The Secure Jobs, Better Pay Bill has now passed through both Houses of Parliament and received Royal Assent.
The Secure Jobs, Better Pay Act represents the largest proposed workplace relations reform since the Fair Work Act commenced. We break down the changes and what they mean for organisations.
In this update, we outline the most significant changes to the Bill between its introduction and its final form as an Act. Most relate to the expansion of the Fair Work Act's multi-enterprise bargaining system.
The new laws represent a radical change to a number of important aspects of workplace law, particularly enterprise bargaining. Many employers will need to adopt new strategies to ensure industrial outcomes which suit their operations. Others will need to consider strategy for the first time. Unions will have far more ability to project influence into workplaces, including where previously resource constraints or employee indifference was a barrier.
Employers who don't rapidly gain a comprehensive understanding of the scope of these changes and how they are likely to apply in practice may eventually lose control of how terms and conditions of employment are set for their employees.
This round of reforms is so far-reaching in their potential application to many Australian businesses that an investment in strategy and preparedness will be necessary. If you would like to discuss the amendments in detail to understand exactly how they will apply to your circumstances, and to consider how best to adapt and respond, please get in touch with us.
It is inevitable that the changed legislative landscape will result in increased direct and indirect costs for many businesses across Australia. In this regard, one implication of the reforms is that the reward for having good and trusting relationships with your employees will never have been so great. Conversely, the potentially adverse implications of a poor relationship where trust levels are low will also never have been so great.
You will find an overview of the Secure Jobs, Better Pay Bill as it was first introduced in our article, Secure Jobs, Better Pay Bill introduced to Parliament. Most of those provisions will be implemented, unchanged.
When do the new laws commence?
On 2 December 2022, the House of Representative passed the Secure Jobs, Better Pay Bill, with some amendments proposed by the Senate the night before. On 6 December 2022, the Bill received Royal Assent to become an Act.
As a result, the Fair Work Act, the Fair Work (Registered Organisations) Act and other key workplace legislation will be amended. Some of the changes have occurred immediately, but some will be implemented over the next 12 months.
There are some significant changes that will immediately impact existing and future bargaining processes. However, there are also other significant changes which will change how employees can be engaged.
Multi-enterprise bargaining changes
The most contentious aspect of the Secure Jobs, Better Pay Bill has been the proposal that employers may be compelled to bargain on a multi-employer basis. These provisions were the main focus of the negotiation with crossbench Senators.
Not all employers will be subject to multi-employer bargaining processes. There are ways for employers to proactively remove themselves from the possibility of being included in such a process.
Firstly, there are some general carve outs from the multi-enterprise bargaining system. For example, employers with less than 20 employees cannot be compelled to bargain alongside other businesses. This increased from the originally proposed 15 employees.
Secondly, the building and construction industry is wholly excluded from the scope of the reforms. However, no doubt there will be debate about the precise scope of the exclusion. This will be the case particularly when employers have multiple divisions, some of which involve building or construction activities, but some of which do not. Other questions will come up where there is disagreement about the scope of work within the industry. Notably, it appears that renewable energy projects may not be within the exemption and may remain available for multi-employer bargaining.
Thirdly, at least some of the relevant employees must be represented by a union (which may require current membership).
Fourthly, a majority of the relevant employees in each employer must want to bargain on a multi-employer basis. This is likely to be commonly satisfied via a petition process, as is common now in relation to Majority Support Determinations.
Fifthly, an employer with an in-term enterprise agreement cannot be compelled to join a multi-employer bargaining process. However it appears they will be able to be 'roped in' at a later point when their enterprise agreement passes its nominal term.
Finally, there is capacity for a union and the employer to agree in writing to bargain for a single enterprise agreement, which would remove them from the multi-employer process. There may be a question whether this requires a specific, separate written agreement made after the new laws come into effect.
Subject to these exclusions, larger businesses may be compelled to bargain alongside other businesses unless they can demonstrate:
- the majority of employees in their enterprise do not want to be covered by the proposed multi-enterprise agreement;
- their business either does not have a clearly identifiable common interest with operations or business activities that are reasonably comparable, or it is not a related franchise, with the other businesses;
- it would be contrary to public policy to require the employers to bargain together; or
- the agreement would cover employees in relation to general building and construction work, who are excluded from these provisions.
'Common interest' is not defined. The Fair Work Commission (Commission) will have a broad discretion to determine whether that interest exists having regard to factors such as:
- geographical location;
- regulatory regimes and the nature of the enterprises; and
- the terms and conditions of employment in those enterprises.
This is bound to be a contentious issue. We can expect a number of test cases to define the scope 'common interest' and 'reasonably comparable'.
Businesses will be presumed to be 'reasonably comparable' if they employ more than 50 employees and it will be for the employer to prove otherwise. For businesses with fewer than 50 employees, the onus will be on the unions and workers to establish this.
What happens if an employer becomes a party to a multi-employer bargaining process?
Genuine single enterprise bargaining prohibited
The employer is only permitted to bargain within the multi-employer framework and cannot propose an enterprise agreement to its employees outside of that process.
Union agreement generally required for a vote
Ordinarily, union bargaining representatives must agree before the employer can propose an enterprise agreement for approval by its employees. The Commission can permit a vote despite union refusal if union consent has been unreasonably withheld and granting the request would not undermine good faith bargaining. This is expected to be a 'high bar', with employers expected to stay in the process until unions have negotiated to a satisfactory result with all or most other employers in the process.
Industrial action still available
As with the current enterprise bargaining system, unions and employees will have the ability to apply for protected industrial action while bargaining for a multi-enterprise agreement. However, the Commission can only grant a protected action ballot order in relation to an enterprise if the majority of employees within that organisation who will be covered by the agreement vote in favour of the action. This means each enterprise will be treated separately for the purposes of industrial action, even if they are bargaining 'collectively' for a multi-enterprise agreement. The Commission will also be required to convene a conciliation conference with all bargaining representatives if a protected action ballot order has been issued.
Employers can be 'roped in'
Once a multi-employer agreement has been approved (with at least some consenting employers), a union can apply to 'rope in' non-consenting employers where a majority of their employees want to be covered and any existing agreement is outside its nominal term. Providing particular criteria are met (such as the employers having a common interest and their operations being reasonably comparable), the Commission's capacity to refuse to make such an order is highly constrained. There is a discretion to refuse the order where there is already enterprise bargaining taking place and some other criteria are met, but this is the only discretion.
New pathways to arbitration – 'intractable bargaining' declarations
Where an employer has been bargaining for an individual enterprise agreement or any FWC-authorised multi-enterprise agreement (other than a cooperative workplace agreement) but the parties cannot reach agreement, the Commission may assist the parties to reach agreement.
The Commission also has the power to make an 'intractable bargaining declaration' if it decides there is no reasonable prospect of the parties reaching agreement.
This declaration can be made after the later of nine months after the nominal expiry of any existing agreement or nine months from the date bargaining commenced. It appears pre-reform history can be taken into account. The Commission then has the power to require a further negotiating period, or to make an intractable bargaining determination to decide any matters in dispute between the parties.
Once a declaration has been made, the Fair Work Commission may arbitrate the outcome in the form of a Workplace Determination. The Determination will include core and mandatory terms as well as dealing with the matters in issue (those agreed and those not agreed). When made, the Determination will operate substantially as an enterprise agreement. This arbitration will not be constrained by wage fixation principles – rather it will be an arbitration on the parties competing positions.
'Low-paid' bargaining stream
The Act introduces a 'supported bargaining' stream to facilitate multi-employer bargaining in low paid industries such as disability care, early childhood education, and aged care. (There may, however, be a question whether this industry remains caught by this stream following the recent Aged Care Work Value decision).
There were no substantial amendments to this provision since the Bill was first introduced, although the Minister now has power to declare industries or occupations eligible for this stream. Notably, the Commission must make a supported bargaining authorisation in response to an application in industries or occupations the subject of a Ministerial declaration.
As proposed in the initial Bill, the Commission will also be required to make a low-paid bargaining order in certain low-paid industries if certain requirements are met including where employers have clearly identifiable common interests.
Many provisions outlined above that apply to single interest employer bargaining also apply to the supported bargaining stream. This includes those related to protected industrial action, intractable bargaining, and that when an employer is specified in a low-paid bargaining authorisation they cannot bargain for any other form of agreement.
Cooperative bargaining stream
Finally, two or more employers that are not already subject to a supported bargaining or single interest employer authorisation may choose to commence bargaining for a cooperative workplace agreement, which must include at least one Union. While parties are bargaining for a cooperative workplace agreement, there is no ability for employees to undertake protected industrial action. However, an employer may be compelled to bargain for another form of multi-employer agreement before any cooperative workplace agreement is made.
Better Off Overall Test
The Act retains changes to the Better Off Overall Test from the initial Bill, requiring the Commission to conduct a 'global assessment' of both more and less beneficial terms when compared to the applicable modern award. However, the Act has been tweaked. The Commission is now required to be satisfied that reasonably foreseeable employees, as well as employees covered by the agreement, would be better off overall.
It will also be easier for unions and employees to initiate bargaining for a new agreement to replace a single-enterprise agreement which has passed its nominal expiry date.
Bargaining can now be initiated by a bargaining representative simply giving the employer a request to bargain for a replacement agreement where the coverage of the agreement will not change, and where the nominal expiry date passed less than five years ago. No Majority Support Determination is required in these circumstances. The employer must issue a notice of representational rights and is subject to the good faith bargaining regime.
As discussed in our earlier article, Secure Jobs, Better Pay Bill introduced to Parliament, there are a number of other new initiatives in the Act which will require employers to become familiar with the changes. In some cases, they will need to alter existing contracts, workplace processes, policies, and procedures.
Flexible work and unpaid parental leave requests
Our earlier update noted the expanded availability of requests for flexible working arrangements through the Act. The bar for rejecting these requests has been significantly raised. The Commission now has powers to deal with disputes about flexible work arrangements by, firstly, conciliating the dispute and then, ultimately, arbitrating disputes about the request.
If an employee requests a flexible working arrangement and you are not able to accommodate that request, we recommend seeking advice to ensure you comply with the new obligations placed upon employers arising from the change in the law.
The Act also imposes new obligations on employers when responding to requests for the extension of unpaid parental leave. These changes will operate in a similar way to the amended flexible working arrangement requests. This means, among other things, employees will have the right to refer disputes about these requests that cannot be resolved at the workplace level to the Commission, ultimately for arbitration. Again, employers will need to familiarise themselves with these changes and seek advice if in doubt.
Fixed term employment agreements
The newly introduced restrictions on fixed term employment agreements have been strengthened to include additional anti-avoidance provisions to prohibit employers engaging another employee to perform substantially the same role.
There is also a new requirement for employers to give a Fixed Term Contract Information Statement, in the proscribed form, to new term employees engaged on any contract that provides an end date.
The Act confirms that the pay secrecy provisions will commence immediately to prohibit pay secrecy clauses in new employment contracts or contracts varied after the commencement date. This means that employers should update their template employment contracts to remove pay secrecy provisions.
How to record paid family and domestic violence leave on payslips
The Act introduces the ability for Parliament to pass regulations regarding the words that employers can include on payslips to refer to paid family and domestic violence. (This was passed in a separate Bill described in our earlier article, Government proposes new paid family and domestic leave as a national minimum standard, with some limited changes). We expect to see regulations soon to provide guidance to employers about the words to use.
New protected attributes and a new prohibition on sexual harassment
The Act confirms the expansion of the anti-discrimination provisions in the Fair Work Act to include breastfeeding, gender identity and intersex status. It also introduces a prohibition of sexual harassment. Employers should review their policies and procedures to ensure consistency with these changes, as well as the related recent [email protected] landmark reforms.
We are working closely with public and private companies in Australia and internationally to develop holistic, transformational approaches that support these landmark reforms by creating physically and psychologically safe and productive workplaces.
National Construction Industry Forum
The Act has been amended to establish a National Construction Industry Forum, commencing 1 July 2023. The Forum is intended to provide advice to the Government on matters relating to work in the building and construction industry.
Gender equity changed to gender equality
The original Bill proposed a number of changes with the goal of achieving gender equity, including in the objectives of the Fair Work Act 2009, the modern awards objective and the minimum wages objective. Each reference to gender equity has been amended to gender equality, to adopt language more consistent with applicable international convention, and with the policy objective to both formal and substantive gender equality.
The Act requires a review of these changes, which will likely include their impact on modern awards, to be commenced within two years. We will provide further updates on the details of this review as they are announced.
For more information about the Act, its potential impacts on your organisation, and what you can do to best prepare your business and your staff for the anticipated workplace changes, please contact our team.