Top 3 things to watch in the Secure Jobs Bill:
- Greater scope for employees to request flexible work
- Fixed-term contract ban
- Changes to enterprise bargaining
In what is set to be most extensive reforms since the introduction of the Fair Work Act 13 years ago, the Fair Work Legislation Amendment (Secure Jobs, Better Pay) Bill 2022 was introduced into Parliament on 27 October 2022 and recently passed Parliament after the ALP announced it had struck a deal with the Greens and Independent ACT Senator Pocock to ensure the Bill passed this side of Christmas.
The Bill is part of a broader package of reforms the ALP promised in the lead-up to the May 2022 election. The ALP have said that the Bill will promote job security, help close the gender pay gap and get wages moving, while employers and employer associations have expressed concern at the scope of some of the changes and the impact they will have on businesses.
The following changes are of particular interest:
Expansions to flexible work arrangements
In a significant post-pandemic shift, the Bill will require that employers ‘genuinely try’ to make changes to accommodate flexible working requests received from employees. Employees experiencing domestic or family violence will also be entitled to request flexible work arrangements.
Currently, employees have a right to request flexible working arrangements, and unless an enterprise agreement expressly says otherwise, there is limited ability to challenge an employer’s refusal, which may take place on reasonable business grounds (i.e. if it is too costly or impractical to implement the flexible arrangement). Recent amendments to the Bill have included a note to clarify where an employer may have ‘reasonable business grounds’ to refuse a flexible work request. The note makes it clear that the size and nature of the employer’s business is among the specific circumstances that may be considered when examining ‘reasonable business grounds’. For example, if the employer only has a small number of employees, there may be no capacity to change the working arrangements of other employees, and so a refusal may be reasonable.
The Bill will now allow employees to raise a dispute in the Commission where the parties cannot agree on a change to the employee’s working arrangements (or where the employer does not respond to a request within 21 days) and, if the dispute is not resolved, the Commission can resolve the dispute (including by mandatory arbitration) and ultimately order an employer to grant a request (although conciliation before arbitration is now mandated except in exceptional circumstances).
Concerns have been raised that these changes will increase disputation about flexible work arrangements at a time when employers are trying to deal with the challenges presented by the post-pandemic workplace, including introducing hybrid work settings involving some requirement for face-to-face working.
Ban on certain fixed-term contracts and pay secrecy clauses
The Bill contains provisions prohibiting an employer from engaging an employee on a fixed-term contract beyond two years (including extensions) or contracts that may be extended more than once under threat of a civil penalty. The references to “fixed term” contracts also include what are generally known as maximum term contracts.
These changes have the potential to impact a wide range of employers who regularly use fixed term or maximum term contracts. There are some exceptions to the ban on these agreements. Fixed term or maximum term contracts can continue to be used for:
- contracts with employees only engaged to perform distinct and identifiable tasks involving specialised skills
- training arrangements
- contracts with employees to undertake essential work during a peak demand period
- contracts with employees engaged to undertake work during emergencies or temporary absences
- contracts with high income employees (that is, employees that earn more than $162,000 per year in 2022-23)
- contracts relating to a position for which there is one-off government funding
- contracts relating to a governance position that has a time limit
- fixed term arrangements permitted under a modern award for the Fair Work Regulations.
Businesses will be given a 12-month window to adapt to changes to fixed-term contracts.
The Bill also prohibits “pay secrecy clauses”, giving employees the positive right to disclose (or not disclose) their pay and remuneration to others. The Government’s view is that often these clauses have been used to conceal gender pay discrepancies. The changes create a new workplace right, allowing employees to ask each other about their remuneration and conditions – with the view that employees would be able to assess whether they are being fairly paid. Employers who seek to impose pay secrecy clauses could be subject to civil penalty proceedings under the Bill.
Bargaining is set to change, and the Government has said, it will become simpler with the changes.
Amendments to the bargaining process respond to criticisms that bargaining has become overly complex, time-consuming and difficult. Employers will no longer have to provide certain materials and explanatory information prior to the “access period”. Instead, there will be an overarching requirement that the Commission be satisfied there has been genuine agreement. In making this assessment, the Commission will now consider a “statement of principles” which includes whether genuine bargaining occurred prior to the vote and whether bargaining representatives were included in the process.
Further, employees who vote on an agreement will need to have “sufficient interest” in the agreement and must be “sufficiently representative” of its coverage. This is designed to limit circumstances when a small cohort of employees might vote up an agreement.
The “Better Off Overall Test”, often criticised, is also set to become a global assessment. The Commission will only deal with circumstances that are ‘reasonably foreseeable’, which means that the Commission will no longer consider ‘hypothetical’ working arrangements when determining if workers would be ‘better off’ under a proposed agreement. Employees covered by an agreement who perform work in different patterns or different kinds of work to those initially considered by the Commission will now have the opportunity to have the BOOT re-examined.
The Bill will allow parties to seek a reassessment of the BOOT through a “reconsideration process” where there have been material changes in working arrangements during the life of an agreement. While this change may reduce the number of required undertakings prior to initial approval, there is concern the proposal could lead to further disputes over the BOOT during the life of an agreement.
'Common interest' and 'supported' bargaining
Perhaps contentiously, ‘supported bargaining’ or industry-wide bargaining changes are being broadened, which will increase the likelihood of bargaining across multiple employers. A ‘common interest’ test will be introduced to govern when industry-wide bargaining is used, enabling workers across multiple workplaces in a common sector to bargain on a collective basis. These changes were first said to increase the bargaining power of low-paid and female-dominated sectors and enable more employees to access the benefits of enterprise bargaining. However, it appears a wider range of industries will be subject to multi-employer agreements. To bargain together, businesses must be ‘reasonably comparable’ in terms of the industry they operate within, their size, geographical location, business activities and operations
When the Bill was first introduced, there was widespread concern that all types and sizes of businesses would be subject to multi-employer bargaining. One of the most significant changes introduced through discussions and concessions with the Senate is that small businesses with fewer than 20 employees will now be excluded from multi-employer bargaining. Additionally, small businesses with fewer than 50 employees will be able to argue more easily that they are not reasonably comparable to other businesses with a multi-employer bargain and thus exit the process.
Termination of enterprise agreements
Currently, enterprise agreements continue to apply past their nominal expiry date unless replaced or a successful application is made to the FWC to terminate the agreement. The Bill makes it harder for employers to apply to unilaterally terminate an enterprise agreement after its nominal expiry date. In most cases, an employer would need to establish that the continued operation of the enterprise agreement would pose a significant threat to the viability of a business and that termination of the agreement would reduce the potential of redundancies. However, under recent amendments to the Bill, the FWC would now need to be satisfied that it is appropriate to terminate the agreement in all of the circumstances.
What is to come?
The Government has sought to introduce wide-ranging reforms, which it says will increase wages and flexibilities in Australia’s workplace relations system. However, business groups are concerned about the opposite effect, that the Bill will result in increased disputation, arbitration and industrial action and diminish productivity by uncoupling wage rises from an enterprise’s circumstances and features. The true impact of the Bill remains to be seen, however as a result of one of the concessions made by the Albanese Government, there will be a review of the Bill two years after its introduction where we anticipate many of these questions will be addressed.
Shortly after securing passage of the Bill, the ALP indicated we can expect further changes to the workplace relations landscape in 2023. With foreshadowed laws regulating the gig economy and the introduction of 'same pay' provisions for labour hire employees, we expect 2023 to be another significant year as the Government seeks to achieve its industrial relations agenda.