The Jobs and Skills Summit closed on Friday in Canberra with the Government saying it is committed to “immediate” action to update the Fair Work Act. This is in addition to a list of what it has described as ‘complementary existing commitments’ that it committed to at the election and, in many cases, are already in bills that are before parliament. Here are links to previous Insights: Respect@work and gender equality and Post-election Insight.
Before we throw our current copies of the Fair Work Act in the bin, remember that this immediate action starts with business and government consultation and must be passed by the parliament, including an upper house where the government needs the support of the Coalition or a combination Greens and a crossbencher to get it through. Those who attended the Kingston Reid Job Summit Fringe event in Canberra heard from representatives of these three groups and it suggests that support is anything but guaranteed.
The fact that the change will not be instantaneous is important because there is a lack of clear detail in what the government has announced.
The Jobs + Skills Summit Outcomes document published by the Government says that it will update the Fair Work Act to create a “simple, flexible and fair new framework”.
Below we have set out what the government has said, suggested what the government might mean and provide our view on what this could mean for you.
What the government has said:
A new framework that: “Ensures all workers and businesses can negotiate in good faith for agreements that benefit them, including small businesses, women, care and community services sectors, and First Nations people.”
What the government might mean:
This is a clue that the “sector bargaining”, referred to by the ACTU during the summit, may not only be drawn along traditional industry or “single interest” employer lines. The inclusion of a reference to “small businesses”, “women” and “First Nations people” suggests that there may be an ability for people in these categories to bargain collectively even if they work in different industries and forms of business. However, it also reflects a reference to the current low paid bargaining stream which exists but is not utilised.
What this could mean for you:
Employers will need clarity on whether these new forms of bargaining will be an opt-in model for them or whether they can be forced to bargain along these new lines.
What the government has said:
A new framework that: “Removes unnecessary complexity for workers and employers, including making the Better Off Overall Test simple, flexible and fair.”
What the government might mean:
This suggests that the Government will revise previous proposals to simplify the Better Off Overall Test to focus on an overall comparison of the benefits terms and conditions of employment rather than a line-by-line approach. This should include restrictions on unrealistic and hypothetical comparisons between working arrangements under the proposed enterprise agreement and underlying award. Hopefully, there may also be an ability to focus on the non-monetary needs of the group of employees voting for the agreement and the specific needs of the business they are working in.
What this could mean for you:
If previous feedback from employers is genuinely embraced, this is one of the most promising developments that might come from these reforms. The most important question is whether any relaxation of the Better Off Overall Test will be restricted to union negotiated enterprise agreements, effectively making unions “gate keepers” for the improved system.
What the government has said:
A new framework that: “Gives the Fair Work Commission the capacity to proactively help workers and businesses reach agreements that benefit them, particularly new entrants, and small and medium businesses.”
What the government might mean:
This suggests that the Fair Work Commission may be given stronger arbitral powers somewhere between the current bargaining orders (which are about how bargaining is conducted rather than what the enterprise agreement will be) and the making of entire arbitrated agreements when industrial action is terminated to prevent serious damage to the bargaining parties, third parties or the economy.
One possibility is that these new arbitral powers could be used when there are a small number of issues that are preventing an enterprise agreement from being made as a means of avoiding industrial action. The specific reference to “…new entrants, and small and medium businesses.” also suggests that the Fair Work Commission may be given a more proactive role in guiding bargaining where the participants have limited resources or experience in the bargaining process.
What this could mean for you:
Giving the Fair Work Commission further powers to help employers and employees reach agreement is a promising development and potentially fills a gap in the current system. Any arbitral power must be underpinned by a productivity objective and an overriding principle that arbitrated terms must be aimed at simplifying agreements rather than adding to complexity. Employers should be wary of these reforms being used as a trojan horse to restore the broad arbitral powers to resolve any workplace dispute which led to frequent destabilising litigation last century. Instead, the powers need to be tightly focussed on bargaining and the making of enterprise agreements. It will be interesting to see what effect this has on the good faith bargaining provisions.
What the government has said:
A new framework that: “Ensures the process for agreement terminations is fit for purpose and fair, and sunsets so called ‘zombie’ agreements.”
What the government might mean:
The paring of two opposing issues (use by employers of agreement terminations as a bargaining tactic and the potential difficulties in terminating zombie agreements) suggests that there will not be a blanket abolition of the power to terminate enterprise agreements. Employers should expect a sunset provision for pre-Fair Work Act enterprise agreements similar to the coalition government’s omnibus bill and further preconditions that must be met before the Fair Work Commission can terminate an enterprise agreement. These pre-conditions are likely to be based around employee welfare and prevention of agreement termination applications as a tactic to gain leverage in enterprise bargaining negotiations with employees.
What this could mean for you:
Any employer intending to terminate an existing enterprise agreement should consider timing very carefully. There is a risk that the changes will be legislated to commence from a policy announcement date rather than the date the legislation commences. It will also be important to understand the impact of Minister Burke’s letter to the Fair Work Commission, which notifies it of the proposed changes, on any decision that it may make to terminate an enterprise agreement.
What the government has said:
Update the Fair Work Act to: “Provide proper support for employer bargaining representatives and union delegates.”
What the government might mean:
There is no detail about what this statement will mean in practice. While it could be the provision of additional resources to the Fair Work Commission to facilitate bargaining, it is also possible that it encompasses advisory support. Another possibility is that this will be used as a basis to introduce a mechanism for funding union involvement in bargaining through an employer or employee bargaining fee.
What this could mean for you:
The government has not explained what “proper support” means. In its most extreme form, this change could have a significant impact on employers (and potentially employees) who may be required to pay for it operationally or financially.
What the government has said:
Update the Fair Work Act to: “Provide stronger access to flexible working arrangements and unpaid parental leave so families can share work and caring responsibilities.”
What the government might mean:
It is likely that these reforms will be centred around the equalising of parental leave under the Fair Work Act regardless of the gender of parents. There is also potential for changes that make it harder for employers to resist employee requests for flexible working arrangements such as “working from home”.
What this could mean for you:
Regardless of the final form of the changes, it is unavoidable that employers will need to reassess their strategies for managing requests for flexible working arrangements.
What the government has said:
Update the Fair Work Act to: “Provide stronger protections for workers against adverse action, discrimination, and harassment.”
What the government might mean:
This is an issue which has not been discussed publicly and was a surprise inclusion to many. The link between “discrimination and harassment” and “adverse action” already exists in a legal sense. It is possible that this suggests a watering down of the current tests applied by the Courts in adverse action cases.. It also suggests that there could be a move to importing concepts of procedural fairness into the general protections framework.
What this could mean for you:
The High Court has carefully balanced the rights of employers, employees and unions in its interpretation of the current adverse action laws so that rights are protected but the business needs of employers are not undermined. Any legislative attempt to change this delicate balance will involve further litigation to determine its impact.
The government has said that the Department of Employment and Workplace Relations will commence detailed consultations with business and unions on these matters in the week commencing 5 September 2022.
The government has also said that “Business, unions and Government committed to work proactively together to:
- Strengthen tripartism and constructive social dialogue in Australian workplace relations
- Revitalise a culture of creativity, productivity, good faith negotiation and genuine agreement in Australian workplaces
- Establish a tripartite National Construction Industry Forum to constructively address issues such as mental health, safety, training, apprentices, productivity, culture, diversity and gender equity in the industry
The use of expression “tripartism” suggests that the Jobs and Skills Summit is likely to be the first of many roundtable discussions convened by government to try to find common ground between business, unions and government. The danger for employers is that unions and government appear to be aligned on many issues but business representatives bring a much more diverse range of views which makes it difficult to develop a united position
Areas for further work
The government has also identified the following areas for further consultation with unions and business.
- Consider options to support the Fair Work Commission build cooperative workplace relationships.
- Consider how to best help employer representatives and unions to improve safety, fairness and productivity in workplaces.
- Amend relevant legislation to give workers the right to challenge unfair contractual terms.
- Initiate a detailed consultation and research process on the concept of a living wage, reporting back in late 2023.
- Initiate a detailed consultation and research process considering the impact of workplace relations settings (such as rostering arrangements) on work and care, including childcare.
- Consider allowing the Fair Work Commission to set fair minimum standards to ensure the Road Transport Industry is safe, sustainable and viable.
- Ensure workers have reasonable access to representation to address genuine safety and compliance issues at work.
- Consider possible improvements to Modern Awards and the National Employment Standards.
Consistent with comments made by government representatives at the Kingston Reid Job Summit Fringe, these further areas of reform appear to be aimed at cementing ideas for the future as part of a long-term legislative agenda. Employers should keep a watchful eye as these ideas become more solid policy proposals.
Kingston Reid will continue to keep our clients informed as the process of workplace law reform unfolds.