What does the Fair Work Legislation Amendment (Secure Jobs, Better Pay) Act mean for you?

Preparing for major changes ahead 5 min read

The Federal Government's first wave of sweeping changes to workplace laws has started to take effect, with the Fair Work Legislation Amendment (Secure Jobs, Better Pay) Bill 2022 (Cth) (the Bill) receiving Royal Assent on 6 December 2022. Our article and webinar about the Bill when it was first introduced are available here and here.

The Bill was subsequently amended by the House of Representatives and again by the Senate. In this Insight, we set out a snapshot of key changes contained in the Fair Work Legislation Amendment (Secure Jobs, Better Pay) Act 2022 (Cth) (the Act) as passed, what they mean for you, and what you should be doing now to prepare for the changes.

Pay secrecy clauses¹

• Employees will have a new workplace right to choose whether or not to disclose their remuneration and any terms or conditions of their employment that may determine remuneration outcomes.
• Pay secrecy clauses in new employment contracts will be prohibited. Pay secrecy clauses in existing employment contracts will have no effect.

What does this mean for your business?

• Employees will not be prevented from disclosing their remuneration to any other person.
• Potential adverse impact on workforce culture in businesses where employees consider remuneration is inequitable.

What should you do now?

• Employers should review their template employment contracts to ensure they do not prevent employees from disclosing their pay.

Fixed-term or maximum-term contracts²

• With limited exceptions, employers will be prohibited from entering into a fixed-term or maximum-term contract:
  • where the term exceeds two years (including any extension or renewal period); or
  • which contains the right to extend or renew the contract more than once (even if the period of the contract is not more than two years in duration); or
  • where the employee has previously been engaged on two consecutive contracts for the same or substantially similar work. This restriction will apply even where there may be a gap between contracts if there is 'substantial continuity of the employment relationship' during the period between the previous contract terminating and the current contract coming into effect (the explanatory materials give the example of a contract that finishes at the end of one semester and another contract that starts at the beginning of the next semester).
• The prohibition will apply to a contract entered into before 6 December 2023 if an employer entered into a subsequent contract after that initial contract ended, in circumstances which meet the 'consecutive contracts' restriction.

What does this mean for your business?

• The ability of employers to engage employees on fixed-term contracts will be significantly curtailed.
• The onus will be on employers to establish that their fixed-term contracts are not in breach or otherwise exempt from the above prohibitions.

What should you do now?

Employers should:

• review their current employment arrangements and conduct an audit of their employees on fixed and maximum-term contracts to determine how long they have been employed under such arrangements, including previous contracts; and
• review their template fixed/maximum term contracts to remove any clauses that provide the option to extend or renew the term; and
• if seeking to rely on an exception against the prohibition on fixed-term contracts, consider including that exception within the terms of the contract and explain why the exception applies.

Employers should also consider if they have projects that rely on fixed or maximum-term workforces that may be impacted by these changes, and plan ahead to structure their workforces in light of these changes.

Flexible working arrangements³

• The process employers must follow on receiving an employee's request for flexible work arrangements has become more prescriptive. Employers must, within 21 days of receiving the request:
  • approve the request; or
  • have discussed and agreed with the employee changes to the employee's requested work arrangement; or
  • have discussed the proposed arrangement with the employee and must set out the reasonable business grounds on which they refuse to grant the request.
• The Fair Work Commission (FWC) will have the power to arbitrate a dispute in relation to a flexible working arrangement. The FWC can only arbitrate where a conciliation conference has failed to settle the dispute.

What does this mean for your business?

• The scope for employees to make a flexible working arrangement request has been expanded. Employees can bring a dispute to the FWC if the employer refuses their request or fails to respond within 21 days. The FWC will have broad powers to make a number of orders when arbitrating the disputes.

What should you do now?

• Employers should review their current policies and procedures to ensure they meet their obligations in relation to responding to requests for flexible working arrangements, and if refusing a request, be clear about the reasonable business grounds upon which they rely.

Sexual harassment and anti-discrimination⁴

• From 6 March 2023:
  • sexual harassment in connection with work will be expressly prohibited; and
  • employers will be held vicariously liable for sexual harassment unless they can prove that they have taken all reasonable steps to prevent the conduct; and
  • employees can make an application to the FWC for a stop-sexual harassment order. The FWC must first attempt to conciliate the dispute. If the dispute is not settled at that point, the FWC may, with the consent of both parties, arbitrate the dispute. If consent is not given by either party, the applicant will then have 60 days to make an application to the Federal Court.
• Breastfeeding, gender identity, and intersex status are now new protected attributes under the anti-discrimination provisions of the Fair Work Act 2009 (Cth) (the FW Act).

What does this mean for your business?

• Businesses should have already taken steps to protect workers from sexual harassment to comply with existing obligations to eliminate or minimise psychosocial risks to health and safety under work health and safety legislation. The changes are a timely reminder to ensure this has been done and if not, to commence as soon as possible.

What should you do now?

• Given the new positive obligation to prevent sexual harassment by employees or agents, businesses should consider applying the work health and safety framework to identify what controls they have in place to prevent sexual harassment in the workplace and to assess the efficacy of such controls. This would require at least the following:
  • ensuring they have robust policies, training and procedures in place to prevent or address sexual harassment in their workplace; and
  • investigating complaints of sexual harassment and addressing the conduct if established.
  • Additionally, employers should review and if necessary update their policies and training in relation to anti-discrimination, to ensure that people managers are aware of the new protected attributes.

Bargaining and enterprise agreements⁵

By far the most extensive and controversial changes in the Act relate to industrial relations. Among the key changes:

Multi-enterprise agreements

• Multi-employer bargaining will be expanded across three streams: 'single-interest bargaining'; 'supported bargaining'; and 'cooperative workplace'. Across all streams, civil and commercial construction industries have been excluded.
• Employers who employ 20 or more employees with a 'common interest' and are not covered by an enterprise agreement that is still within its nominal term, may be forced by a union into bargaining for a single-interest multi-enterprise agreement.
• For common-interest employers to be covered by a single-interest agreement, the operations and business activities of the employers must also be 'reasonably comparable'. Employers that employ 50 or more employees will bear the onus of proving that its operations and business activities are not reasonably comparable with other employers that are to be covered by the same multi-enterprise agreement.
• The FWC must also be satisfied that the decision to grant a multi-employer bargaining authorisation is not contrary to the public interest.
• Employers must have written consent from each union bargaining representative before a vote to approve or vary an agreement can be put to employees, although employers can also apply to the FWC for an order permitting the vote if a union has unreasonably failed to provide written agreement.

Better off overall test

• The FW Act now expressly provides that the better off overall test (BOOT) is a 'global assessment' (not a line-by-line assessment of entitlements). Additionally, the FWC will need to consider 'reasonably foreseeable employees' when applying the BOOT. BOOT reassessment will also be made available in certain circumstances.
• The FWC will be able to directly amend a proposed enterprise agreement if it considers the amendment necessary to address their concern in relation to the BOOT (instead of accepting undertakings from employers).

Bargaining disputes

• The FWC will have greater powers to resolve bargaining disputes, including by issuing intractable bargaining declarations, after which the FWC can effectively arbitrate. The FWC can make an intractable bargaining workplace determination if the parties have been bargaining for at least nine months.
• There will be changes to processes around protected industrial action. In addition to single-enterprise agreements, protected industrial action will now be available in the single-interest and supported bargaining streams of the multi-employer bargaining regime, but any action would be conducted on an employer-by-employer basis.

Zombie agreements

• All remaining transitional instruments preserved by the Fair Work (Transitional Provision and Consequential Amendments) Act 2009 (Cth), known as 'zombie agreements', will sunset.

What does this mean for your business?

• More employers may be forced into bargaining for an enterprise agreement, and we are likely to see an increase in industrial action.
• Employers of different sizes could still be found to have 'clearly identifiable common interests'.
• Employers covered by single-enterprise agreements nearing their nominal expiry date or within five years of their nominal expiry date should be aware that unions will be allowed to bypass the standard majority support determination process and commence bargaining for a replacement enterprise agreement.
• Changes relating to intractable bargaining declarations may encourage parties to wait out for arbitration if they think that might achieve better outcomes.
• Despite discussion, particularly at the Jobs and Skills Summit (which we reported on here), about simplifying the BOOT, the test remains complex and retains a requirement to consider future employees to the extent that their work patterns are 'reasonably foreseeable'.

What should you do now?

• Consider your industrial relations strategy and approach to the bargaining process and determine how these changes will affect your approach moving forward.
• Think about how you can work to manage the risk of protected industrial action, particularly in the context of multi-enterprise bargaining.
• When bargaining, employers should carefully undertake their own BOOT assessments to avoid situations where the FWC discovers an issue and seeks to directly amend the agreement.

Abolishing the ABCC⁶

• The Australian Building and Construction Commission (ABCC) will be abolished.
• The National Construction Industry Forum will be established to provide advice to the government on the building and construction industry.

What does this mean for your business?

• The number of industrial disputes on construction sites is likely to increase.
• Building and construction industry participants will:
  • no longer be monitored by an industry-specific industrial regulator; and
  • have the same rights as other workers in respect of enforcing the FW Act.

What should you do now?

• Employers currently subject to the ABCC should review their obligations and rights under the FW Act and be prepared to take action to enforce their rights.
• If industrial disputes are reasonably foreseeable, employers should consider how they will approach these matters moving forward.

More to come

Workplace Relations Minister Tony Burke has indicated the Act will be followed by the government's next tranche of reforms to workplace relations laws next year, which will cover labour hire and regulating the gig economy.