On 2 December 2022 the parliament passed the ‘Secure Jobs, Better Pay’ legislation. The legislation brings into effect a series of changes and obligations that will impact on many workplaces.

The Fair Work Act (FW Act) now focuses on job security and gender equality, and aims to promote fairer wages and equal pay for work of equal value. Changes also include employer accountability for sexual harassment, broadened anti-discrimination provisions in the FW Act, banning pay secrecy and significant changes to the enterprise bargaining processes.

We have summarised some of the changes brought about with the Bill:

Flexible work requests strengthened

The circumstances on which an employee can request flexible work arrangement have been extended and now include employees experiencing family or domestic violence, or employees that are required to care or support an immediate family or household member who experiences family or domestic violence. Pregnant employees can now also make a flexibility request.

The FW Act will also be amended to include a detailed procedure for how employers must respond to requests for flexible working arrangements. The procedure will require employers to discuss requests with the employee and make genuine attempts to reach and agreement prior to refusing a request. If a request is refused the employer will be required to provide detailed reasons for the refusal and outline any adjustments or alternative arrangements that can be implemented instead.

Before an employer refuses a request they must have:

• Discussed the request with the employee; and
• Genuinely tried to reach an agreement with the employee about making changes to the employee’s working arrangements that would accommodate the employee’s circumstances; and
• the employer and employee have been unable to reach agreement; and
• the employer has had regard to the consequences of the refusal for the employee; and
• the refusal is based on reasonable business grounds.

Reasonable business grounds for refusing a flexible work request includes:

• There is no capacity to change working arrangements of other employees to accommodate the request;
• The request would be too costly for the employer;
• The request is likely to lead to significant losses in productivity or efficiency;
• The request is likely to have significant negative impact on customer service.

Employers are required to respond to flexibility requests within 21 days.

The changes in the FW Act will also enable employees to seek arbitration before the Fair Work Commission (FWC) to contest employer decisions. Prior to going to arbitration before the FWC, the parties are required to attempt to resolve their dispute through alternative dispute mechanisms, such as mediation.

Accountability for sexual harassment in the workplace

The amendments introduce stronger provisions to prevent sexual harassment in the workplace and a new dispute resolution framework. The new provisions in the FW Act are modelled on the existing clauses contained within the Sex Discrimination Act, the main difference being that prospective employees will also be covered.

The amendments build on the Respect@Work report and the Anti-Discrimination and Human Rights Legislation Amendment (Respect at Work) Bill 2022 that passed Parliament in late November 2022.  The amendments:

• Apply to workers, prospective workers and persons conducting businesses or undertakings; and
• Create a new dispute resolution function for the Fair Work Commission that enables people who experience sexual harassment in the workplace to initiate civil proceedings if the FWC is unable to resolve the dispute. 

The definition or “worker” is any individual engaged to perform work including employees, contractors, subcontractors, apprentices, trainees and volunteers. The amendments also prohibit sexual harassment perpetrated by third parties, such as customers or suppliers.

Employers may be vicariously liable for acts of their employees or agents if the sexual harassment was perpetrated in connection with the employment. Employers may be subject to enforcement action in line with the Sex Discrimination Act and receive significant penalties, which have been introduced as part of the amendments.

Employers may not be vicariously liable if they can prove they took all reasonable steps to prevent sexual harassment. Contact our employment lawyers to discuss what measures your business can put in place to minimise the risk of sexual harassment in the workplace.

Fixed term contracts limited to 2 years

The new Bill sets strict limits on the use of fixed-term and maximum-term contracts. Employers are prohibited from entering into fixed-term employment contracts with employees for a period of longer than two years, and such contracts are only permitted to be renewed once.

Some exclusions exist such as for casuals, apprentices or trainees, high income workers ($162k pa), work covering peak periods of demand, where the work is performed by a specialist engaged for a specific and identifiable task, or where the modern award or FWA allows for longer fixed term contracts.

Employers will need to provide employees with a Fixed Term Contract Information Statement before, or as soon as practicable after, entering into a fixed term contract. The Fair Work Ombudsman is drafting the Fixed Term Contract Information Statement and it should be available shortly.

If a fixed term contract exceeds the limitation period, employees may be entitled to claim permanent ongoing employment. From 1 January 2023, the maximum penalty for contravening the 2 year limitation is $82,500 for a body corporate and $16,500 for an individual.

If your workplace has existing fixed term contracts in place, it is imperative that you review the operation of these contracts to ensure compliance.  Our business lawyers are available to assist you in conducting a contract review to ensure you don’t fall foul of these changes to the law.

Gender equality and addressing the pay gap

The concept of gender equality is now included as an object in the Fair Work Act. Previously, to grant an Equal Remuneration Order (ERO) the Fair Work Commission (FWC) assessed claims using a comparable male group (male comparator).

The new Bill removes this requirement opening the way for historical gender based undervaluation to be taken into account and for the FWC to issue an ERO on that basis. This means that female dominated industries may be undervalued generally not specifically compared to men working in that industry or sector.

The FWC is no longer required to find that there is gender-based discrimination in order to establish that work has been undervalued, and the FWC will be able to initiate an ERO on its own volition without a claim being made.

Pay secrecy banned

In line with the objective of gender pay equity, the amendments have introduced a prohibition to pay secrecy clauses in contracts or other agreements, and renders existing secrecy clauses invalid.

Employees are not compelled to disclose their pay or conditions to others, but now have a positive right to do so if they choose. It is hoped that this move will create transparency in the workplace, leading to a reduction in pay bias based on gender or other factors.

Employers need to ensure that all new contracts of employment do not include any clauses prohibiting the employee from disclosing their pay or conditions. Significant penalties may apply where an employer continues to enforce pay secrecy. Contact our employment lawyers to discuss a review of your employment contracts.

Anti-discrimination

The Bill has introduced three additional protected attributes to the anti-discrimination provisions in the FW Act to specifically prevent discrimination on the grounds of breastfeeding, gender identity and intersex status.

Enterprise bargaining

The reforms make it easier for unions/applicants to negotiate pay deals across similar workplaces with common interests creating two new pathways for multi-employer agreements, supported bargaining, and single-interest. The Bill also addresses many of the complexities of the enterprise bargaining process by streamlining the initiation and approval process.

Supported bargaining for low paid industries is intended to support those who have difficulty negotiating at a single enterprise level, for example aged care, disability care, and early childhood education and care. The Minister will now have authority to declare an industry or occupation eligible for supported multi-employer bargaining (MEB) and the FWC will decide if it is appropriate for the parties to bargain together. The employer does not have to give their consent to be included.

Employers cannot negotiate a separate agreement once they are included in supported multi-employer bargaining – they need to apply to the FWC to be removed from the supported bargaining authorisation.

Single interest multi-employer bargaining draws together employers with “common interests”. It is a very broad test, and may include geographical location, the nature of the enterprise and the terms and conditions of employment.

Unless the employer consents, the FWC will not authorise multi-employer bargaining where it applies to a business with fewer than 20 employees. For businesses with less than 50 employees wanting to be excluded, the employer needs to prove that they are not a common interest employer or its operations and business activities are not reasonably comparable with the other employers.

For the FWC to authorise single interest multi-employer bargaining, the applicant will need to prove that they have the majority support of the relevant employees.

If either party to the bargaining can demonstrate that they were unable to come to an agreement, the FWC will now have the power to issue an intractable bargaining declaration. This means that the FWC can make a determination to resolve any matters that the parties have been unable to reach an agreement on.

Sunsetting of expired enterprise agreements

A Productivity Commission report found that 56% of employees covered by an enterprise agreement are on an expired agreement, often referred to as a ‘zombie agreement’. As these ‘zombie agreements’ remained fully enforceable, despite being expired, the terms of the agreement were often out of sync with modern awards.

The ‘Secure Pay, Better Pay’ reforms generally sunset these expired agreements. All zombie agreements will now sunset automatically after a 12 month grace period, unless the FWC extends the default grace period.

If you are operating under an expired agreement, or industrial instruments that were not bargained or approved under the FW Act contact us to discuss your obligations under the new automatic sunsetting provisions.

These amendments may have significant impacts on your business practices. If your business is likely to be impacted by the amendments, please contact our specialist commercial lawyers for assistance in ensuring your business is compliant.