judgment, this will no longer be a lawful basis for an employer or occupier of premises to refuse entry.

Multi-employer bargaining authorisations

We have started to see some early Commission cases involving the more controversial aspects of last year’s “Secure Jobs, Better Pay” provisions being handed down.

This has included multi-employer bargaining authorisations being made in the early learning and education sectors. These applications were largely determined by consent, and so the more complex aspects of the reforms have not yet been the subject of fully reasoned consideration.

That said, they nevertheless provide some important insights into the operation of the new provisions.

First, the Commission has acknowledged the complexity and uncertainty of the new multi-employer bargaining schemes which will inevitably be the subject of future debate.

Second, and more importantly, the Commission has indicated that concept of “clearly identifiable common interests – central the multi-employer bargaining framework – is one of “wide import” and tends to “any joint, shared, related or like characteristics, qualities, undertakings or concerns”. This gives credence to employer concerns about the breadth of the provisions.

Fair Work Commission makes first intractable bargaining declaration

We have also now seen the first intractable bargaining declaration (relating to bargaining with Fire Rescue Victoria).

There was no contest in this case that bargaining had become “intractable”, and so again the boundaries of that threshold concept are yet to be fully explored. The Commission has however indicated (without necessarily deciding) that the requirement for the Commission to have previously assisted with “the dispute” means the dispute which led to bargaining becoming intractable, as opposed to just bargaining more generally.

The matter is now listed for hearing in December for the purposes of arbitrating the terms of the Workplace Determination. It appears likely that this will involve some contest about the extent to which parties are able to revisit their position on matters which were the subject of bargaining – an important issue on the overall intractable bargaining framework.

 

Brad Popple Special Counsel +61 3 9958 9613 [email protected]