The Federal Government’s Fair Work Legislation Amendment (Secure Jobs, Better Pay) Bill 2022 passed parliament on 2 December 2022, after negotiations in the Senate. The new laws represent the most significant changes to Australia’s industrial relations system since the commencement of the Fair Work Act 2009 (Cth). While some employers will be affected more than others, the changes will have an impact across Australian workplaces. Royal Assent was received on 6 December 2022.

The amendments will come into effect in several stages, with some elements taking effect today.

The key changes are set out in this article, however there are some critical messages for employers:

  • If your template employment agreements contain provisions restraining employees from discussing their pay, you must remove those provisions from the templates immediately.
  • If you are about to issue a contract with a pay secrecy clause, delete that clause before issuing.
  • If your business uses fixed term or maximum term contracts, you should consider whether those contracts are necessary, and if so, seek advice on whether long term or back to back arrangements will be lawful once the changes take effect.
  • If your business relies on an out of date enterprise agreement, particularly if the agreement disadvantages employees, you will need to start considering alternative options.
  • If your business’s enterprise agreement has passed, or is about to pass, its nominal expiry date, you should get on the front foot and consider renegotiation options.
  • All employers need to be more proactive in preventing sexual harassment in the workplace.

Removing secrecy over pay

Employment contracts commonly contain requirements that employees do not disclose or discuss their salary with other staff. As of 7 December 2022 pay secrecy clauses in existing contracts have no effect. However, it is also unlawful for employers to offer new contracts which contain pay secrecy clauses. It is critical that employers review their contract templates to remove pay secrecy provisions, and also consider this issue with any future contract variations.

Limiting the use of fixed-term contracts

Under the new system it will be unlawful to offer fixed- or maximum‑term contracts for terms of two or more years, unless an exception applies. This restriction also applies to individual contracts in a series of fixed- or maximum‑term contracts (eg where a worker is on a series of 1 year fixed‑term contracts).

The effect of this restriction is that existing contract terms which exceed the rules about maximum terms will be of no effect. Contracts entered into after these provisions take effect may also give rise to penalties for employers.

The exceptions are intentionally narrow. Importantly, the restriction does not apply to employees who are earning over the high income threshold, so it may not apply to more senior managers. However, employers who have a general practice of engaging staff on back to back fixed or maximum term contracts will need to revisit their practices.

Finally, employers will be required to provide a Fixed Term Contract Information Statement developed by the Fair Work Ombudsman to all employees entering a fixed term contract.

The restrictions on fixed-term contracts will take effect when they are proclaimed, but no later than 7 December 2023.

Flexible working arrangements

The new laws expand the number of grounds an employee can rely on to request a flexible work arrangement, and give the Commission the power to resolve disputes regarding flexible work arrangements through conciliation and arbitration.

Employers will still have the right to refuse a flexible work request on reasonable business grounds, but only after consulting and genuinely trying to reach agreement with the employee to accommodate their circumstances. An employer may face penalties if they fail to follow that process, or unreasonably refuse a flexible work request.

These changes take effect from 7 June 2023.

Multi-enterprise bargaining

One of the most significant changes to the Act is the expansion of multi-enterprise bargaining provisions. These changes will all take effect on a date to be proclaimed, but no later than 7 June 2023.

Cooperative workplaces

Under the current Act, a group of employers can decide to enter into a multi-enterprise agreement with their employees. These employers will now be referred to as “cooperative workplaces”, and the Bill adds new options to add or remove employers and employees from the scope of the multi-enterprise agreement.

Single interest employer agreements

Under the current Act, employers can apply to the Commission for authorisation to negotiate a single interest employer agreement. Outside a franchising context, employers could only seek such an authorisation after having first obtained a declaration from the Minister.

Under the new system:

  • the requirement for a Ministerial declaration is replaced with requirements that there is some similarity between the employers, and that the authorisation is not contrary to the public interest; and
  • employees may apply for a single interest employer authorisation without the employer’s consent, as long as the employer is not a small business employer, and the majority of employees support the move.

Employees may not make such an application if the employer has fewer than 20 employees, or there is a current existing enterprise agreement, or if the previous agreement expired within the last 6 months and the parties are negotiating a new agreement. However, the bottom line is that in sectors where most employees are engaged on award terms and conditions, there is a real likelihood that employers will be dragged into multi-enterprise agreements whether they like it or not.

The civil construction industry is excluded from the single interest enterprise bargaining system.

Supported bargaining authorisations replace low-paid bargaining authorisations

The concept of low-paid multi-employer bargaining under the current Act will be replaced with the supported bargaining stream, which is intended to cover sectors where there are obstacles to effective bargaining at the single enterprise level. Obtaining a supported bargaining authorisation is likely to be easier under the new system than obtaining a low-paid bargaining authorisation under the old system. Instead of having to satisfy the Commission that the authorisation is in the public interest, the Commission need only be satisfied that it is appropriate, which is a lower bar.

There are also fewer factors required to be considered by the Commission before granting the authorisation. For example, the Commission is no longer required to consider the views of affected employers, or whether the authorisation will improve productivity or service delivery.

Also, a number of factors have been adjusted to make it more likely that they will be favourable to the granting of the authorisation. For example, instead of having to consider the degree of commonality in the nature of the enterprises under the current system, the Commission need only consider whether the employers have clearly identifiable common interests in terms of their location, the nature of their enterprise, and their sources of funding.

Finally, the Commission may make a supported bargaining authorisation if the Minister has declared the relevant industry or sector eligible.

Changes to enterprise bargaining

Changes to the BOOT application

The Commission will have greater flexibility to consider the views of the bargaining parties as to whether an agreement passes the better off overall test. The Commission is also directed to only consider existing, actual and reasonably foreseeable patterns of work at the time of the test, rather than considering all of the possibilities. This change should mean that the process for passing an uncontroversial enterprise agreement is simpler and faster, reducing the need for undertakings.

It will take effect on a date to be proclaimed, but no later than 7 June 2023.

Simplifying approval process

The Commission will be able to disregard minor procedural or technical errors in connection with things like the notice of employee representational rights or the timing of the vote, as long as it is satisfied that the employees are not likely to be disadvantaged by the error.

The Commission will publish guidance material for employers on appropriate ways to ensure that employees fully understand their rights and the proposed agreement. This should make it easier for employers to demonstrate that employees have genuinely agreed to the agreement.

These changes will take effect on a date to be proclaimed, but no later than 7 June 2023.

Arbitration of intractable bargaining disputes

The Fair Work Commission will gain the power to arbitrate to resolve intractable bargaining disputes.

A bargaining representative will be able to apply to the Commission for an intractable bargaining declaration if there has already been a bargaining dispute process, and at least 9 months have passed since the previous enterprise agreement’s nominal expiry date passed or the negotiations started, whichever is later. The Commission may make a declaration if it is satisfied that despite the previous dispute resolution process, there is no reasonable prospect of agreement being reached, and it is reasonable in all the circumstances to make the declaration.

The Commission will be able to direct the parties to negotiate further, or issue a workplace determination resolving any matters which remain in dispute.

These changes will take effect on a date to be proclaimed, but no later than 7 June 2023.

Increased capacity for Commission to issue bargaining orders

The Commission has the power to issue bargaining orders if it considers that a party is not engaging in good faith bargaining. Previously, if an employer would not agree to bargain, a union could only apply to the Commission for a bargaining order if there was a majority support determination, a scope order, or a low-paid authorisation in order on place. Under the new system, if a union is seeking to replace an earlier agreement which expired within the last 5 years, the union simply needs to have written to the employer requesting bargaining. There are no other barriers to seeking a bargaining order.

This change takes effect from 7 December 2022.

Termination of enterprise agreements

Termination of enterprise agreements after nominal expiry date

The circumstances in which enterprise agreements can be terminated after the nominal expiry date have now changed. Previously, the Commission would terminate the agreement if it was satisfied that termination was appropriate in all the circumstances and not contrary to the public interest.

Under the new system, the Commission must terminate the agreement if:

  • the continued operation of the agreement would be unfair for the employees; or
  • the agreement does not and is unlikely to cover any employees; or
  • the continued operation of the agreement would pose a significant threat to the viability of the business (but only if the termination of the agreement reduces the risk of employees losing their jobs, and the employer preserves any termination of employment entitlements under the agreement).

The effect of these changes is that it is harder for employers to terminate an enterprise agreement as a bargaining tactic, and much easier for an employee or union to terminate an enterprise agreement which has unfair impacts.

These changes take effect from 7 December 2022.

The end of the zombie enterprise agreements

Pre-Fair Work Act enterprise agreements will automatically terminate on 7 December 2023. Employers can apply for an extension of this date, but only if their agreements are still beneficial to employees. Employers will have to notify their employees on or before 7 June 2023 of the projected termination date for these agreements. This means that employers who rely on Work Choices-era agreements will need to start looking at new enterprise agreements or paying based on award conditions.

Substantive equality

The Act now includes several changes which are specifically directed towards achieving greater equality.

The Commission now has the power to make equal remuneration orders at its own initiative (and no longer only by application of affected parties or the Sex Discrimination Commissioner). The Commission is now also required to specifically consider structural factors underpinning wage inequality, such as whether the work has been undervalued on the basis of gender.

The Commission must also consider gender inequality when determining whether a modern award review is justified by work value reasons.

Finally, the Act will expressly state that enterprise agreements can incorporate special measures intended to achieve equality for employees or prospective employees with particular attributes.

These changes take effect from 7 December 2022.

Discrimination and sexual harassment

As of 7 December 2022 the Act now includes gender identity, intersex status and breastfeeding in the list of attributes which are protected from discrimination.

From 7 March 2023 the Act will also prohibit sexual harassment in connection with work, with the result that a person who experiences sexual harassment will be able to seek compensation and penalties through the Commission. This avenue will operate in addition to the “stop sexual harassment orders” which were introduced in 2021, and does not affect existing rights to make claims under State and Federal anti-discrimination legislation.

Small claims

The cap on the amount that can be awarded through small claims court proceedings will increase from $20,000 to $100,000. The new provisions also allow a court to award filing fees as costs to successful small claims applicants, which breaks from the principle that parties cannot usually recover costs on matters arising under Fair Work Act.

These changes will commence on 1 July 2023, and may make the small claims procedure more appetising for employees.

Job advertisements

The new laws make it unlawful to advertise a pay rate which is less than the minimum rate of pay, including the minimum rate of pay under an award or enterprise agreement. There is also a requirement that employers hiring pieceworkers will need to specify the periodic rate of pay relating to the employment.

These changes take effect from 7 December 2022.