Federal Government introduces workplace relations reforms

By Veronica Siow, Simon Dewberry, Sikeli Ratu, Samantha Betzien
Employment & Safety

An ambitious (and contentious) bill 5 min read

The Federal Government has introduced the Fair Work Legislation Amendment (Secure Jobs, Better Pay) Bill 2022 (the Bill) into Parliament. This Bill is the Government's first tranche of reforms to workplace relations laws. The stated aims are to modernise workplace bargaining, address the gender pay gap and increase wages.

The Government is seeking to have the Bill before Parliament in early December. To that end, the Senate inquiry into the Bill will close on 11 November 2022 and report on 17 November 2022. If passed, the Bill will introduce important amendments to the Fair Work Act 2009 (the FW Act) and related legislation, imposing new and changing existing obligations across Australian workplaces that cover:

  • Bargaining;
  • Sexual harassment and anti-discrimination;
  • Abolition of the Australian Building and Construction Commission and the Registered Organisations Committee;
  • Job security (fixed term contracts and flexible working arrangements); and
  • Gender pay equity measures (including prohibiting pay secrecy clauses).

Understanding the changes

Minister for Employment and Workplace Relations Tony Burke said the Bill aims to address commitments the Labor Government made prior to forming government (some of which we reported on here) and at the Jobs and Skills Summit in September (which we reported on here).

1. Bargaining

  • Initiation of bargaining for replacement enterprise agreements: under the current law, if an enterprise agreement has passed its nominal expiry date and the employer does not wish to bargain for a replacement agreement, union bargaining representatives must get a majority support determination. Under the proposed law, union bargaining representatives could simply give the employer a written request to bargain (provided no more than five years has passed since the nominal expiry date).
  • Multi-employer bargaining: the Bill seeks to expand the FW Act's multi-employer bargaining regime, including by expanding the single interest agreement stream. Currently, multi-employer agreements can be made where two or more employers voluntarily agree to bargain together or where unions and employee bargaining representatives compel separate employers to bargain together through an application to the Fair Work Commission (the FWC). Under the proposed law:
    • unions could apply for an authorisation to enable multi-employer bargaining, including for multiple employers within a group of companies;
    • any employer that is not covered by an in-term enterprise agreement could be covered, and employers that are covered by an in-term agreement could be roped in once the agreement expires;
    • the Commission would have to be satisfied (but not necessarily by a vote) that a majority of employees across all the businesses (not a majority in each individual business) wish to be covered;
    • to be forced into the regime, employers would have to have a common interest, but this would be a broad concept that means operating in the same place or under the same regulatory regime could be enough; and
    • there would no longer be a requirement that businesses operate cooperatively not competitively, meaning competitors may be forced to bargain for the same agreement (which could give rise to competition law issues).
  • Intractable bargaining declarations: under the current law, when enterprise bargaining is exhausted, the Fair Work Commission can arbitrate the disputed terms. However, this can only happen after there have been serious and sustained contraventions of bargaining orders that have significantly undermined bargaining, and a negotiated agreement will not be reached in the foreseeable future. The scope for the Commission to decide the terms of an enterprise agreement would be expanded under the proposed law. The Commission could step in where it has dealt with a bargaining dispute and it considers there is no reasonable prospect of agreement being reached by negotiation.
  • Termination of agreements: the existing rules for the termination of enterprise agreements would be amended so that the FWC could only terminate an agreement on unilateral application in limited circumstances. Before granting a termination, the FWC would need to consider the views of employees, each employer and each employee organisation covered by the agreement. These changes mean it would become unlikely that termination applications would succeed during bargaining for a replacement agreement.
  • Death of zombie-agreements: all remaining transitional instruments currently preserved by the Fair Work (Transitional Provision and Consequential Amendments) Act 2009, known as 'zombie agreements', would sunset.
  • Changes to the better off overall test (BOOT): the Bill seeks to overhaul the BOOT, including by:
    • clarifying that the BOOT is to be applied as a 'global assessment' of the terms of the agreement;
    • requiring the FWC to give 'primary consideration' to any common view that the employer(s) and representatives of the employees covered by the agreement express about whether the agreement satisfies the BOOT; and
    • ensuring the BOOT is assessed in relation to existing employees (not hypothetical or prospective employees) and 'reasonably foreseeable' patterns or kinds of work, or types of employment that are 'reasonably foreseeable' at the time the BOOT is undertaken.

      The stated intention of these changes is to ensure the BOOT is assessed in a flexible and holistic way, rather than the narrow and highly technical focus that has been a feature of BOOT assessments in the past. This flexibility is balanced by a new 'safeguard' power of FWC to undertake 'reassessments' of the BOOT after an agreement's initial approval if employees ultimately work other patterns or kinds of work not considered at the time of the original BOOT assessment. The Fair Work Commission would have the power to amend the agreement or seek undertakings to address a failure to pass such a BOOT 'reassessment'.
  • Industrial action: the Bill proposes various amendments to the FW Act addressing industrial action, including amendments to provide an extended period of three months in which employees can take industrial action after the results of a protected action ballot.

2. Sexual harassment and anti-discrimination

  • Sexual harassment prohibition: an explicit prohibition on the sexual harassment of workers, prospective workers or a person conducting a business in connection with work would also be introduced to the FW Act. In some circumstances, principals may be vicariously liable for acts of their employees or agents.
  • New protected attributes: the FW Act would be aligned with other federal anti-discrimination provisions, with the addition of three new protected attributes: breastfeeding; gender identity; and intersex status.

3. Abolishing the Australian Building and Construction Commission and the Registered Organisations Committee

The Bill seeks to abolish the:

  • Registered Organisations Committee and transfer the functions of its Commissioner to the FWC's General Manager; and
  • Australian Building and Construction Commission and repeal the Code for Tendering and Performance of Building Work 2016, making the Fair Work Ombudsman the workplace relations regulator for the building and construction industry.

4. Job security – fixed term contracts and flexible working arrangements

  • Fixed term contracts: proposed amendments seek to limit the use of fixed term contracts by limiting their use for the same role to two consecutive contracts or a maximum duration of two years. Fixed term contracts that exceed these thresholds will be prohibited except in limited circumstances, including where:
    • the employee is engaged to undertake essential work during a peak demand period;
    • the contract is to perform a distinct and identifiable task involving specialised skills;
    • the employee's earnings under the contract are above the high-income threshold; or
    • a modern award permits the term.

The Bill also seeks to introduce a civil remedy penalty for an employer entering into a prohibited fixed term contract.

  • Expanded flexible work arrangements: proposed amendments seek to include more circumstances in which an employee can request flexible work arrangements and enhance employer obligations in responding to flexible working arrangement requests, including providing detailed reasoning for refusal.

5. Gender pay equity measures, including prohibiting pay secrecy clauses

  • Pay secrecy clauses: an express prohibition on pay secrecy clauses in employment contracts is proposed, a contravention of which will give rise to civil penalties. Existing pay secrecy clauses would have no effect.

The Bill also proposes a positive right for employees to disclose, or not disclose, information about their own remuneration or any related terms and conditions of their employment that is reasonably necessary to determine remuneration, such as their hours of work. The proposed amendments include an express statement that this right would be considered a 'workplace right' for the purposes of the FW Act's general protections provisions.

  • Other gender measures: a raft of other measures aimed at addressing the gender pay gap are proposed, including:
    • changes to the equal remuneration order framework, including by allowing the FWC to make such orders of its own initiative;
    • establishing two new expert panels within the FWC—the Pay Equity Expert Panel and the Care and Community Sector Expert Panel—to determine equal remuneration cases and certain award cases; and
    • including gender equity as an object of the FW Act.

To learn more about these changes and how they might impact your business, we're hosting a webinar in which we'll explore the Bill in greater depth and answer any questions you may have. Register for the webinar below.