On 6 December 2022 the Fair Work Legislation Amendment (Secure Jobs, Better Pay) Act 2022 (Cth) (Act) received Royal Assent and became law in Australia. Some of the changes have already come into effect, whilst others will be rolled out over the next 12 months.
The Act has reformed the industrial relations landscape across the country with the amendments marking the most significant changes to federal industrial law for national system employers since the introduction of the Fair Work Act 2009 (Cth) (FW Act) 13 years ago.
Employers should familiarise themselves with the new requirements under the Act and take active steps to ensure compliance.
A summary of key changes introduced through the Act and the commencement dates, are set out below, followed by our recommendations for employers in light of the new laws.
What has changed?
| Topic | Summary | Commencement Date |
|---|---|---|
| Pay Secrecy | The Act introduces a workplace right for employees to disclose (or not disclose) information about their remuneration and ask any other employee (whether employed by the same or a different employer) about their remuneration. The Act invalidates any existing pay secrecy terms in contracts of employment. An employee may make a general protections complaint if their employer takes adverse action against them (including disciplinary action or termination of employment) because of this workplace right. The Act also prohibits employers from including any pay secrecy terms in a new contract of employment. Non-compliance may result in civil penalties. | 7 December 2022 7 June 2023 |
| Job Advertisements | Penalties may now be imposed on employers who advertise employment opportunities at a rate of pay that would contravene the FW Act or an industrial instrument. | 7 December 2022 |
| Termination of Enterprise Agreements | The Act introduces a more onerous test which must be satisfied before the Fair Work Commission (FWC) will approve the termination of an enterprise agreement which has passed its nominal expiry date. | 7 December 2022 |
| Zombie Agreements | "Zombie agreements" (being individual and collective agreements made prior to the commencement of the FW Act and during the "bridging period" from 1 July to 31 December 2009) will automatically terminate on6 December 2023. Before 7 June 2023, employers are required to notify affected employees if they are covered by a zombie agreement and advise them that the agreement will terminate, unless an application to extend the agreement is made to, and approved by, the FWC. | 7 December 2022 Sunset period ending 6 December 2023, unless formally extended by FWC |
| Sexual Harassment | The Act introduces an express prohibition on sexual harassment in connection with work. These changes align with the landmark Anti-Discrimination and Human Rights Legislation Amendment (Respect at Work) Bill 2022 which passed both Houses of Parliament on 28 November 2022 and is due to receive Royal Assent shortly. For more information on this Bill please refer to our previous newsletter here. These reforms are intended to shift the responsibility for making complaints away from victims of sexual harassment, by imposing a positive obligation on duty holders to take proactive steps to eliminate such conduct in the first place. The Act provides the FWC with the power to arbitrate a stop-sexual harassment application by consent or otherwise to issue a certificate allowing an application to be made to the Federal Circuit or Federal Court of Australia. | 6 March 2023 |
| BOOT | The Act simplifies and streamlines the Better Off Overall Test (BOOT). It is now clear that the FWC is required to undertake a global assessment of the proposed enterprise agreement to determine whether each employee is better off under its terms, as opposed to a line-by-line analysis compared to the relevant modern award. The FWC will also have power to amend an enterprise agreement during the approval process (rather than requiring undertakings). In addition, parties may apply for a reassessment of the BOOT during the life of an enterprise agreement. | 6 June 2023, or an earlier date to be fixed by proclamation |
| Flexible Working Arrangements | Under the FW Act, employees are able to request flexible working arrangements in certain circumstances (such as where they are a carer or have a disability). The personal circumstances giving rise to a right to request such an arrangement have been expanded to include employees who are pregnant or where they have experienced family and domestic violence. Additional obligations will be placed on employers when considering an employee’s request for a flexible working arrangement. An employer can now only refuse such a request where, amongst other things, the request has been discussed with the employee, the employer has genuinely tried to reach an agreement, the refusal is on reasonable business grounds and the employer has provided the employee with detailed reasons for the refusal in writing. Similar provisions have also been introduced concerning the obligations of employers in responding to a request for an extension of unpaid parental leave. The Act also introduces a new dispute resolution mechanism for resolving such disputes before the FWC. | 6 June 2023 |
| Multi-employer bargaining | The Act makes significant changes to the enterprise bargaining framework in Australia. In particular, it expands the existing multi-enterprise bargaining regime and provides employees and trade unions with greater powers to compel employers to bargain for agreements that cover multiple employers, which could include competitors. The building and construction industry has, however, been carved out from these reforms. A “supported bargaining stream” will replace the former (and seldom used) “low-paid bargaining stream” under the FW Act. Under this renamed stream, the FWC can make a supported bargaining authorisation requiring multiple employers to bargain together having regard to, amongst other things, whether the employers have “clearly identifiable common interests”. The test is therefore broader with the intention of reducing barriers to accessing this form of bargaining. Further, “single-interest employer authorisations” can be made under the Act by employee bargaining representatives, not just employees themselves. The FWC can also grant an authorisation covering an employer without its consent (compelling it to bargain with other employers) provided the business employs at least 20 employees and it is not covered by an enterprise agreement which has not passed its nominal expiry date. | 6 June 2023, or an earlier date to be fixed by proclamation |
| Small Claims Procedure | The Act increases the cap for small claims proceedings from $20,000 to $100,000. Further, under the changes, an unsuccessful party may be liable for the other party’s costs for any filing fees paid. | 1 July 2023 |
| Fixed Term Contracts | The Act prohibits the use of fixed term contracts for a period greater than 2 years (including renewals). In addition, fixed term contracts cannot be extended more than once. There are a number of exceptions, including where an employee earns more than the high income threshold (currently, $162,000 per annum) or is engaged to perform essential work during a peak demand period. An employer must also provide an employee who will be engaged on a fixed term basis with a copy of the Fixed Term Contract Information Statement (which the Fair Work Ombudsman has been tasked to prepare). | 6 December 2023, or an earlier date to be fixed by proclamation |
| Discrimination | There are a number of existing provisions in the FW Act which prohibit unlawful discrimination against an employee (or prospective employee) because they have a protected attribute (including race, sex or age). The Act introduces three new protected attributes, being “breastfeeding”, “gender identity” and “intersex status”. | 7 December 2023 |
| Abolition of the ABCC and the ROC | The Act abolishes the Australian Building and Construction Commission (ABCC) and Registered Organisations Commission (ROC). The functions of the ABCC will be transferred to the Fair Work Ombudsman and the functions of the ROC will be assumed by the FWC. | Staggered |
What should employers do now?
We recommend employers take the following steps to ensure compliance with the changes introduced by the Act:
- Employers should review their contracts of employment to remove pay secrecy clauses.
- Employers should determine if they have any employees under fixed term contracts which exceed 2 years or have already been extended, and begin proactively planning their staffing requirements for when those contracts expire.
- Employers should ensure their job advertisements set out lawful rates of pay which are no less than the minimum rates required by law.
- Employers should review their policies and procedures concerning sexual harassment, unlawful discrimination and flexible working arrangements to ensure they align with the new requirements.
- Employers should take proactive steps to ensure appropriate measures are in place to prevent and prohibit sexual harassment in the workplace. Such steps may include induction training and regular refreshers for staff, reviewing policies and procedures, monitoring workplace culture and ensuring complaints are investigated promptly.
- Employers should consider whether their business could potentially be compelled to participate in the supported bargaining or single interest enterprise bargaining schemes and (if so) review their bargaining strategies prior to the commencement of the relevant changes.
- Prior to lodging a proposed enterprise agreement for approval before the FWC, employers should carefully consider whether it passes the new BOOT over the life of the agreement with a view to reducing the risk of amendments being made by the FWC during the approval process, and/or an application for review being made during the term of the agreement.
- Employers should consider whether they have any zombie agreements covering their business and what the impact would be if those agreement were terminated on the sunsetting date.
- Employers should address any underpayment of wages risks now as there may be a higher degree of risk of employees bringing recovery proceedings once the small claims compensation cap increases on 1 July 2023.
This article was written by Clare Raimondo, Partner, Jessica Nicholls, Special Counsel and Jackie Sorial, Law Clerk.
