Improving The Industrial Relations Landscape: Major Legislative Changes To The Fair Work Act

Employers will need to adapt to a rapidly changing employment and industrial relations landscape under the recently adopted Fair Work Legislation Amendment (Secure Jobs, Better Pay) Act 2022 (Cth); which imposes several new obligations on employers and will substantially affect the way they run their workplace and structure their workforce. In this article, our Commercial law team considers the key amendments under the Act that employers ought to be aware of.

OVERVIEW – FAIR WORK LEGISLATION AMENDMENT

On 6 December 2022, Australia’s industrial relations landscape welcomed the highly anticipated Fair Work Legislation Amendment (Secure Jobs, Better Pay) Act 2022 (Cth) (‘Act’) as part of the legislative reform regime championed by the Labour Government. The Act introduces several significant amendments to revolutionise federal industrial relations, which will be incrementally rolled out over the course of the next year.

KEY AMENDMENTS

The underlying objective of the Act is to incorporate measures designed to ensure employee job security and increase employee well-being and equality. While there are quite a few changes, the key additions are as follows:

Prohibition on Fixed-Term Contracts

A key objective of the amending Act is to minimise the use of fixed-term contracts. Subsequently, the Act imposes new restrictions on these types of contracts and prohibits employers from entering fixed or maximum-term arrangements where:

(a)      the term of employment exceeds two years

(b)      the contract contains the right to renew or extend employment beyond two years

(c)       the employee has been engaged under two consecutive contracts for the same or substantially the same work

This prohibition will mean employers’ ability to engage employees on fixed-term contracts will be significantly impeded. That said, there are exceptions to the prohibition for fixed-term contracts exceeding two years, such as where the employee is engaged under a training arrangement (i.e. apprenticeship) or for essential work during a peak demand period.

Equal Pay Objective

The Act also aims to equalise opportunities for employees, with an emphasis on remuneration transparency and disclosure, effectively invalidating any pay secrecy terms which may have been included within previous employment contracts. Employers who previously relied on such terms to prevent employee wage disputation and agitation in the workplace will no longer be able to do so. A civil remedy provision has been introduced such that employers acting in contempt of this provision will be subject to monetary penalties.

Expert Panels

New expert panels have also been established in accordance with this provision, relating to pay equity generally and specifically within the Care and Community Sector. These Panels will be headed by Commission members with expertise in gender pay equity, antidiscrimination and the Care and Community Sector, who will hear complex wage-related matters.

Flexible Work Requests

Working remotely or out of the office may also become a more frequent occurrence with new changes set to strengthen flexible working arrangements. Under the Act, the circumstances in which an employee may request flexible working arrangements have been expanded to include pregnant employees or where an employee is experiencing or is affected by domestic violence.

The procedure employers must take once a flexible work request has also become more procedural. Upon receiving a request, an employer must, within 21 days, provide a written response either approving or rejecting the arrangement. If refused, employers will be required to discuss the decision with the employee and provide them with ‘reasonable business grounds’ (i.e. reasons) for the refusal.

Reasonable business grounds on which an employer may refuse a flexible work request may include, but is not limited to, the following:

• that the flexible working arrangement would be too costly for the employer
• that there is no capacity, or it would be impractical, to change the working arrangements of other employees to accommodate
• that the flexible working arrangement would be likely to result in a loss of efficiency or productivity or have a significant negative impact on customer service

Sexual Harassment Prohibition

The Act introduces an express prohibition against sexual harassment in the workplace, supplementing the Australian Human Rights Commission’s Respect@Work Report. As a result of this addition, the onus will fall back onto employers, who now have a positive obligation to actively monitor workplace conduct, prevent instances of sexual harassment and reprimand offending individuals accordingly. However, this provision not only applies to employees and applies to all ‘workers internal and external to the workplace, including (but not limited to): employees, contractors, subcontractors, out workers, students, prospective employees, customers, and clients. Employers must therefore ensure that robust policies are in place to combat sexual harassment in the workplace and that complaints regarding the conduct of this kind are investigated thoroughly. Failure to take reasonable steps to do so will mean that employers can be held vicariously liable.

In addition to the above, the Fair Work Commission has also been granted the ability to deal with sexual harassment disputes.

Anti-Discrimination Measures

The Anti-Discrimination provisions of the Fair Work Act will also be expanded to include breastfeeding, and gender identity and intersex status as protected attributes.

Bargaining and Enterprising Agreements

Arguably the most comprehensive and contentious amendments in the Act relate to bargaining and enterprise agreements, which amongst other things, expands the concept of multi-enterprise bargaining. As a result of these changes, employers will see a significant loss of bargaining power, while more employees will be covered by enterprise agreements. Employees covered by an enterprise agreement will also gain the benefit of a simplified, better-off overall test (BOOT) and new avenues of industrial actions.

Further details regarding the extensive changes to bargaining and enterprising agreements can be found on the Fair Work Ombudsman website.

NEXT STEPS FOR EMPLOYERS

Considering the above, it is only natural that employers may feel overwhelmed. To ensure that employers act in compliance with the legislative reforms, we suggest (at a minimum) they:

(a)      re-evaluate existing and future employment contracts, making any necessary adjustments

(b)       consider whether the company presently maintains fixed-term contracts that exceed or have already exceeded the 2-year maximum

(c)       appraise the company’s policies and training on antidiscrimination and sexual harassment

review the Amendment Act and seek comprehensive legal advice concerning the key changes and how they may affect you and your company

RAMSDEN LAWYERS – HOW WE CAN HELP WITH THE FAIR WORK LEGISLATION AMENDMENTS

In light of the highly anticipated Fair Work Legislation Amendment (Secure Jobs, Better Pay) Act 2022 (Cth), employers are now subject to a host of new statutory obligations. Ignorance is not bliss in these circumstances, as employers may be subject to significant penalties or litigation for non-compliance with the provisions. To that end, it is vital that you seek legal advice at the earliest available opportunity if you are still determining your obligations.

If you are looking to seek legal advice, Ramsden Lawyers can assist you. We are happy to arrange an obligation-free initial consultation to assist you in navigating the procedures set out under the relevant legislation for your circumstances. Our Commercial and Commercial Litigation Divisions have specific expertise in employment law and employment-related disputes and can provide you with specialised advice.

The content of this article is intended to provide general guidance to the subject matter and must not be relied on as legal advice.  Specific advice should be sought about your circumstances.