New year, new laws.
The Labor Party hasn’t wasted any time delivering on its promises since taking leadership in Federal Government. The Secure Jobs, Better Pay Bill and Respect at Work Bill were passed in late 2022. They amend Australia’s workplace relations laws to, amongst other things, stamp out pay secrecy clauses, restrict use of fixed/maximum term contracts, strengthen laws preventing sexual harassment at work and provide for appeal of refusals to allow flexible work.
So exactly what are these changes, when do they take effect, and what do you need to do to prepare?
No more secrecy around pay
For years it has been standard practice to include in employment contracts an obligation for an employee to keep their rate of pay confidential, with the threat of disciplinary action if they don’t. This is now a thing of the past.
- employees have workplace right to disclose (or ask someone else to disclose) their remuneration or terms of employment reasonably necessary to determine remuneration outcomes;
- all existing contract clauses which prevent employees discussing pay are no longer valid;
- employers are prohibited from including pay secrecy clauses in new contracts of employment. If they do so, they may be liable for a civil penalty.
The biggest concern for employers is that if employees are sharing their remuneration details, they may find discrepancies that aren’t obviously explainable. For example, employees on the same level doing the same work. These discrepancies are likely to cause dissatisfaction, a decrease in team morale and trust, which in turn may cause staff turnover and reputational damage, or worse, legal claims (e.g., discrimination on the ground of gender/age etc).
- Review your template contract of employment to ensure there are no pay secrecy clauses when issuing new contracts (to new or existing employees).
- Review all existing pay rates and ensure that any discrepancies can be objectively explained (e.g., position, based on length of service, duties, qualifications etc), and if not, make corrections.
- Consider how pay rates are determined to ensure that there are objective measures which are designed to prevent the influence of subjective views and unconscious bias.
- Ensure all managers are aware of these changes and don’t seek to discipline employees for discussing their remuneration with others
Greater Scope and Accountability re Flex Work Requests
More people can make a request
Following the pandemic, it is clear that flexible working arrangements are valued more highly than ever.
Coming up from 6 June 2023, more employees will have a legal right to request flexible working conditions and it will be more difficult for employers to refuse.
At present, employees with over 12 months of service can request flexible working arrangements where they are over 55 years of age, have a disability, are a carer, have the responsibility for a child school aged or younger, are experiencing violence from a family member or providing support to a member of their immediate family or household who is experiencing violence from their family.
Added to this list will be employees who are pregnant.
It’s harder to refuse
An employer must respond to a request within 21 days in writing. It must either grant the request, provide an agreed amended request (if agreed following discussion), or refuse the request.
A request can only be refused following discussions with the employee where the employer has genuinely tried to reach agreement and has had regard to the consequences of a refusal on the employee.
If a request is refused, the employer must provide the reasons – setting out the business grounds underpinning the refusal and how they apply to the request, and list any changes that the employer would be willing to make as an alternative to the request.
“Reasonable business grounds” are defined to include when:
- a request is too costly for an employer;
- there is no capacity to change working arrangements;
- changes would be impractical by requiring changes to other employees’ conditions or the need to hire new employees;
- the change would likely result in significant loss in efficiency or productivity;
- there is a likely significant negative impact on customer service.
FWC can review a decision to refuse
Currently, if an employer refuses a request, there is no direct avenue for the employee to have the decision reviewed (unless doing so under some other claim, such as a discrimination claim or unfair dismissal claim).
The new laws provide that if an employer refuses a request, or doesn’t reply within 21 days with reasons, the employee may make an application to the Fair Work Commission to resolve a dispute (so long as the parties have first attempted to resolve it between themselves at the workplace level).
This makes it more important for employers to strictly follow the rules setting out the permitted grounds for refusing a flexible working request.
- If you have an existing flexible work policy, make sure it is updated to reflect the additional grounds for making a claim, and the requirements for a written response.
- Ensure HR or other staff responsible for assessing flex work requests are trained in how to properly respond (including meeting the timeframes) to reduce the likelihood of employees applying to the Fair Work Commission for a review.
Strict Limits on Using Fixed Term Contracts
The use of “rolling” fixed and maximum term contracts is commonplace in some industries and workplaces. Sometimes used as a misguided attempt to provide an “easy out” when an employment relationship isn’t working, the new rules put significant limitations on how these contracts can be used in future.
Not sure what the difference is? Check out our video below for more information.
When aren’t fixed/maximum term contracts allowed?
From 7 December 2023, it will be an offence for an employer to enter a fixed/maximum term contract with an employee:
- For a period greater than two years; or
- That allows for the contract to be extended or renewed for a period that, including the initial period, is greater than two years; or
- That provides an option to extend/renew more than once.
It will also be an offence to enter a fixed/maximum term contract where the contract is an extension of the same/substantially similar work relationship in a previous fixed term contract and when taken together with the previous contract, the total exceeds two years in length, or it has a right of renewal/extension, or the previous contract had an option for extension that was exercised, or the employee has previously been engaged under two consecutive fixed term contracts.
When is a fixed/maximum term contract allowed?
Importantly, there are exceptions. These include:
- The employer is reliant on government funding to finance the employee’s position and the funding is for a period of more than 2 years and there are no reasonable prospects of the funding being renewed;
- The employee is appointed under governance rules which specify a length of time for the appointment (e.g., term of office is 5 years);
- Fixed term contracts are permitted under applicable modern awards;
- The employee is engaged under a training arrangement;
- The employee has specialised skills the employer doesn’t have and deeds to complete a specific task;
- The employee earns over the high-income threshold ($162,000 in FY 2022/2023) in the first year of the contract;
- The employer needs additional staff during an emergency or to replace a permanent employee absent for personal or other reasons (e.g., parental leave);
- Additional workers are needed for essential work during a peak period.
If none of these exceptions apply, then if an employer does enter into a fixed/maximum term contract, the expiry clause in the contract becomes invalid, making the contract an ongoing one.
Other requirements for fixed/maximum term contracts
Other important changes:
- The government have implemented anti-avoidance provisions to stop employers taking steps to avoid these limitations (e.g., delaying re-engaging an employee for a period to prevent back-to-back contracts).
- Employers will be required to issue to fixed/maximum term employees a Fair Work Ombudsman statement called the Fixed Term Contract Information Statement on commencement of employment.
- If employers and employees have a dispute about fixed/maximum term contracts, they can make an application to resolve the dispute to the Fair Work Commission.
Failing to meet these new obligations can result in civil penalties.
- Check whether you have any existing fixed or maximum term contracts. If you do, determine whether they meet the exceptions to allow them to continue. If not, consider entering into a new ongoing contract of employment that provides for clear termination provisions.
- Implement a process/checklist in recruitment (or when renewing contracts) to help determine whether the situation meets the conditions enabling the use of a fixed/maximum term contract.
Respect at Work – Eliminating Sexual Harassment at Work
The Labor Government has made a raft of changes to Federal laws to implement the final recommendations made in the Respect@Work Report.
Stop Sexual Harassment Orders
From 6 March 2023, there will be an express prohibition in the Fair Work Act against sexual harassment at work. In the event that a person has experienced sexual harassment at work, they will be able to make an application to the Fair Work Commission for a stop sexual harassment order (similar to the stop bullying order provisions).
These provisions are designed to work in conjunction with the significant recent changes to the Sex Discrimination Act (Cth) which include creating a positive duty on employers to take reasonable actions to eliminate sexual harassment, discrimination and victimisation at work, and prohibiting employers subjecting people to a workplace that is hostile on the grounds of sex.
Note: We will be writing a detailed article soon on the full changes with respect to managing sexual harassment at work.
- Create or review your sexual harassment/workplace behaviours policy to ensure that it correctly defines sexual harassment and the obligations of both employees and employers in the workplace.
- Add sexual harassment as a risk to be considered and managed in your risk management register.
- Ensure all employees are trained in appropriate workplace behaviour (ideally during induction and regularly thereafter), that they know where to raise complaints, and that you have suitable people trained to manage those complaints.
Other changes and the times that they take effect are set out below.
- Changes to Enterprise Bargaining: There are a significant number of changes to enterprise bargaining arrangements. These include widening multi-employer bargaining; making the better off overall test (BOOT) a ‘global’ rather than line by line assessment and include consideration of future work patterns in the BOOT; giving the Fair Work Commission new powers to make declarations and arbitrate when satisfied there is no reasonable prospect of an agreement being reached; and the ability to terminate expired agreements that are “unfair”, and to terminate historical industrial instruments with 12 months’ notice.
From 7 December 2022:
- Objects re Job Security and Gender Equality: The changes include the addition of job security and gender equality as objects of the Fair Work Act, meaning the Fair Work Commission and Courts can have regard to them when resolving matters arising from the Fair Work Act.
- Equal remuneration: including gender comparisons and considerations for the FWC in making equal remuneration orders.
- More protected attributes: To match other Federal anti-discrimination laws, it is now unlawful to discriminate on the attributes of breastfeeding, gender identity and intersex status under the Fair Work Act.
From 7 January 2023:
- Prohibiting advertising less than minimum wage: Employers are prohibited from advertising a wage that is below the minimum required for the position under the Fair Work Act or an industrial instrument.
From 1 February 2023:
- Paid domestic violence leave: Permanent and casual employees can access up to 10 days of paid family and domestic violence leave per year of service. (For small business employers, the paid provision commences on 1 August 2023.) The Fair Work Act will contain rules regarding the information to be included on a payslip.
From 7 February 2023:
- ABBC Abolished: The Australian Building and Construction Commission will be abolished from 6 February 2023, with duties to be taken over by the Fair Work Ombudsman and Office of the Federal Safety Commissioner.
From 6 June 2023:
- Parental Leave extension: Employees can apply for a 12 month extension to parental leave after the initial 12 month period. From 6 June, similar provisions to those relating to flex work requests will apply to parental leave extension requests. This will include requiring employers to genuinely try to reach agreement with an employee, provide a written response within 21 days (with refusals required to be on reasonable business grounds), and providing an avenue for employees to raise a dispute with the Fair Work Commission.
From 1 July 2023:
- Small claims compensation lifted: The changes increase the compensation cap from $20,000 to $100,000.
- Review parental leave policies to update the terms in relation to requesting and refusing an extension of leave following the initial 12 month period.
- If you have an existing enterprise agreement, put some time in your diary now to review all of the new rules well before you are due to commence bargaining for a new agreement.
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