In brief - What will the 2023 industrial landscape look like for employers? In preparation for significant changes, employers should assess the possible implications for their business, for bargaining and for existing industrial instruments.
On 27 October 2022, the Albanese Government introduced the Fair Work Amendment (Secure Jobs, Better Pay) Bill 2022 (Bill) to Parliament. The Bill will mark Australia's largest industrial relations reform since the inception of the Fair Work Act 2009 (Cth) (FWA).
After a month of negotiation and amendment and a Senate Inquiry by the Education and Employment Legislation Committee (Senate Inquiry), the Government secured support from Independent ACT Senator David Pocock and the Australian Greens Party that have the Bill set to pass in the final parliamentary sitting before the end of the year.
The Bill progresses some, but not all, of Labor's pre-election promises. The key relevant changes for your business include:
This article provides a summary of these key changes and provides some tips on what employers should do.
In the new year, as these changes come into effect, we will provide further guidance and update, kicking off with our tailored HR Highlights Session in February 2023, focusing on the commercial impacts of the reforms.
Pay secrecy clauses
Pay secrecy clauses and clauses which prevent employees from discussing pay in employment contracts will be prohibited. Employees now have a positive right to disclose (or not disclose) information about their renumeration to any other person. Existing secrecy clauses will be rendered invalid.
The provision aims to increase renumeration transparency and reduce gender-based pay discrimination, carrying wide industry support.
To do: employers should review their employment contracts and remove any clauses that will breach the new provision. It must also be noted the change will enliven a new, enforceable workplace right, and could be the basis for adverse action proceedings. Where employees will have greater transparency around remuneration, employers may also want to undertake audits to ensure equity in remuneration.
The objects of the FWA and Modern Awards will be amended to include the right to secure work and greater gender equity in the workplace.
The amendment prescribes considerations for the FWC to take when determining whether to make an Equal Remuneration Order (EMO). The considerations include considering whether the type of work has been undervalued on the basis of gender after comparisons. The FWC will be obliged to make an ERO if it is satisfied that remuneration is unequal.
To do: employers should be aware that pay practices that are not meeting standards in industry or community may be subjected to EMOs. In sectors where the workforce is largely female, employers might expect EMOs to be made in 2023 and beyond, increasing rates of pay.
Some minor changes will align the FWA with other anti-discrimination legislation by including protection against discrimination on the basis of breastfeeding, gender identity and intersex status as protected attributes.
The amendments require 'special measures to achieve equality'. Clauses around special measures can be included in enterprise agreements.
Though this does not go further than existing obligations under the tranche of anti-discrimination legislation, employers should ensure policies and training are up to date.
To do: policies need to be reviewed to ensure that they reflect any special measures which will be taken to achieve equality. Definitions will be important, as will consultation about any changes. Employers should be prepared to include special measures in future EA negotiations.
Amendments to include Part 3-5A in the FWA prohibits sexual harassment in connection with work. Under these changes employers may be vicariously liable for sexual harassment by their employees, unless an employer can demonstrate they took all reasonable steps to prevent the conduct from occurring.
Operating similar to the existing anti-bullying jurisdiction of the Fair Work Commission (FWC), employees may apply for stop-sexual-harassment orders for conduct at work. Individuals as well as employers, board members, directors and decision makers can be named in such proceedings.
The amendments mean that in 2023 employers should manage the risk of sexual harassment in the same manner as other safety risks. See our recent articles What the Respect@Work laws mean for employers and Avoiding Vicarious Liability in Sexual Harassment Actions.
To do: policies and training should be reviewed to ensure employers can demonstrate a risk management approach to sexual harassment and that employers have taken all reasonable steps to address the risk. Officers and directors, as well as boards should be included in the application of policies and in training.
Limitations on fixed-term contracts
The offering of fixed-term contracts will be limited in 2023 and beyond to circumstances where the period of engagement is less than two years. Fixed-term contracts which provide for extension greater than two years, or for more than one extension are also prohibited and employers will be unable to offer a third consecutive fixed-term contract for substantially the same role.
Failure to comply with this change may result in prosecution and civil penalties.
Some exceptions to this provision are outlined in a new section 333F, including where proposed work is for a distinct and identifiable task, or the contract is intended to cover essential work during a peak demand period.
To do: employers should ensure their approach to fixed-term contract arrangements reflect the reforms so as to avoid possible prosecution and penalty.
Expanded flexible work arrangements
Employees will be able to request flexible work arrangements in a wider range of circumstances, including on the grounds of family and domestic violence, whether the perpetrator is an immediate family or household member or not.
Employers' consideration of such requests will need to be more considered if an employer refuses such a request. Specifically employers will need to respond within 21 days, and the 'reasonable business grounds' for refusal including any cost or productivity reasons for not granting the request.
An employee can raise disputes about refusal to grant flexible work arrangements with the FWC.
To do: clear policies and procedures for considering requests for flexible work arrangements should be developed to ensure that reasonable business grounds are made clear.
Under the Bill, a union or other representative may initiate bargaining for a replacement single-employer agreement by providing a written request to renegotiate to the employer, Additionally, representatives will no longer be required to obtain a majority support determination. Stricter provisions requiring employers to bargain in good faith will also be included.
In one of the more controversial changes, the reforms will expand the operation of multi-employer bargaining by introducing new 'streams' through which agreements can be made.
Supported bargaining agreements
The Workplace Minister will be able to declare that an industry or occupation is eligible for supported multi-employer bargaining (MEB), with the FWC being granted power to make a supported bargaining authorisation that requires employers to bargain together.
The Minister for Employment and Workplace Relations Tony Burke has said that the process of MEB will allow employers or their workforce to 'opt in' to bargain, and the FWC to determine "whether there is a common interest" and "public interest" in an MEB. In authorising an MEB, the FWC will have regard to several factors, such as the presence of low pay-rates, and use of the common interest test.
MEBs won't be authorised for businesses that employ fewer than 50 employees. By placing the onus of proving a common interest on the applicant/union it is intended to be easier for smaller businesses to resist MEB. For larger businesses, the employer will have to prove they are not reasonably comparable with other businesses to avoid MEB.
Single interest employer authorisations
Employees and unions can apply for a "single interest employer authorisation" (SIEA) to the FWC. Such an application may be granted (but not against small businesses - being those who employ less than 20 employees, excluding casual and seasonal workers) without the employer's consent if their Certified Agreement has passed its nominal expiry date (NED) and the subsequent 'grace' period (being 9 months post the NED).
To be granted, the FWC must be satisfied that the majority of employees want to bargain and that they have identifiable common interests, as well as consideration of the public interest test.
MEBs or SIEAs can be varied to incorporate new employers, and employers and affected employees may vary the agreement to remove themselves as parties, by a majority vote during the term of the MEB or SIEA, with the approval of the FWC.
The FWC will have power to compel a multi-employer agreement to be put to a vote, without an employer's right to veto and without union support, limiting the ability of parties to unreasonably withhold agreement.
Civil construction, including infrastructure projects and commercial construction will be exempt from these changes.
To do: employers likely to fall within the SIEA and MEB parameters will need to review their current EAs and industrial relations strategy. Bargaining dynamics will likely shift in 2023 and beyond. Employers with long expired agreements should be doing work now around classifications and mapping to prepare for future negotiations.
Better off overall test (BOOT)
The BOOT is intended to be simplified to make bargaining and the approval process easier.
The FWC will have to consider any common views held by bargaining participants about the proposed agreement passing the BOOT, and must apply a global assessment (not a line-by-line comparison between the proposed amendment and the relevant modern award) of whether each employee is better off having regard to the more beneficial and less beneficial terms of the agreement
In assessing the BOOT, the FWC may only consider reasonably foreseeable patterns of work, not hypothetical rosters or work patters.
The FWC will be able to remove a term in a draft agreement that does not meet the BOOT, and will be able to reassess the agreement if there has been a material change in working arrangements or other circumstances which were not considered during the approval process.
The Bill changes the threshold for involvement of the FWC, and increases the FWC's power in arbitrating bargaining disputes.
If the 'minimum bargaining period' exceeds nine months, the FWC may issue an intractable bargaining declaration if bargaining has not and is not likely to be progressed further.
Where a declaration is made, the FWC may provide a supplementary 'post-declaration negotiation period' if the supplementary period might assist to finalise the deal.
If a post-declaration negotiation period is not granted, the FWC must arbitrate and reach a decision as quickly as possible, or the FWC can make a workplace determination to resolve matters in dispute.
Terminating agreements and sunsetting of old agreements
The reforms introduce restrictions on employers terminating agreements after the NED. Termination will only be valid where:
the agreement does not and is not likely to cover employees;
its continued operation would be unfair to any employees covered; or
all of the following apply:
the agreement poses a significant threat to the viability of the business;
termination of the agreement would reduce the risk of redundancy, insolvency or bankruptcy; and
the employer has undertaken to preserve redundancy entitlements under the agreement up to four years.
The FWC will also consider the views of the parties and the impact termination will have on employees' bargaining power. If there is any opposition to termination, such as from a union, the application must be heard by a Full Bench of the Commission.
'Zombie agreements' will generally be sunsetted 12 months after the legislation commences. Employers are required to give written notice to employees of the impending termination of an agreement within six months of the legislation commencing.
For further consideration of what the sunsetting of 'zombie agreements' will mean, see our 22 June article Dusk of the dead: the end for "zombie" agreements.
To do: employers must review their existing agreements and consider if they fall under the 'zombie' provisions. If agreements have passed their NED, employers should make preparation for renegotiation in 2023/24.
Abolition of the Australian Building and Construction Commission (ABCC)
The ABCC will be abolished, giving workers in the industry the same access to rights under the FWA such as those that restrict bargaining and industrial action, and removes excessive penalties to industry participants.
All of the ABCC's regulatory responsibilities and existing ABCC matters will be transferred to the Fair Work Ombudsman (FWO).
Abolition of the Registered Organisations Commission
The Registered Organisations Commission (ROC) will also be abolished. Its regulatory responsibilities and existing matters will be transferred to the General Manager of the Fair Work Commission.
Next steps for employers
With the passing of the Bill it is certain that 2023 will bring with it significant changes to Australia's industrial landscape.
The holiday period may provide an opportunity for employers to plan their 2023 'To Do' lists, to assess the possible implications for their business, for bargaining and for existing industrial instruments.