The genie is out of the bottle: proposals for reforming the Fair Work Act

The Fair Work Laws (Secure Jobs, Better Pay) Amendment Bill proposes to implement significant changes to employment agreements, corporate bargaining and deal making, as announced by the government federal in its electoral platform.

What do you want to know

  • The bill makes significant changes to provisions relating to enterprise bargaining, which risks further diverting attention from both improving productivity and achieving mutually beneficial outcomes for employers and their employees. At first glance, the proposed arrangements for multi-company negotiation might extend well beyond the examples cited in the explanatory memorandum and warrant very careful consideration.
  • The bill includes changes to the global Better Off test aimed at simplifying the approval process for single enterprise agreements. However, we have real doubts as to whether the new provisions will achieve this objective in practice.
  • The bill also includes a series of other measures that will have very real impacts on the day-to-day management of employees, including limits on fixed-term contracts, increased rights to flexible working arrangements and salary secrecy.
  • The bill does not include heralded “same work, same pay” changes (targeting contractors and hiring labor) or “similar employment” regulations of the economy of gigs. These changes are expected to take place next year.

What do you need to do

  • The labor relations landscape is changing. Start thinking about your workplace relations strategy early.
  • Start reviewing contracts, policies, and procedures to review the impact of proposed changes on your maximum-term contracts, flexible work arrangements, and salary confidentiality requirements.

The changes introduced by the Fair Work Law Amendment Bill (Secure Jobs, Better Wages)

The bill proposes substantial reforms on two fronts: corporate bargaining and certain aspects of employment agreements. The proposed changes are broader in scope than the government’s election policies would suggest and will require careful consideration to determine whether the changes will have broader and perhaps unintended consequences.

The bill does not address two major changes announced before the election, namely “same job, same pay” (targeting contractors and hiring labor) and “like-employment” regulations (targeting gig workers in the delivery and care sectors) . These changes are subject to further consultation and are expected to be implemented separately next year.

Trading Changes

There are a series of changes that can significantly affect the dynamics of corporate negotiations.

1. BOOT changes

The bill attempts to address some of the current BOOT enforcement difficulties. The FWC will be required to undertake an overall assessment of what terms would be both more and less beneficial to each covered employee, and will need to take into account the bargaining representatives’ views on whether the deal passes the BOOT.

While this goes some way to addressing current concerns about a “line-by-line” evaluation approach, it still creates barriers to implementing corporate agreements that can generate meaningful productivity and mutually beneficial results. for most employees, even if a single employee is not better off.

The inclusion of a mechanism for an employee or union to request BOOT reconsideration during the term of the company agreement is a fundamental waiver that could remove a key benefit of company agreements – certainty as to to the terms and conditions during the term of the agreement.

2. Employees can engage in negotiations

An employee bargaining representative will be able to effectively enter into negotiations for a company agreement to replace an existing company agreement that has notionally expired within the past 5 years, provided the proposed agreement is of the same scope (or essentially the same).

This sets aside the current requirement that the CC must be satisfied that there is majority support to begin negotiations for a replacement agreement.

3. Evolution of trade union action

The bill includes a series of changes that will affect the way industrial action takes place in practice. It will be important to work out the implications of these changes in the context of the particular circumstances of your negotiation process.

4. Arbitration

There is a new regime dealing with circumstances where bargaining has become “unresolvable”. If the negotiation cannot be concluded by a negotiation dispute or a restricted negotiation period, the CC will have the power to arbitrate on the outstanding terms that have not been agreed to by the parties.

This regime echoes the current provisions for workplace determinations made following the suspension or termination of protected industrial action, but expands the circumstances under which binding arbitration is available.

5. Termination of corporate agreements

The likely effect of the bill is that employers will not be able to request the termination of a company agreement after its nominal expiry date (except in cases where there is a significant threat to the viability of the company of the employer and where other conditions are met).

6. Cancellation of old agreements

The bill provides for the automatic termination of pre-Fair Work Act instruments (pejoratively called “zombie agreements”) within 12 months.

There is a mechanism for the CC to extend the deadline in limited circumstances.

7. Negotiation between several companies

In addition to changes to the negotiation of a single company agreement, the bill introduces the possibility of negotiating in several companies.

There are two streams:

  • the “accompanied negotiation” which replaces the current system of authorizations of low wages for the least well paid sectors; and
  • “cooperative work agreements” which can be applied in other sectors.

Both regimes are supported by a test involving the identification of a “common interest” between the companies. However, this test is framed extremely broadly and could possibly facilitate negotiation between companies well beyond the scenarios mentioned in the explanatory memorandum or other comments on this proposed change. We hope this will be given careful consideration by Parliament.

Changes in terms of employment

The bill proposes significant reforms that will impact terms and conditions of employment for all employers.

8. Fixed-term contracts

The proposed laws will limit the use of fixed-term contracts for the same role beyond two years or two consecutive contracts, whichever is shorter, including renewals. Contracts that violate these limits will be unenforceable and employees on fixed-term contracts exceeding these limits will become permanent employees.

The bill contains some exceptions, such as fixed-term contracts for specialized skills, training arrangements, peak periods and employees above the high income threshold. Employers will bear the burden of proving that an exception applies.

9. Flexible work

The proposed laws will expand the grounds on which an employee can request flexible working arrangements and give the FWC the power to deal with a refusal to grant flexible working arrangements by the employer.

Rights to flexible working arrangements will be expanded to include cases of domestic violence, aligning with the circumstances of access to family and domestic violence leave. The application review process will require employers to discuss and genuinely try to reach an agreement before refusing an application, and to provide detailed reasons for the refusal as well as information on any other arrangements the employer has made. employer would be ready to accept.

Disputes regarding requests for flexible working arrangements may be dealt with by the FWC, which may resolve the dispute by arbitration, and may order the employer to grant the employee’s initial request or provide additional other specified changes to that employee’s working arrangements.

ten. [email protected] amendments

Follow through on the government’s commitment to implement the recommendations of the [email protected] Report, the proposed amendments will make a number of complementary reforms in the Fair Work Act to those of the Anti-Discrimination and Human Rights (Respect at Work) Amendment Bill 2022 (see our alert on this bill here)

The reforms aim to strengthen protections against sexual harassment and gender-based discrimination in the workplace. Reforms include:

  • Additional attributes gain protection from discrimination—breastfeeding, gender identity and intersex status;
  • Prohibition of sexual harassment in the course of employment, with provisions that employers are vicariously liable for such conduct on the part of their employees and agents (which overlaps with existing prohibitions under discrimination and discrimination laws). occupational health and safety); and
  • New Dispute Resolution Framework in the CC for sexual harassment cases prior to the commencement of civil proceedings (similar to the general dispute protection regime).

11. Job Security, Gender Equity and Salary Secrecy

The bill will introduce new goals to fair work law that promote job security and gender equity in the workplace. These objectives will need to be taken into account by the FWC when awarding or modifying modern rewards and setting minimum wages. The impact of “job security” considerations in an economic downturn when setting wages is unclear.

The bill also proposes changes to promote gender pay equity, including:

  • Pay the secret – provisions granting employees the statutory right to disclose their remuneration and related information to third parties. Contractual clauses requiring salary secrecy will be without effect and the conclusion of new contracts containing such clauses will expose employers to civil penalties; and
  • Equal pay orders – the powers of the FWC will be expanded to enable it to make orders on its own initiative, remove the need to undertake any comparison with a traditionally male-dominated group (recognizing that an appropriate comparison may not exist), clarify that gender discrimination need not be found to make an order, and requires the CC to consider any historical undervaluation of work based on gender.

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