Legislation Update

Published 2 March 2023

In this newsletter we address the legislative changes under the Fair Work Legislation Amendment (Secure Jobs, Better Pay) Act 2022 (Cth), amending the Fair Work Act 2009 (Cth) (FW Act) and Anti-Discrimination laws, enacted at the end of 2022, as part of the Albanese government’s election promises.

The key changes:

Multi-Enterprise Bargaining and Industrial Action
Prior to the introduction of this legislation, trade unions had some scope to compel an employer to enter into bargaining towards an Enterprise Agreement (EA), even if they were unwilling, by way of a majority support determination. However, multiple employers could not be compelled together for the same Enterprise Agreement, which they could only do at the initiative of the employers. There was simply not enough of a commercial advantage for multiple employers to be tied together to an Enterprise Agreement, unless there were some specific industrial reasons for its preference.

Under the new legislation, trade unions now have the capacity to apply to the Fair Work Commission (FWC) to make a ‘single interest employer authorisation’ and to compel multiple employers to bargain together towards a form of multi-enterprise agreement, called a ‘single interest employer agreement’. The conditions for this are broadly as follows:

  1. The union has to represent some of the employees;
  2. The union must have the majority support of the employees within each of the employer companies;
  3. It must not be contrary to public interest;
  4. Operations and business activities of the employers must be reasonably comparable;
  5. The employer must have at least 20 employees; and
  6. It may only be granted if no existing written agreement or bargaining is in place between the employer and the union, for a period of up to 9 months after nominal expiry date.

Despite that last condition, the amendment prohibits employers from entering into single-enterprise bargaining with a union solely for the purpose of avoiding a single interest employer authorisation.

An exception has been granted to the construction industry, businesses in that sector cannot be compelled.

Under the new changes, the FWC also has greater power to arbitrate difficult bargaining disputes, and more robust conciliation processes have been implemented. Part of the rationale of these multi-enterprise changes is to give unions and employees greater leverage in industrial action. Industrial action across an entire industry would naturally have a greater impact on society, socially and commercially, compared to the industrial action taken by the employees of a single company. The FWC now also has greater powers to resolve industrial action, with the anticipation that there will be more industrial action.

The Better Off Overall Test (BOOT)
The BOOT has been amended to address some of the inflexibilities that have arisen in its implementation in some recent EA applications. The BOOT is now to be applied as a global assessment. The FWC will consider actual and reasonably foreseeable patterns of work and will give ‘primary consideration’ to a common view of the bargaining representatives on whether a proposed enterprise agreement qualifies the BOOT.

In addition, the FWC will have the capacity to amend EA’s with consent of the parties, removing the need for EA’s to be prefaced by undertakings. A practice which has caused inconvenience.

‘Zombie’ Agreements
The amendments provides that all ‘Zombie’ agreements (those made before the commencement of the FW Act that are still in operation) will automatically ‘sunset’ on 7 December 2023.

Parties to a ‘Zombie’ agreement can make an application to the Fair Work Commission to extend the sunset date for the agreement by up to 4 years at a time.

Applications need to meet certain conditions, being either that:

  • bargaining is occurring for a proposed replacement agreement; or
  • employees would be better off under the zombie agreement.

Employers who have employees covered by these agreements need to let those employees know, in writing, that the agreement will be terminating on 7 December 2023 unless an application for extension is made to the Commission. The written notice needs to be provided before 7 June 2023.

In relation to collective agreements, the FWC will publish its decision in relation to any extension online.

Prohibiting Pay Secrecy
Under the new amendments, employees are now free to choose whether or not to discuss and reveal their remuneration (and any other terms and conditions reasonably necessary to determine their remuneration) to others. These rights are given the status of ‘workplace rights’ under part 3-1 of the FW Act. This means that if an employer takes adverse action against their employee for discussing or asking about remuneration, the employee may bring a general protections claim before the FWC against their employer, on the grounds that the adverse action is unlawful.

A term of a contract of employment that is inconsistent with the workplace rights above will have no effect and cannot be enforced. As such employers who have used these pay secrecy clauses or confidentiality clauses will want to review their employment contract templates moving forward.

From 7 June 2023, employers will contravene the FW Act, and face civil penalties, if an employment contract is entered into that contains terms that are inconsistent with an employee’s rights to disclose or not to disclose their remuneration.

Fixed Term Contracts
Section 333E of the FW Act will prohibit the use of fixed and maximum term contracts for a period greater than 2 years. This has ended a period of uncertainty about the status of long term recurring fixed term workers. Under the new provisions, the total period can never extend beyond two years and only one extension of a fixed contract is permissible. Contraventions of these laws will attract civil penalties under the FW Act, but these changes will only come into effect 12 months after the Royal Assent in order to allow for a transition period.

There are a number of exceptions to these prohibitions, including:

  • If an employee is engaged to perform a distinct and identifiable task that involves ‘special skills’;
  • Certain training arrangements;
  • Where an employee receives earnings that put them above the high income threshold at the time the contract is entered into; and
  • Government funded work where the funding is payable for a period of more than 2 years and there are no reasonable prospects that the funding will be renewed beyond that period.

The FWC has issued a Fixed Term Contract Information Statement that must be provided to the workers at the time they are offered a fixed term role.

Sexual Harassment
From 6 March 2023, changes to the FW Act which expressly prohibits sexual harassment in the workplace will take effect. This amendment will increase an employer’s responsibility to provide a safe workplace environment as well as providing appropriate pathways to resolve claims of sexual harassment in the workplace.

The main takeaway from this amendment is the provision of dispute resolution processes that must be followed when handling a claim of sexual harassment. When an employer is approached with a complaint of sexual harassment, they are required to conduct internal processes to resolve this matter which may include but is not limited to, internal investigations and internal dispute resolution services such as conciliation and/or mediation.

Another key change in the new amendment to the FW Act is that it allows the FWC to deal with these claims in addition to the Australian Human Rights Commission and other applicable state and territory anti-discrimination processes. Following this process, if the matter is not resolved, the Applicant may make an application to the Federal Court.

The FWC retain their power to make a “stop sexual harassment order” under s527F of the FW Act for existing or ongoing employees. However, these amendments extend their powers to situations where employment has come to an end. This gives Applicants a choice of whether to go to the Australian Human Rights Commission, or to the Fair Work Commission.

It is also important to note that these amendments to the FW Act are not only applicable to employees, but also to prospective employees.

Respect At Work
The Anti-Discrimination and Human Rights Legislation Amendment (Respect at Work) Act 2022 (Cth) (Respect at Work Act) introduced a positive duty on employers to protect their workers against sexual harassment discrimination on the grounds of their sex, aimed at eliminating sexual harassment from the workplace, and effectively treating sexual harassment the same as any other Work Health and Safety issue.

The Respect at Work Act has placed a non-restrictive test on what constitutes whether or not an employer has taken “reasonable and proportionate measures”. Factors to consider include the level of resources the employer has available to them (depending on the size of the business) as well as the implications of disciplinary action on the perpetrator i.e. demoting or dismissing the employee.

The Respect at Work Act has also introduced a clarification on the civil action prospects of sexual harassment. In particular that victimisation can form the basis of a civil action against the employer as well as criminal action.

The Respect at Work Act implements a number of the remaining recommendations in the Respect@Work Report: Sexual Harassment National Enquiry Report 2020. The key changes include:

  1. Positive duty to eliminate sexual harassment e.g.:
    • Implementing policies and procedures;
    • Collecting and monitoring data;
    • Providing the appropriate support to workers and employees; and
    • Delivering training and education around the unlawful conduct on a regular basis – this may be done via staff meetings, training of new employees, or by providing employees with relevant resources and information.
  2. Express prohibition on conduct that subjects a person to a hostile workplace environment on the grounds of sex.
    • The protection will not require that the conduct is directed at a specific person, but instead prohibits conduct that results in an offensive, intimidating or humiliating environment for people of one sex. This may include but is not limited to:
      • General sexual banter;
      • Innuendo or offensive jokes;
      • Displaying obscene/pornographic materials; and
      • Petty nuisance phone calls that may be creating a hostile workplace environment for either sex, even when not necessarily sexual in nature.
  3. Expanded investigative and enforcement powers for the Australian Human Rights Commission;
  4. Lowered threshold for finding of harassment on grounds of sex;
  5. Clarification that victimising conduct can form the basis of a civil action for unlawful discrimination as well as a criminal complaint;
  6. Amendment to timeframes for making a complaint under anti-discrimination legislation;
  7. Commonwealth public sector reporting to the Workplace Gender Equality Agency; and
  8. Additional changes in Secure Jobs Bill.

If you would like any guidance or assistance in how any of these changes affect your workplace, please reach out to a member of the team.

This content is general in nature and provides a summary of the issues covered. It is not intended to be, nor should it be relied upon, as legal or professional advice for specific employment situations.

Olexo Workplace Law recommends that specialist legal advice should be sought about specific legal issues.