Secure jobs, better pay – Australia’s workplace relations overhaul - Kingston Reid

Secure jobs, better pay – Australia’s workplace relations overhaul

The Federal Government introduced the Fair Work Legislation Amendment (Secure Jobs, Better Pay) Bill 2022 (Bill) on 27 October 2022.

When introducing the Bill, the Minister for Employment and Workplace Relations, Tony Burke promised the Bill will deliver “…more secure jobs, better pay and a fairer workplace relations system for Australian workers.”

The Minister’s public announcements before introducing the Bill did not fully convey that the Bill could result in the most substantive changes to the Fair Work Act 2009 (Cth) (Act) in a decade.

The Bill has been referred to a Committee, with the report due on 17 November 2022.

Parts 1, 2 and 3 – ROC and ABCC abolished

The Government crossed off two election promises with the Bill abolishing the Registered Organisations Commission and the Australian Building and Construction Commission, returning regulatory oversight to the Fair Work Commission (FWC) and Fair Work Ombudsman (FWO) respectively.

Part 4 – Objects

The Bill introduces two new objects to the Act – promotion of job security and gender equity. The new objects will guide the FWC in performing its functions, and will be matters the FWC takes into account as a part of the modern awards objective in section 134 and the minimum wages objective in section 284.

Part 5 – Equal remuneration

The Bill will change the way that the FWC looks at equal remuneration and work value cases. The FWC’s consideration of work value reasons must be free of assumptions based on gender and include consideration of whether there has been historical gender-based undervaluation of the work under consideration.

The Bill removes the need to find a male comparator and clarifies that sex discrimination is not a necessary prerequisite for the FWC to make an equal remuneration order.

Part 6 – Expert panels

The Bill creates a Pay Equity Expert Panel and a Care and Community Sector Expert Panel within the FWC. The purpose of these new expert panels will be to tackle low pay and conditions in the female dominated care sector to help attract and retain workers. By having these expert panels, it will make it easier for the FWC to order pay increases for workers in low-paid, female dominated industries by putting in place the statutory Equal Remuneration Principle.

Part 7 – Pay Secrecy

It will be a workplace right that employees (and job applicants) are able to disclose (or not disclose) their own remuneration or ask another person about their remuneration. Adverse action may not be taken against an employee (or job applicant) for exercising this workplace right.

The Bill also proposes prohibiting contractual provisions or terms in industrial instruments which prevent employees from discussing their remuneration or terms of their employment that are reasonably necessary to determine remuneration outcomes. This includes quantum and the number of hours the employee works. Existing pay secrecy terms will have no effect. Up to 600 penalty units may be imposed for a serious contravention, or 60 penalty units.

Part 8 – Prohibiting sexual harassment in connection with work

This part introduces the measures and means to combat sexual harassment in the workplace. The major changes to the Act are based on recommendations made by the Respect@Work report.

Recommendation 28: The Fair Work system be reviewed to ensure and clarify that sexual harassment, using the definition in the Sex Discrimination Act, is expressly prohibited.

The Bill implements this recommendation by prohibiting sexual harassment in connection with work in the Act, using the definitions in model work health and safety laws. The prohibition applies broadly to protect workers, prospective workers and persons conducting businesses or undertakings.

Principals would, in some circumstances, be vicariously liable for acts of their employees or agents – unless they could prove that they took all reasonable steps to prevent the employee or agent from doing the unlawful acts. At the same time, principals may also be subject to enforcement action for contravening the proposed new positive duty to prevent sexual harassment under the Respect at Work Bill which is currently before Parliament.

The prohibition is supported by a new dispute resolution framework, modelled on the compliance framework in the Act that applies to general protections dismissal disputes. In most cases, the FWC would first deal with a dispute by conciliation or mediation. If the dispute remained unsettled, the parties could proceed to consent arbitration or make an application to the Federal Court.

Recommendation 29: Introduce a ‘stop sexual harassment order’ equivalent to the ‘stop bullying order’ into the Fair Work Act. This should be designed to facilitate the order’s restorative aim.

The Bill introduces this recommendation by allowing the FWC to make stop sexual harassment orders to protect applicants from future sexual harassment. The FWC may also deal with disputes about sexual harassment which relate to past harm caused by sexual harassment.

To avoid duplication and streamline application processes, Part 8 would merge the existing stop sexual harassment order jurisdiction into new Part 3-5A—Prohibiting sexual harassment in connection with work.

The Bill ensures people have access to an appropriate remedy (other than an order requiring payment of a pecuniary amount) but also ensures that they are not entitled to more than one remedy in such cases.

These changes provide flexibility. Applications may be made jointly by one or more aggrieved persons against one or more perpetrators or principals and enable a union to represent an aggrieved person or persons. It inserts anti-double dipping provisions to prevent a person from obtaining multiple remedies in relation to the same conduct. It protects all Australian workers, prospective workers and persons conducting businesses or undertakings. It prevents the concurrent operation of State and Territory anti-discrimination laws and, except in some limited circumstances, occupational health and safety laws (to the extent they deal with sexual harassment).

Part 9 – Anti-discrimination and special measures

The Bill adds three further protected attributes—breastfeeding, gender identity and intersex status—into the anti-discrimination provisions in the Act which aligns the Act with other Commonwealth anti-discrimination legislation.

It amends the Act to confirm that ‘special measures to achieve equality’ are matters pertaining to the employment relationship and therefore matters about which an enterprise agreement may be made. This would also clarify that ‘special measures to achieve equality’ are not discriminatory terms and therefore not unlawful terms in an enterprise agreement.

Part 10 – Fixed-term Contracts

The Bill inserts prohibitions on the use of fixed term contracts where the term extends beyond 2 years or where the contract may be renewed more than once. These restrictions apply to both extensions or renewals of an existing contract as well as consecutive or new contracts, where the work is the same or substantially the same and there is substantial continuity of service.

There are some exemptions to this prohibition including, for example, where:

  • the employee is engaged under the contract to perform only a distinct and identifiable task involving specialised skills
  • the employee is engaged under the contract in relation to a training arrangement (which will include apprenticeships and traineeships)
  • the employee is engaged under the contract to undertake essential work during a peak demand period
  • the employee is engaged under the contract to undertake work during emergency circumstances or during a temporary absence of another employee
  • in the year the contract is entered into the amount of the employee’s earnings under the contract is above the high-income threshold for that year
  • the contract relates to a position for the performance of work that is funded by government funding or other particular types of funding, the funding is payable for a period of more than 2 years, and there are no reasonable prospects that the funding will be renewed after the end of that period
  • the contract relates to a governance position that has a time limit under the governing rules of a corporation or association of persons
  • a modern award that covers the employee includes terms that permit a longer period

A term of a contract that does not comply with these provisions will have no effect but the remainder of the contract will remain valid. This creates an ongoing employment relationship.

Other proposed amendments include prohibitions on terminating or delaying reengaging an employee or changing the nature of the work or tasks or otherwise alter the employment relationship to avoid these obligations.

The FWO will be required to prepare a new information statement that employers must give to fixed-term employees.

The FWC will be given new powers to deal with disputes about these provisions, including by way of arbitration if the parties to the dispute agree.

Penalties for non-compliance may be 600 penalty units for a serious contravention, or 60 penalty units.

Part 11 – Flexible Working Arrangements

While there was some discussion about expanding the categories of employees who could make requests for flexible working arrangements, this has not eventuated (save for a minor change to employees experiencing family and domestic violence – expanded from an employee experiencing violence from ‘a member’ of their family).

The proposed amendments focus on an employer’s response to a request for flexible working arrangements.

In addition to an employer being required to respond within 21 days, being able to refuse a request on reasonable business grounds, and notifying the employee of the reasons for the refusal, the amendments propose that before refusing a request on reasonable business grounds, the employer must:

  • have discussed the request with the employee and genuinely tried to reach agreement with the employee about other changes that may be made to accommodate the employee’s circumstances, and
  • have had regard to the consequences of the refusal for the employee.

When providing written notice of a refusal of a request, the employer must also include details of the reasons for the refusal, including the particular business grounds and how they apply to the request. The refusal must set out other changes that would accommodate the employee’s circumstances the employer would be willing to make or that there will be no changes.

The FWC will have new powers to deal with disputes about these provisions, including by arbitration. The types of orders the Fair Work Commission may make include an order that:

  • the Fair Work Commission agrees with the refusal, or
  • the employer grants the employee’s request or make specified changes to the employee’s working arrangements to accommodate the employee’s circumstances.

Part 12 – Termination of enterprise agreements after nominal expiry date

The Bill changes how applications to terminate agreements after they have passed their nominal expiry date are made, and the grounds they can be made on. Principally, the FWC’s focus shifts from considering the public interest to the interests of employees’ covered by the agreement.

The proposed amendment provides that the FWC must terminate an enterprise agreement, on application, where either:

  • the continued operation of the agreement would be unfair to covered employees;
  • the agreement does not and is not likely to cover any employees; or
  • all of the following circumstances apply:
    • the continued operation of the agreement would pose a significant threat to the viability of a business of the covered employer(s);
    • the termination of the agreement would likely reduce the potential for terminations of employment by way of redundancy, or due to insolvency or bankruptcy; and
    • where the agreement contains termination entitlements, the employer has given a guarantee to the FWC in respect of its compliance with those obligations.

Where an application is made, the FWC must consider the views of the employees, employers, and unions covered by the agreement. If one of those parties opposes the application, the matter is to be dealt with by a Full Bench of the FWC.

The FWC must have regard to whether bargaining has or will commence for a proposed agreement which will cover the same or substantially the same group of employees. The FWC must also consider if the termination would adversely affect the bargaining position of employees to be covered by the proposed agreement.

An employer’s guarantee about termination entitlements will be an undertaking to comply with any post-termination obligations/entitlements which would have applied but for the termination of the agreement. The guarantee remains in effect for a period of 4 years, unless otherwise specified by the employer and approved by the FWC. Compliance with the guarantee will be a civil remedy provision.

Part 13 – Sunsetting of “zombie” agreements etc.

The Bill makes several amendments to the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 (Cth). The net effect of the provisions will be that unless actions are taken to the contrary, all pre-FW Act agreements, in whatever form they exist, will end 12 months from the date the Bill is enacted. These agreements are often referred to as ‘zombie’ agreements.

Employers must give written notice to employees within six months of the Bill being enacted that they are covered by a ‘zombie’ agreement and it will terminate 12 months from the date of the Bill’s enactment, unless an application is made to the contrary. An employer’s obligation to notify employees will be a civil remedy provision.

Employers, employees, and unions may apply to the FWC to extend the sunset date of an agreement by up to 4 years. The FWC must approve the application where certain circumstances are satisfied. For example, where a new enterprise agreement is being bargained for, where employees would be better off overall than if the relevant modern award applied, or if it is reasonable in the circumstances to do so. There is no limit on the number of extensions the FWC can grant, but one of these circumstances must be satisfied on each occasion.

Part 14 – Enterprise agreement approval

The Bill proposes several changes which relate to the FWC’s approval of enterprise agreements. The Government says the amendments will simplify the requirements employers must satisfy before the FWC can approve an enterprise agreement.

The general trend is for the requirements to shift from a prescriptive set of steps employers need to go through, to a singular broad analysis undertaken by the FWC of whether employees have genuinely agreed to the agreement.

To guide this broad analysis, the FWC will be required to publish a ‘Statement of Principles’. The statement will deal with various matters related to genuine agreement including:

  1. informing employees about bargaining;
  2. informing employees of their right to be represented by a bargaining representative;
  3. providing employees with a reasonable opportunity to consider a proposed agreement;
  4. explaining terms of an agreement and their effects;
  5. providing employees with a reasonable opportunity to vote on an agreement in a free and informed manner; and
  6. any other matters the FWC considers relevant.

Importantly, these are guiding principles only. It is not necessary that each are met for the FWC to be satisfied an agreement has been genuinely agreed to.

The Bill preserves the FWC’s ability to disregard minor procedural, and technical errors when determining if an agreement has been genuinely agreed to. This applies to notices of employee representational rights, requesting employees to vote to approve an agreement, and timelines for asking employees to vote to approve an agreement after notices of employee representational rights have been issued.

The Bill will upends the strategy of ‘brownfields agreements’ (i.e. small workforces voting on agreements with wider coverage). Agreements which are not the result of collective bargaining in good faith, including ‘unrepresentative’ and ‘low voter cohort’ will not be ‘genuinely agreed’. Examples given in the Explanatory Memorandum to the Bill are:

  • employees would not have a sufficient interest in the terms of an agreement if no genuine collective bargaining in good faith occurred as part of the agreement-making process
  • employees engaged in one industry, occupation or classification should not be capable of being found to have genuinely agreed to an enterprise agreement intended to cover employees across a substantially wider range of industries, occupations or classifications
  • a small cohort of employees would also not be sufficiently representative where the agreement is intended to ultimately cover a much wider workforce following transfers of employment, possibly within a corporate group.

Part 15 – Initiating bargaining

The Bill creates a way for employee bargaining representatives (e.g. unions) to start the process of bargaining with an employer without the employer’s consent in particular circumstances. This can be done where:

  1. the proposed single-enterprise agreement will replace an earlier single-enterprise agreement;
  2. no more than 5 years has passed since the earlier agreement passed its nominal expiry date; and
  3. the proposed agreement will cover the same, or substantially the same, group of employees as the earlier agreement.

The amendment flows to provisions dealing with bargaining orders, and essentially allows for unions to apply for a bargaining order where they have made a written request to bargain.

Part 16 – The Better Off Overall Test

The Bill delivers a key outcome from the Government’s Jobs + Skills Summit by simplifying the Better Off Overall Test (BOOT). The changes aim to remove unnecessary complexity.

The Bill introduces a provision intended to inform the FWC’s application of the BOOT. There is an express statement that the BOOT should be applied as a global assessment – as opposed to the current excruciating line-by-line approach which has been applied in recent times. The Bill requires the FWC to only have regard to patterns or kinds of work, or types of employment, if they are reasonably foreseeable at the time of the BOOT.

If the FWC forms the view a term of an enterprise agreement does not otherwise meet the BOOT, it is empowered to amend the term, which could include removing it, to satisfy itself that the BOOT is passed. Importantly, it is the FWC, not the employers, employees and unions, that decides on amendments – although the FWC may consider the views of the employers, employees and unions.

The Bill also includes provisions allowing employers, employees, and unions to apply to the FWC for a reconsideration of whether the agreement passes the BOOT. Applications may be made where there has been a change to patterns or kinds of work, or types of employment when compared to the patterns or kinds of work, or types of employment that the FWC considered when first conducting the BOOT to approve the agreement. If the FWC was concerned that the enterprise agreement did not pass the BOOT, the FWC could either accept an undertaking or amend the agreement.

Part 17 – Errors in enterprise agreements

The FWC may vary an enterprise agreement to correct or amend an obvious error, defect or irregularity (such as a typographical error or obvious omission) on its own initiative or on application by any of the parties covered by the agreement. Where the FWC has approved the wrong version of an agreement, such as an earlier draft, that was erroneously submitted to the FWC by a party for approval, the FWC would have discretion to validate its decision as if the correct version of the enterprise agreement had been submitted for approval. The validation of the correct version of the agreement could occur on the FWC’s own initiative or on application.

Part 18 – Bargaining disputes

The Bill replaces the existing scheme dealing with “serious breach declarations and determinations” with a new scheme dealing with intractable bargaining declarations and determinations.

A bargaining representative to a proposed agreement may apply for a declaration. A declaration is not available to multi-enterprise agreements, unless a supported bargaining authorisation is in operation, or greenfield agreements.

The FWC must be satisfied that:

  • The FWC has dealt with a bargaining dispute, and the applicant for the declaration participated in the process, and
  • There is no reasonable prospect of the party’s reaching agreement, and
  • It is reasonable in all the circumstances (taking into consideration the views of all bargaining representatives).

The FWC may then order a ‘post-declaration negotiation period’ for a defined time. After making a declaration, and after any ‘post-declaration negotiation period’, the Full Bench of the FWC may make an ‘intractable bargaining workplace determination’.

The FWC will determine the resolution of any issues that remain in dispute. That determination will in-effect become the agreement and be binding on the employer and employees.

These changes are said to assist ‘bargaining parties to reach agreement.’ In-fact, the provisions provide for the imposing of agreement on the bargaining parties.

This is a substantial expansion of the Commissions arbitral power to set pay and conditions under agreements.

Part 19 – Industrial action

If the FWC makes a protected action ballot order (PABO), it must also make an order directing all bargaining representatives to attend a mandatory conciliation conference prior to the close of the ballot. If any party fails to attend, subsequent employee claim action or employer response action will not be protected. The voting period specified in the PABO must be at least 14 days to enable time for the conference to occur.

Following the date of declaration of the protected action ballot results, employees will have a 3 months’ period to commence industrial action. This is longer than the current 30 days, and employer response action would need to occur within a 3 months’ period.

If employee claim action relates to a single-interest employer agreement or a supported bargaining agreement, employees must provide 120 hours’ notice of taking industrial action.

The Australian Electoral Commission (AEC) will no longer be the default protected action ballot agent and an alternative agent may be appointed with FWC approval. Where appointed as the protected action ballot agent, the AEC will be able to seek orders for contraventions of civil penalty provisions in relation to the ballot.

Parts 20, 21, 22 and 23 – Multi-employer bargaining

A key feature of the Bill is to create new, very clear paths by which unions are able to force:

  1. multiple employers to negotiate for a multi-employer agreement,
  2. a multi-employer agreement to be imposed on those employers (even absent a vote of employees), and
  3. other employers to be covered by the agreement after it has been made.

This is a very significant change to the structure of bargaining under the Act. It is a clear shift away from bargaining at the enterprise level towards industry level. It also expands, quite remarkably, the circumstances in which agreements will be imposed on employers and employees by the FWC. Under the current Act, the model is mostly based on an employer offering an agreement to be voted on. The Bill would expand the circumstances in which that offer (or voluntariness on the part of the employer) is needed.

Applying for a supported bargaining authorisation

Under the Bill, unions (and other bargaining representatives) may apply to the FWC for a ‘supported bargaining authorisation’. Supported bargaining authorisations are a key feature of the Bill as they:

  1. Initiate negotiating for multi-employer enterprise agreements (termed ‘supported bargaining agreements’); and
  2. Are the first of a series of steps that can ultimately lead to the FWC imposing a multi-employer workplace determination (termed ‘an intractable bargaining workplace determination’).

Once an application has been made, the FWC must grant the application if it is satisfied that it is appropriate for the employers and employees specified in the application to bargain together, having regard to:

  1. The prevailing pay and conditions in the industry or sector;
  2. Whether the employers have clearly identifiable common interests; and
  3. Whether the likely number of bargaining representatives would be consistent with a manageable collective bargaining process.

The FWC must also be satisfied at least some of the employees are represented by the union that has applied to the FWC for the authorisation.

Some points to note here are that:

  1. The consent of employers and employees is not required (i.e. they can be forced to the table);
  2. There is no requirement there be a minimum number of employees seeking to bargain; and
  3. The FWC may order a particular union cannot bring such an application. That said, we have some difficulties with the drafting as the relevant orders (proposed s.178C) seem only to be able to be made during bargaining or after an agreement has been made (which presumably would post-date such an application).

Bargaining for multi-employer agreements

Under the current Act, it is rare for the FWC to make workplace determinations (i.e. for the FWC to impose the terms of an agreement onto those that will be covered by it). The Bill expands the circumstances in which such a determination may be made to include circumstances in which bargaining has become ‘intractable’.

Bargaining representatives may apply for an ‘intractable bargaining declaration’. If the relevant agreement is a proposed multi-employer enterprise agreement, an application may only be made if a supported bargaining authorisation is in operation. The effect of an intractable bargaining declaration is that there is a period in which to try to reach agreement and, absent agreement, a workplace determination must be made by the FWC.

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

  1. A s.240 application has been made and the applicant participated in a conference before the Commission;
  2. There is no reasonable prospect of the agreement being reached if the FWC does not make the declaration; and
  3. It is reasonable to make the declaration taking into account the views of the bargaining representatives of the agreement

The effect of a declaration is that ‘intractable bargaining workplace determinations’ may be made under division 4 of Part 2-5 of the Act. In other words, the FWC will make a workplace determination (including for multi-employer agreements).

The declaration/determination must include:

  1. Any terms that were agreed to between the parties;
  2. The terms that the FWC considers deal with the matters that were still at issue;
  3. A nominal expiry date;
  4. A dispute settlement procedure; and
  5. The model consultation and flexibility terms.

Forcing employers onto supported bargaining agreements

The Bill allows unions to make an application to force other employers onto a supported bargaining agreement that has been made (with or without the consent of that employer). Under the Bill, the FWC must grant that application if it satisfied that:

  1. a majority of the employees want to be covered by the agreement; and
  2. it is appropriate for them to be covered.

In determining whether it is appropriate, the FWC must take into account the views of the unions and the employer.

Cooperative workplace agreements

The existing multi-employer bargaining stream will be reframed as cooperative workplace agreements, which remain voluntary for employers to participate in where they are not subject to a supported bargaining authorisation immediately before making the agreement. Parties may not take industrial action  in respect of bargaining for a cooperative workplace agreement and FWC intervention is available with the parties’ consent.

All three new multi-employer bargaining streams require at least some of the employees to be represented by a union. Supported bargaining and single-interest employer authorisations may not be granted and collective workplace agreements may not be approved by the FWC unless this requirement is met. However, the FWC is empowered to make orders excluding persons, such as unions, from participating in bargaining if they have a history of non-compliance with the Act. For example, if they have contravened a civil penalty provision or committed an offence against the Act in the last 18 months.

Part 24 – Enhancing the small claims processes

The Bill proposes a small number of significant amendments to the small claims process under the Act. The key amendment is an increase in the small claims cap from $20,000 to $100,000.  The Bill also clarifies that the cap is exclusive of interest.

Under the Bill, successful claimants may recover court filing fees as costs against the other side. This provision is intended to act as an carve out to section 570 of the FW Act which currently limits cost orders to circumstances where the proceedings are vexatious or the like.

The increase aims at ‘expanding access to the small claims procedure, enabling more claimants to benefit from its simpler, quicker and cheaper approach to dispute resolution’.

The amendment also comes off the back of recent inquiries which suggested claimants with modest claims exceeding $20,000 have abandoned part of their claim to bring it within the small claims cap or alternatively, have bypassed the small claims procedure all together and proceeded to a full court process.

Part 25 – Prohibiting employment advertisements with pay rate that would contravene the Act

The Bill also regulates pay information included in job advertisements.

Specifically, the Bill prohibits an employer from advertising a job at a rate of pay lower than that permitted by the Act, an Award or an Enterprise Agreement. This provision requires an employer to include for example any casual loadings payable if the advertised role was on a casual basis.

The Bill also requires any employer who is advertising a piecework role to specify the rate of pay for the piecework or include a statement that a periodic rate of pay applies in relation to the employment.

Employers will need to actively monitor the compliance with the Act and any industrial instrument for the duration of the advertising. Advertisements will need updating to reflect any changes to rates of pay which occur during the advertising period.

Significantly, this is a civil penalty provision. This means individuals may be liable for a penalty of up to 60 penalty units (and bodies corporate five times that) if they fail to advertise the correct rate of pay and do not have a reasonable excuse.

The clause has been introduced following concerns raised by the Migrants Workers’ Taskforce and the Senate Unlawful Underpayments Inquiry that migrant workers are targeting with jobs advertised at below minimum wage rates, increasing the risk of such workers being underpaid once they start working.

Key Takeaways

This Bill brings significant change.

We await feedback from the inquiry on 17 November. The next sitting of Federal Parliament in the week of 21-24 November will likely be an exciting one.

In the meantime, the Paid Family and Domestic Violence Leave Bill has been passed

And of course, let’s not forget the positive duty to prevent sexual harassment Respect@Work Bill with the inquiry reporting back on 3 November.

Watch this space.

Alice DeBoos
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Duncan Fletcher
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Yoness Blackmore
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