Published December 2022

On Tuesday 6^th December 2022, the Fair Work Legislation Amendment (Secure Jobs, Better Pay) Act 2022 received Royal Assent, now amending the Fair Work Act 2009 (the Act).

The amendments made by the new Act will see a significant impact on how employers manage their teams, and with impacts to the work of the Fair Work Commission (FWC) including by making changes to existing functions and by conferring new functions on the Commission.

This update sets out an overview of the amendments that will create major changes for both employers and employees in stages over the next 12 months.

STAGE 1 – AMENDMENTS COMMENCING IMMEDIATELY – 7^TH DECEMBER 2022

These amendments are explained in more detail further in this update.

• Pay secrecy provisions commence.
• Job security and gender equality are introduced into the objectives of the Fair Work Act 2009 and the modern awards objective, and gender equality is introduced into the minimum wages objective.
• The Equal remuneration provisions and the provisions relating to varying modern awards for work value reasons are amended.
• Amendments to the anti-discrimination provisions to include breastfeeding, gender identity and intersex status.
• Changes to applications for the termination of enterprise agreements after the nominal expiry date.
• Sunset period for “zombie” agreements
• Changes to initiating bargaining.
• The Commission can deal with errors in enterprise agreements.

PAY SECRECY

The Act now prohibits an employer from preventing an employee disclosing details of their remuneration to other persons and entrenches the rights to ask or disclose such information to others as Workplace Rights. This means that all employees have the right to ask other employees about their rates of pay and choose to disclose or not disclose their rate of pay to others.

From 7^th June 2023, it will also become an offence for employers to include a pay secrecy clause in an employment contract (penalty $63,000).

Pay secrecy clauses in existing employment contracts become void under the new legislation. When an existing contract is varied, through wage increases presumably, it must comply with the new prohibition on pay secrecy provisions.

Employers should review their employment contracts and related templates with urgency.

EQUAL REMUNERATION ORDERS

The Fair Work Commission’s existing ability to make Equal Remuneration Orders has been widened. FWC can now make such orders on its own initiative and is required to take into account comparisons between occupations and industries to establish whether work has been undervalued on the basis of gender. These comparisons are not limited to similar work, nor does there need to be a comparison with a male-dominated occupation of industry. The Act also requires FWC to establish ‘Expert Panels’ for the purposes of making these orders.

ANTI-DISCRIMINATION MATTERS

The scope of ‘Discriminatory Terms’ that are prohibited in Modern Awards and Enterprise Agreements is widened to include breastfeeding, gender identity and intersex status. This broadened definition has also been extended to the Discrimination provisions of the General Protections Part of the FWA.

TERMINATION OF EXPIRED ENTERPRISE AGREEMENTS

The amendments now require the FWC to terminate a registered enterprise agreement (EA) if its continued operation would be unfair to the employees concerned.

In addition:

• The EA may be terminated if the FWC is satisfied that its continued operation would pose a threat to the viability of the employer’s business;
• That the termination of the EA would reduce the prospect of job losses; and
• Where the EA contains benefits relating to termination of employment, those benefits are guaranteed by the employer.

‘ZOMBIE’ AGREEMENTS

Zombie agreements are workplace instruments that have passed their nominal expiry date but continue to operate as they have not been terminated or replaced by another agreement.

The amendment provides for an automatic sunsetting of remaining transitional instruments. The sunset period of 12 months commences immediately, and any zombie agreement will automatically terminate on 7 December 2023.

After the sunset date, if the business has not negotiated a new agreement with employees, they will be bound by the relevant modern award/s.

INITIATING BARGAINING

This amendment enables an employee bargaining representative to initiate bargaining for a ‘single-enterprise agreement’ in certain circumstances, without the agreement of the employer to bargain or the FWC having made a majority support determination, scope or low-paid authorisation (as previously required)

DEALING WITH ERRORS IN ENTERPRISE AGREEMENTS

Part 17 of The Act will remove unnecessary complexity in the agreement making process by:

• Simplifying the process for correcting obvious errors, defects or irregularities in enterprise agreements; and
• Provide a simple remedy to address the situation where the wrong version of an enterprise agreement or variation has been inadvertently submitted to, and approved by, the FWC.

MULTI-EMPLOYER BARGAINING

The amended Act establishes a number of mechanisms to facilitate multi-employer bargaining, including the ability to join new employers to existing multi-employer agreements.

STAGE 2 – AMENDMENTS COMMENCING 6^th MARCH 2023

SEXUAL HARASSMENT

This stage has not received royal assent yet, but would prohibit sexual harassment of workers, including prospective workers. The Bill adopts the Model Work Health and Safety Act definition of ‘worker’ so it includes employees, contractors, subcontractors, outworkers, apprentices trainees, volunteers and students undertaking work experience programs. The Bill introduces vicarious liability for sexual harassment to employers and principals. FWC retains the ability to make orders stopping sexual harassment.

Employers will also have a positive duty to prevent workplace sexual harassment and sex discrimination. It is common currently for employers to react to issues only as they arise, but this will not be sufficient under the amendments.

Employers will need to review their policies, procedures, training initiatives, investigation and reporting practices to ensure their new obligations can be met.

STAGE 3 – AMENDMENTS COMMENCING – 7^TH JUNE 2023

(OR AN EARLIER DATE TO BE FIXED BY PROCLAMATION)

APPROVAL OF AGREEMENTS

The Bill makes a series of minor changes to the mechanics and process by which an employer must obtain employees’ approval of a proposed EA.

In addition, the FWC is required to produce a “Statement of Principles on Genuine Agreement” which will include:

• Informing employees of proposed bargaining;
• Informing employees of their rights to have a bargaining representative;
• Providing employees the terms of any proposed EA and their effect;
• Providing employees with a reasonable opportunity to vote in a free and informed manner; and
• Any other matter considered relevant by the FWC.

BETTER OFF OVERALL TEST

The Act provides that if the FWC is concerned that a proposed EA does not meet the ‘Better Off Overall Test’ (“BOOT”), the FWC may specify an amendment to that EA so as to satisfy the BOOT.

The BOOT itself is amended to require the FWC to make a ‘global assessment’ as to whether each employee who is covered by the proposed EA is better off. It must also give primary consideration to any common view as to the EA meeting the BOOT that may be expressed by all bargaining representatives and any union that is a bargaining representative.

In addition:

• BOOT processes can be reopened during the life of the EA;
• EAs can be varied for this in their life; and
• The BOOT amendments also contain a provision empowering employees or unions to trigger a reconsideration of the BOOT at any time after the EA is approved.

BARGAINING DISPUTES

This amendment introduces the concept of an ‘intractable bargaining declaration’. If a Bargaining Representative has made an application to the FWC to deal with a bargaining dispute, and there is no reasonable prospect of an agreement being made; the FWC can make the declaration. The declaration will specify a ‘post-declaration negotiating period’, and if, at the end of that period agreement has not been reached, the FWC may make an ‘Intractable Bargaining Workplace Determination’. This, in effect, is the FWC arbitrating the terms of the proposed EA.

It is noted that these changes make it easier and more likely that the FWC intervenes in bargaining disputes and arbitrates EA outcomes.

REQUESTS FOR FLEXIBLE WORK

The Act imposes more stringent requirements on how an employer must respond to requests for flexible work, including the requirement to propose changes other than those initially sought by the employee, where the employer is rejecting the request. Requests for flexible work may also be the subject of arbitration by FWC.

In addition, a new category of eligible employee able to make a request includes pregnant employees and employees whose immediate family or household experience family or domestic violence.

STAGE 4 – AMENDMENTS COMMENCING – 6^th DECEMBER 2023

(OR AN EARLIER DATE TO BE FIXED BY PROCLAMATION)

FIXED TERM CONTRACTS

Limitations on the use of fixed term and successive contracts include:

• The prohibition of contracts of employment that provide for fixed term employment of more than two years and prohibits the extension or renewal of such a contract;
• The prohibition of options to extend or renew the fixed term employment contract more than once (regardless of how short the period is);
• The FWO will be required to prepare a Fixed Term Contract Information Statement which employers will be required to provide to current and future fixed term employees; and

Fixed term employees who earn above the high-income threshold (currently $162,000 per annum) are exempt from these restrictions. There are also further limited exemptions.

OUR RECOMMENDATIONS

• Employers should understand the changes applicable to their business and the associated effective dates.
• Employers should update their standard contract clause and consider the impact of changes on existing pay secrecy clauses in employment contracts and enterprise agreements.
• Employers should immediately review their sexual harassment policies, procedures and reporting mechanisms.
• Employers who are engaged in or contemplating bargaining for an EA should review their overall approach and ensure that they are fully informed of the amended approval process.
• Employers should review any existing policies that deal with the right to request flexible work. Where flexible work requests are received, they must be assessed and documented in accordance with the FWA provisions.
• Employers who rely on fixed term contracts, should review existing arrangements and prepare for how they will comply with the new requirements in 2023.

NEXT STEPS

These amendments represent a significant change to the industrial relations landscape and employers need to familiarise themselves with the changes and carefully assess the associated risks to their labour costs, productivity, and input costs.

The team at Edwards HR will continue to share any updates as they rollout. If you would like more advice about how these changes will affect your business or require advice on enterprise agreements, Edwards HR are more than happy to help.

Alternatively, you can find more information about the Secure Jobs, Better Pay changes on the Fair Work Commission site here.