Last week the Labor Government tabled their much-anticipated Fair Work Legislation Amendment (Secure Jobs, Better Pay) Bill 2022 (Bill) into parliament.
Experts are heralding this as the biggest shake up to IR laws in 20 years and the proposed changes will have broad reaching implications on every business in Australia (including small business).
The bill claims to deliver more secure jobs, better pay and a fairer workplace relations system for all Australian workers, but many industry experts (particularly in the small business sector) worry that all the proposed changes will do is make it even harder for businesses to employ people and remain competitive.
Minister for Employment and Workplace Relations Tony Burke is claiming the bill seeks to create job stability, fair pay and gender equality, and new protections for employees with a long-term aim in boosting productivity gains and economic output. Many experts disagree and hold concerns mainly around the multi-site bargaining powers that are going to be given to unions along with the pay secrecy rules.
So, what are the proposed changes and how will they impact your business?
Multi employer bargaining
In our view one of the biggest and most important changes is the proposed overhaul of the enterprise bargaining system in Australia.
Labor claims that the underutilisation of the current enterprise bargaining approach has led to workers falling out of the system and that has led to the suppression of their pay and conditions. So, the new legislation proposes to expand the existing IR laws to facilitate multi-employer bargaining. But what does that actually mean?
It means that single interest bargaining reforms – i.e agreements struck between workers and two or more companies in a joint venture or common enterprise – will make it “easier to bargain” while “simplifying approval requirements”.
“Multi-employer bargaining is already contemplated by the act through three streams — single interest, multi-employer and low paid,” Burke told Parliament on Thursday.
But industry groups have voiced huge concerns around this saying it could open up SME’s to snap industrial action, even when their own employees are not wanting to take part in strikes. Does not sound like much fun, or any way to drive productivity.
According to Smart Company business groups including the Council of Small Business Organisations Australia, want such models to be ‘opt-in’ for businesses.
Speaking on Friday morning, Burke said businesses and employees who don’t want to take part in a multi-enterprise agreement won’t be compelled to join.
The proposed bill would also empower the FWC to remove employers and affected employees from such multi-employer agreements upon application. So watch this space on this one. Sounds like the Labor government want to broaden and encourage the amount of businesses and employees that are covered by Enterprise Agreements, which seems like a lot more red tape and bureaucracy if you ask me.
Tightening of the rules around Fixed Term or rolling contracts
Another concerning impact for small business is that the Bill will prevent businesses from engaging people on Fixed Term contracts with a period of two or more years, or on a contract which may be extended more than once. This will apply to contracts more commonly know as maximum term contracts.
So, what does this mean? If an employer engages an employee in a fixed term contract that exceeds the limitation period they may have the ability to claim permanent ongoing employment. The bill also calls for civil penalties for companies that breach those rules.
Interestingly there seems to be some very ambiguous exemptions including, where:
- the employee is engaged under the contract to perform only a distinct and identifiable task involving specialised skills
- the employee is engaged under the contract in relation to a training arrangement (which will include apprenticeships and traineeships)
- the employee is engaged under the contract to undertake essential work during a peak demand period
- the employee is engaged under the contract to undertake work during emergency circumstances or during a temporary absence of another employee
- in the year the contract is entered into the amount of the employee’s earnings under the contract is above the high-income threshold for that year
- the contract relates to a position for the performance of work that is funded by government funding or other particular types of funding, the funding is payable for a period of more than 2 years, and there are no reasonable prospects that the funding will be renewed after the end of that period
- the contract relates to a governance position that has a time limit under the governing rules of a corporation or association of persons
- a modern award that covers the employee includes terms that permit a longer period
I guess the thinking is that the use of ongoing and multiple Fixed Term contracts is really just another form of insecure work, but this will no doubt impact on businesses that engage people to work on projects where they are not excluded as per the above.
Equal remuneration and prohibiting pay secrecy
The next change aims to focus on gender equity, as the Bill will prohibit pay secrecy clauses and create a new positive right for employees to disclose information concerning their own remuneration to others. The thinking is that with anticipated openness and transparency in the workplace, this will magically eliminate pay bias between genders or other groups.
Experts including myself are baffled around how this will work in the real world as the practical application of this is extremely complex and has the potential to create massive issues. In our view the only way to guarantee pay parity would be to create a classification and pay structure internally supported by a skills and competency matrix. In this structure everyone would need to be paid the same no matter their performance or output. Sounds good in theory but not sure this will achieve anything in practice. If you want to learn more about this, then reach out if you want to get your ducks in a row.
Coupled with this Tuesday’s federal budget included $20 million for a Pay Equity Expert Panel and a Care and Community Sector Expert Panel within the FWC, and the legislation promotes their establishment.
There are also plans to give the FWC special powers to issue equal remuneration orders where pay gaps are discovered by those panels.
All these measures seem to be driven by industries like the Aged Care and Early Childhood industries that are largely staffed by women and notoriously paid badly compared to other sectors.
Finally, the Bill also pushes to ban job ads that advertise wages below the relevant award rates. Civil penalties may likely apply for breaches.
Prohibiting sexual harassment at work
In line with recommendations falling out of the Respect and Work report the bill will introduce broader protection against sexual harassment for all workers, including candidates.
So, what does this mean? It means the Sex Discrimination Act 1984 (Cth) (‘Sex Discrimination Act’) has been amended to prohibit conduct creating an adverse workplace environment, on the grounds of sex. The express prohibition to protect people from hostile workplace environments creates a positive duty upon on employers which must take reasonable and proportionate measures to eliminate sex discrimination, sexual harassment and victimisation in the workplace.
The meaning of ‘reasonable and proportionate measures’ is still not 100% unclear but experts believe some examples could include:
- Implementing a confidential complaints service supported by a policy
- Implementation of effective and relevant policies and procedures;
- Collecting and monitoring gender-based data;
- Conducting ongoing surveys (large-to-medium-sized businesses);
- Providing appropriate support such as EAP and counselling services
- Developing a sexual harassment prevention strategy;
- Rolling out ongoing training and education around sexual harassment
At a minimum all businesses are going to be required to conduct a risk assessment and develop a plan to mitigate sexual harassment risk in their businesses. To read more about this topic and the Respect and Work Act check out our blog here.
Flexible Work changes
Post COVID one of the most positive changes to workplaces globally has been the prevalence of hybrid / flexible work arrangements. The Labor government argues that this has been very beneficial to working parents and carers overall but acknowledges that if employees have their requests for flexible work refused, they don’t really have an avenue to dispute this.
Many businesses are trying to mandate full back to the office return across the board and it is argued that employers have no real obligation to substantiate what ‘reasonable business grounds” really is and there is no hard requirement to come to a mutually agreeable arrangement. So, the Bill seeks to amend the Flexible Work provisions by mandating that employers must make “genuine efforts” to identify alternative working arrangements, where a request cannot be accommodated. Where there is a dispute, the Bill gives new powers to FWC to make a binding decision which will provide a powerful incentive for businesses to find common ground when it comes to Hybrid and Flexible work arrangements.
Better Off Overall Test changes within Enterprise Agreements
Under the current legislation BOOT (or better off overall testing) is used to assess whether employees are better off overall under a proposed enterprise agreement. To be clear enterprise agreements are useful for employers who are covered multiple Awards or who have unique operating conditions that make it difficult to conduct business under Modern Award conditions. Using an enterprise agreement seeks to simplify and alter the basic award conditions but historically had to pass the BOOT test that was applied line by line so it was often really difficult to prove that employees were BOOT.
The amendments being implemented clarifies that the BOOT is applied flexibly as a global assessment rather than a line-by-line comparison, to restore the intended operation of the BOOT.
Finally, safeguards being implemented ensure that changes to the BOOT do not leave workers worse off. A new ‘reconsideration process’ allows employers, employees or their representatives to seek to have the BOOT reconsidered by the FWC where there has been significant changes in working arrangements.
So there you have it! A high level wrap up of all the significant changes and how they will impact businesses.
The process from now is that Parliament will debate the bill and we know that this is not the end of the proposed changes. The Government has announced that they will introduce additional legislation in 2023 that will further change the employment law landscape so watch this space.
If you need support interpreting the changes or have any questions, please don’t hesitate to yell out to one of our team!
Written by Emily Jaksch – Head Guru