28 October, 2022
Parliament has introduced a Bill proposing substantial changes to the Fair Work Act 2009 (Cth) (“FW Act”) which, if passed, will have a significant effect on employers and employees. Introduced on 27 October 2022, the new Fair Work Legislation Amendment (Secure Jobs, Better Pay) Bill 2022 aims to address a number of the government’s policies and campaign promises. This EMA Note provides a brief summary of the Bill.
The Bill is largely aimed at addressing slow wage growth, job security, gender equality, and fairness in employment, as well as the abolishment of some regulatory bodies (with a transfer of various functions to other existing bodies). Some of the more significant proposals will change enterprise bargaining, limit the usage of fixed-term contracts, enable employees to discuss their remuneration and terms and conditions of employment, and terminate old ‘zombie agreements’.
The Bill is currently in its first iteration and subject to change. While the below reflects, effectively, the wish list of changes that are hoped for by the government in introducing the Bill, it is common for Bills with this many proposals to see significant parliamentary debates and amendments. As such, the version that passes both Houses may be significantly different in some of the below areas, or even omit areas entirely.
The specific areas targeted by the Bill include:
(a) abolishing the Registered Organisation Commission and the Australian Building and Construction Commission;
(b) introducing provisions on how the Fair Work Commission must consider work value and equal remuneration;
(c) introducing a new Pay Equity Expert Panel and a Care and Community Sector Expert Panel;
(d) prohibiting clauses from forbidding employees discussing with each other their remuneration and other terms and conditions of employment;
(e) prohibiting sexual harassment at work (see our previous EMA Note on this topic);
(f) adding breastfeeding, gender identity, and intersex status as protected characteristics about which a person must not be discriminated;
(g) restricting the use of fixed-term contracts;
(h) expanding circumstances in which an employee may request flexible work arrangements, and allowing the Fair Work Commission to deal with disputes about those requests;
(i) introducing provisions about terminating enterprise agreements (and provisions about the sunsetting of pre-Fair Work Act enterprise agreements—often called ‘zombie agreements’);
(j) simplifying the requirements for enterprise agreement approval, the better off overall test, initiating bargaining, and dealing with errors in enterprise agreements;
(k) increasing the scope of the Fair Work Commission to assist in bargaining disputes;
(l) introducing provisions aimed at removing burdens on the Fair Work Commission and employee bargaining representatives around taking protected industrial action, as well as attempting to de-escalate disputes before industrial action is taken;
(m) repealing current low-paid bargaining provisions to a new supported bargaining stream to assist employees in low-paid bargaining industries to bargain for single enterprise agreements;
(n) removing some limitations on single interest employer authorisations;
(o) replacing the current multi-enterprise agreements with ‘cooperative workplace agreements’;
(p) increasing the small claims cap from $20,000 up to $100,000;
(q) introducing changes around workers compensation presumptions for firefighters.
We briefly expand on some of these areas below.
This proposed amendment addresses a common provision in contracts which restricts an employee disclosing terms of the contract (including remuneration and other terms and conditions) with other employees. The new provision would give an employee the right to disclose such information, as well as give an employee the right to ask another employee about that information. However, the proposed amendments are written as being discretionary – ie, there would be no obligation for an employee to disclose the information if asked.
These rights would be classed as ‘workplace rights’ and would therefore be subject to the general protections provisions of the FW Act. These provisions would also be civil penalty provisions, subjecting an individual and an employer to penalties for entering into a contract or other written agreement with an employee which includes a term attempting to restrict the employee’s rights relating to pay secrecy.
The proposed clauses appear not to make it a civil penalty provision if existing contracts included such a term, but make it so that those terms have no effect.
If these proposed amendments come into effect, employers will need to amend their template contracts to ensure that there are no provisions that seek to restrict an employee discussing their pay or conditions of employment with other employees.
These proposed amendments will prevent an enterprise agreement including a term which discriminates against, and prevent an employer from discriminating against, a person because of reasons including the person’s breastfeeding status, gender identity, or intersex status.
These protected characteristics will also be included in the ‘unlawful termination’ provisions of the FW Act, meaning that it will be unlawful for employers—including non-national system employers—to terminate a person’s employment because of reasons including the person’s breastfeeding status, gender identity, or intersex status.
The use of fixed-term contracts has been the subject of some significant decisions in the past several years, including the 2017 decision of Khayam v Navitas English Pty Ltd and the recent decision in Alouani-Roby v National Rugby League Ltd.
The proposed amendments will seek to introduce a general limitation on the use of fixed-term contracts with some limited exceptions. It would also introduce a ‘fixed term contract information statement’ (similar to the current general and casual employment information statements), allow the Fair Work Commission to deal with disputes about fixed-term contracts, and introduce civil penalties for contraventions of the limitations.
If these proposed amendments come into effect, employers will need to review their practices around fixed-term contracts, including checking whether any exemptions apply to them, and otherwise whether their current practices are compliant with the new provisions.
These proposed amendments would change the provisions in section 65 of the FW Act (request for flexible work arrangements) to reflect the standard provisions in modern awards, which provide for greater levels of discussion between employers and employees in order to genuinely try and reach an agreement on some form of arrangement that meets the employee’s needs.
The proposed amendments will also allow the Fair Work Commission to deal with a dispute about flexible work arrangements, including by arbitrating a dispute. The Commission would be able to make various orders, including an order determining whether grounds were reasonable or not if the employer has refused a request.
A lot of the news and political commentary on these proposed amendments suggest that these amendments are likely to pass.
Various significant proposed amendments to the enterprise agreement approval and termination provisions have been introduced in the Bill.
One change likely welcomed by employers, unions, and employees alike will be the changes to the better off overall test. Currently, the Fair Work Commission is required to satisfy itself that every individual employee will be better off overall under the agreement than if they were covered by the relevant modern award. This results in the Commission often applying a test on various worst-case scenarios. The new provisions would alleviate this and require the Commission to give primary consideration to the views of bargaining representatives of employers and employees if those representatives share a common view that the agreement will pass the test. The Commission will be permitted to have regard to specific patterns of work or kinds of work only if they are reasonably foreseeable at the test time.
If these proposed amendments come into effect, they will alleviate a significant burden on parties applying for the approval for an enterprise agreement and the Fair Work Commission itself and will likely reduce the number of undertakings required in enterprise agreement approvals.
There are also proposed changes to the termination of enterprise agreements after its nominal expiry date. These provisions are intended to, effectively, prevent employers from using the proposed termination of an enterprise agreement as a bargaining chip during negotiations. If an agreement is terminated because of a ‘significant threat to the viability of the business’, the Fair Work Commission could make a guarantee of termination entitlements for certain protected employees.
These provisions are significant and limit the ability of parties to terminate enterprise agreements. Employers will old enterprise agreements who may wish to terminate those agreements will likely be affected by these amendments if they pass. Any employers who have been considering terminating an old enterprise agreement but have not yet made any application should seek advice on this and decide whether they wish to begin taking steps to terminate those agreements now.
There are significant proposed amendments to pre-FW Act agreements, commonly referred to as ‘zombie agreements’. These amendments include the creation of a grace period, after which the agreement will terminate. This will have a major effect on employers and employees still operating under a pre-FW Act agreement.
Employers will be required to give notice to affected employees that the agreement will terminate. Employers, employees, and industrial associations may apply to the Fair Work Commission to extend the grace period for a particular instrument for a period of no longer than four years provided the Commission is satisfied it is appropriate to do so in the circumstances (for example, if the agreement does not operate unfairly to employees covered by it).
If these proposed amendments come into effect, employers covered by these zombie agreements will need to notify their employees and decide on whether they wish to revert to modern award coverage or negotiate a new enterprise agreement.
The proposed amendments include significant proposals in relation to supported bargaining operations and multi-enterprise agreements (renamed as cooperative workplace agreements). The proposed amendments and explanations for those amendments are vast, as is the political and news commentary on various aspects of the proposed amendments (including the rights around protected industrial action, and certain unions engaging in multi-employer bargaining).
Based on a lot of this commentary, and on submissions and releases made around this area so far in the lead up to this Bill, it seems likely that significant debate will be had on these provisions and they may see some substantial changes before any amendment act is passed.
At the moment, while some amendments seem likely to pass, there is little for employers to start doing, other than keeping themselves informed about what is going on. Parties may have the opportunity to make submissions on areas of the Bill throughout the process. More information about this is available on Parliament’s website.
When more certainty is available around upcoming changes, we will provide further updates and guidance on some of the key areas, including through EMA Live webinars and EMA Notes.If you have any questions in the meantime about how this may affect you, please feel free to contact us.
This EMA Note is not comprehensive advice about your situation and does not cover all your obligations. If you require further information or advice, please contact your Consultant.
EMA Consulting is not a law firm and therefore does not provide legal advice or services. The information contained within this document and associated material is general in nature and should not be relied upon. If you require specific advice on a particular matter, we recommend that you contact EMA Consulting on 08 8203 1700. Subject to the matter at hand, your EMAC Consultant may recommend that you obtain formal legal advice. If formal legal advice is required, upon your written instruction EMAC will brief your matter to a legal practitioner for this purpose. The contents of this document and associated materials do not represent legal advice.