Employment law reforms: key changes under the Secure Jobs, Better Pay and Respect at Work legislation

The last quarter has seen the introduction of numerous changes to employment laws, including the most significant changes to industrial relations in Australia since the passage of the Fair Work Act in 2009. Many of the changes are directed at job security, gender equality and the prevention of discrimination and sexual harassment in the workplace.

We have set out below a high level summary of key changes for businesses to consider. Employers are encouraged to seek advice on their specific circumstances as needed.

Fixed term contracts

What has changed?

The legislation restricts the use of fixed term or maximum term contracts for the same role (or substantially similar work) for terms of two or more years, unless an exception applies. The restriction also applies to a series of fixed term contracts.

Employers will also be required to issue a Fixed Term Contract Information Statement to employees (yet to be developed by the Fair Work Ombudsman).

These changes come into effect for new contracts from 6 December 2023 (but may apply to existing contracts which are extended/renewed, in some circumstances).

What should you do?

• Review existing fixed term arrangements to ensure compliance.
• Amend template contracts to remove extension clauses.
• Be aware of these restrictions when staffing projects or making temporary arrangements.

Prohibiting pay secrecy

What has changed?

For employment contracts entered into or varied after 7 December 2022, any clauses that require an employee to keep their pay and conditions secret will be of no effect and cannot be enforced.

From 7 June 2023, it will be unlawful for employers to make new employment contracts with pay secrecy clauses (and this includes any variations to existing contracts). The inclusion of a pay secrecy clause in a new employment contract or contract variation could expose the employer to a civil penalty.

Employees now have a protected right to disclose remuneration information (and employers cannot take adverse action against them because of any such disclosures).

What should you do?

• Review and amend template contracts to remove pay secrecy clauses and ensure that future employment offers (including variations) do not contain such clauses.
• Consider potential impacts to culture/morale if remuneration information is shared across the workforce and whether any adjustments should be made.

Flexible work arrangements

What has changed?

From 7 June 2023, employees will have greater rights in relation to flexible work.  Employers will be required to follow a more prescriptive process in considering a request for flexible work, including providing a written response within 21 days. Employees will also be able to bring a dispute to the Fair Work Commission in certain circumstances. The Fair Work Commission will be able to resolve disputes through conciliation and mandatory arbitration, giving the Commission greater control to make decisions with operational impacts.

What should you do?

• Update flexible work policies as needed.
• Ensure that line managers are aware of the new laws and follow the proper process when dealing with flexible work requests.

Sexual harassment

What has changed?

Following changes to the Sex Discrimination Act 1984 (Cth) that took effect from 12 December 2022, every employer now has a positive duty to take reasonable and proportionate measures to eliminate sexual harassment in the workplace, as well as victimisation and sex discrimination as far as possible. The Australian Human Rights Commission will have enforcement powers, although these won’t operate until December 2023 to allow a transition period for employers to make adjustments.

From March 2023, the Fair Work Act will prohibit sexual harassment in connection with work, and will impose vicarious liability on employers for a worker’s sexual harassment, unless the employer proves that it took all reasonable steps to prevent the sexual harassment conduct. An aggrieved worker may make a claim through the Fair Work Commission, seeking compensation and penalties. This is in addition to the Commission’s existing jurisdiction for workers to seek “stop sexual harassment orders”. These changes do not affect workers’ rights to make claims under State and Federal anti-discrimination legislation, enabling applicants a choice of forum.

What should you do?

• Apply a work health and safety framework to assess the risks of sexual harassment and implement appropriate controls.
• Regularly review risk assessments.
• Update and/or put in place robust policies, training and procedures to eliminate sexual harassment and anti-discrimination.
• Investigate allegations of sexual harassment and address problematic behaviour.

Enterprise bargaining

What has changed?

Test for approval: from 7 June 2023, the Fair Work Commission will apply the better off overall test as a ‘global assessment’ rather than a line by line assessment of entitlements. The Commission will also be required to consider only existing and reasonably foreseeable work patterns, rather than all possibilities. This represents an important shift back to the way the test was intended to operate and should offer employers welcome relief, resulting in a quicker and simpler approvals process.

If the Commission is concerned that an agreement does not pass the better off overall test, it will be able to amend the agreement to address its concern.

The Commission will also have power to disregard minor procedural or technical errors (including mandatory process steps) if it is satisfied that the employees were not likely to have been disadvantaged by the errors.

Zombie agreements: Pre-Fair Work agreements (commonly referred to as “Zombie agreements”) will automatically terminate on 7 December 2023. Employers are required to notify employees before 7 June 2023. Employers will need to negotiate new agreements or default to award conditions for staff.

Initiating bargaining: a union can now initiate bargaining simply by writing to an employer after an agreement has reached its nominal expiry date.

Bargaining disputes: from 7 June 2023, the Commission will have greater powers to resolve bargaining disputes. If parties have been bargaining for at least nine months, the Commission can issue an intractable bargaining declaration if satisfied there is no reasonable prospect of an agreement being reached. If this happens, it can then issue a workplace determination resolving issues in dispute.

Multi-enterprise bargaining: from 7 June 2023, the Fair Work Act’s multi-enterprise bargaining provisions will be expanded. Under the current system, employers can decide to enter into a multi-enterprise agreement with their employees. Under the new laws, employers (excluding those in the civil construction industry) may be forced to bargain for a multi-enterprise agreement, in certain circumstances.

What should you do?

• Consider your industrial relations strategy in light of these changes.
• Carefully apply the revised better off overall test in relation to ‘reasonably foreseeable’ work patterns to avoid any Commission-initiated amendments.
• For any Zombie agreements, take advice and act soon.

Other important changes

• Anti-Discrimination: “Breastfeeding”, “gender identity” and “intersex status” are now included in the anti-discrimination provisions of the Fair Work Act as protected attributes, bringing it in line with other Commonwealth anti-discrimination laws.
• Equal Pay: The Fair Work Commission now has scope to make Equal Remuneration Orders, including by considering whether the role has been historically undervalued because of gender.
• Rates of Pay: An employer is prohibited from advertising a role at less than the applicable minimum rate of pay.
• The Registered Organisations Commission and the Australian Building and Construction Commission have been abolished, with certain powers transferred to the Fair Work Ombudsman.

We can help:

To ensure your work arrangements, employment agreements and policies comply with these reforms and your business is protected

To provide guidance and support in relation to bargaining strategy and agreement approval

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