Fair Work Act: What is in store for Employers?

• Increase the monetary cap on the amounts that can be awarded in small claims proceedings under the FW Act from $20,000 to $100,000
• broadening the capacity for employees to request flexible working arrangements;
• making it harder to maintain secrecy about pay rates;
• restricting the use of fixed term contracts;
• addressing the lack of pay equity for female workers;
• adding a prohibition on work-related sexual harassment to the FW Act;
• expanding the options for multi-employer bargaining;
• ?A recalcitrant employer can only be required to bargain if a majority support determination (MSD) is made, which can be difficult to obtain.?
• simplifying the processes for making and varying single-enterprise agreements;
• expanding access to protected industrial action and altering the process for taking it;
• making it easier for the Fair Work Commission to resolve “intractable” bargaining disputes;
• changing the rules for the termination and sunsetting of enterprise agreements ;
• expanding access to the small claims procedure for recovering underpayments;
• prohibiting the advertisement of pay rates that contravene the FW Act; and
• abolishing the Australian Building and Construction Commission (ABCC) and the Registered Organisations Commission (ROC).
• Employers covered by a zombie agreement will be required to notify affected employees of the sunsetting arrangement within six months of the commencement of the legislation

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Fixed term employment

In a bid to encourage secure, permanent employment, and limit the use of rolling fixed term contracts, the Bill introduces prohibitions against engaging employees on fixed term contracts:

• spanning for a period of two or more years (inclusive of extensions);?or
• that may be extended more than once.

Subject to the two year limit, parties to a fixed term contract are permitted to exercise an option to renew or extend their first fixed term contract, but are prevented from subsequently entering a consecutive fixed term contract (i.e. a contract can be renewed or extended at least once but not more).

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These changes will be a civil remedy provision – meaning that employers engaging employees on extended or rolling fixed term contracts will be exposed to monetary penalties under the Fair Work Act (FW Act).

The Fair Work Commission (FWC) will be granted the power to resolve disputes relating to these provisions.

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Enterprise Bargaining

Multi-enterprise bargaining

While multi-enterprise bargaining is currently permitted under the FW Act in circumstances of ‘low-paid bargaining’ and ‘single interest bargaining’, multi-enterprise agreements are not commonly utilised by employers. The Bill looks to increase the limited take-up of multi-enterprise agreements by:

• Replacing ‘low-paid bargaining’ with ‘supported bargaining’ stream: like low-paid bargaining, the supported bargaining stream is intended to assist employers and employees who have struggled to bargain at the single-enterprise level. The Bill simplifies the factors that the FWC is required to consider when granting a supported bargaining authorisation, to more readily allow multi-enterprise bargaining to commence. The previously lengthy list of relevant factors will be narrowed to focus on whether the employers to the application have an ‘identifiable common interest’. All other multi-enterprise agreements will be renamed ‘cooperative workplace agreements’. The Minister will also have the power to make a declaration in relation to a particular industry, occupation or sector in order to facilitate access to the supported bargaining stream. If employees specified in an application for a supported bargaining authorisation are employees in an industry, occupation or sector declared by the Minister, the FWC must make a supported bargaining authorisation (i.e. the FWC does not need to be satisfied of the general requirements for entry into the supported bargaining stream). However, this subsection is still subject to the restrictions on making supported bargaining applications that relate to employees covered by an in-term single enterprise agreement and general building and construction work.
• Access to protected industrial action: parties to a single-interest enterprise agreement or a supported bargaining agreement will be entitled to take protected industrial action.
• Agreement of bargaining representatives: an employer must not request that employees vote to approve a proposed multi-enterprise agreement unless each bargaining representative for the agreement that is an employee organisation has provided their written agreement to the request, or a ‘voting request order’ permits the employer to make the request. An application can be made to the FWC for a ‘voting request order’ where an employee organisation has failed to provide their written agreement to a request. The FWC must make a voting request order if it is satisfied each employee organisation’s failure to provide written agreement is unreasonable in the circumstances. Similar requirements apply with the respect to requesting employees approve a proposed variation of a multi-enterprise agreement.
• General building and construction work excluded: other than with respect to greenfields agreements, the Bill excludes certain types of work from multi-enterprise bargaining. This includes general building and construction work (as defined by clause 4.3(a) of the Building and Construction General On-Site Award 2020, and work within the civil?construction sector at the applicable time, as defined by clause 4.3(b) Building and Construction General On-Site Award 2020). However, work in the asphalt industry (within the meaning of clause 4.2 of the Asphalt Industry Award 2020) and construction, repair, maintenance or demolition of power houses or other structures that use eligible renewable energy sources1?to generate electricity is not excluded work.

Streamlining ‘single-interest employer’ authorisations: The Bill removes ‘unnecessary limits’ on access to single interest employer authorisations and aims to simplify the process for obtaining them. Notably, where two or more employers with common interests are not franchisees, a Ministerial declaration will no longer be required for an authorisation to be granted. The proposed amendments to the single-interest employer authorisations and agreements provisions of the Bill were highly contested and debated in the Senate.

While the concept of single-interest employer authorisations and agreements is not new, the Bill expands the single-interest agreement stream.

Currently, the FW Act permits two or more employers to agree to bargain together for an enterprise agreement. However, as a result of the amendments, a union or another employee bargaining representative will have the ability to effectively compel certain employers to bargain for a single-interest agreement (subject to bargaining being supported by a majority of employees).

Following the Bill’s initial introduction to Parliament, the following amendments were agreed to by the Government and key cross-benchers:

• employers who employ fewer than 20 employees may only be added to a single interest employer agreement or authorisation with their written agreement;
• for the purpose of making or varying a single interest authorisation or agreement, the operations and business activities of common interest employers must be reasonably comparable;
• where an application is made to vary a single interest agreement to add an employer and its employees or there is an application for a single interest employer authorisation which relates to an employer with 50 or more employees, the employer will have the onus of establishing that they are not a common interest employer or its operations and business activities are not comparable with the other employers. Evidence that is relevant to the determination as to whether an employer is reasonably comparable is likely to concern the nature and size of the employers and their operations and business activities;
• the FWC has the discretion to refuse an application by a bargaining representative to add a new employer to a single interest agreement or authorisation, if the FWC is satisfied that the employer is bargaining in good faith for an enterprise agreement covering substantially the same group of employees, the parties have a history of effective bargaining for an enterprise agreement, and less than 9 months have passed since the nominal expiry date of such an enterprise agreement; and
• when calculating the number of employees employed by an employer for the purpose of the new provisions the method used is the same as that for the definition of small business employer contained in the FW Act.

Enterprise agreement approval

The proposed changes are intended to simplify the agreement-making process and approval requirements, and include:

• Removal of access period requirements:?there will no longer be a requirement for employers to take all reasonable steps to ensure employees are given access to a copy of the agreement (and any material incorporated by reference) during the 7 day ‘access period’ or that employees be notified of the time, place and method for the vote by the start of the access period.Instead, these requirements will be incorporated within the overarching requirement that the FWC must be satisfied an agreement has been ‘genuinely agreed to’ by employees.
• Genuine agreement:?a number of strict pre-approval requirements have been removed or simplified, being replaced by the overarching requirement that the FWC must be satisfied the agreement has been genuinely agreed to by employees covered by the agreement.
• Statement of principles: the?FWC will be required to publish a ‘statement of principles’, which will provide guidance for employers about how to ensure employees have genuinely agreed to an agreement. The statement of principles will be required to deal with a number of matters, including informing employees of bargaining and their right to be represented, providing a reasonable opportunity for employees to consider the agreement and information regarding the vote, as well as explaining the terms of the proposed agreement and their affect. This statement of principles will be taken into account by the FWC when approving an agreement.
• Sufficient interest in the terms of an agreement and sufficiently representative:?the FWC cannot be satisfied an agreement has been ‘genuinely agreed’ to, unless it is satisfied that the?employees who were requested to vote on the agreement had a sufficient interest in the terms of the agreement and were sufficiently representative of the employees the agreement is expressed to cover.

Initiating Bargaining

Employees (via a bargaining representative) will be permitted to write to their employer to initiate bargaining for a proposed single-enterprise agreement in the following circumstances:

• the proposed agreement is to replace an existing agreement; and
• the existing agreement’s nominal expiry date is within the past 5 years; and
• the scope of the existing agreement is substantially similar to the proposed agreement.

The BOOT

The better off overall test (BOOT) will be amended to address inflexibilities in its implementation which have arisen over time, including ensuring that it is applied as a global assessment (not as a line-by-line comparison) as well as ensuring that the FWC will only have regard to patterns of work or types of employment (and not hypothetical working patterns), for both existing and ‘reasonably foreseeable’ employees (being a person who if he or she was an employee of an employer covered by the agreement at the ‘test time’ would be covered by the agreement and the relevant modern award).

When considering reasonably foreseeable employees, and when applying the BOOT, the FWC must only have regard to the patterns or kinds of work, or types of employment, that are reasonably foreseeable at the test time. When determining what is ‘reasonably foreseeable’ the FWC must have regard to the nature of the enterprise or enterprises to which the agreement relates.

The FWC will no longer be required to consider hypothetical working arrangements that are not reasonably foreseeable. However, if a view is expressed by either the employer, employee or bargaining representative as to whether a particular pattern or kind of work (or type of employment) is reasonably foreseeable, then the FWC must determine the matter.

A new ‘reconsideration process’ will enable the BOOT to be reassessed. This would allow the employer, employees or the employee organisation(s) covered by the agreement to seek a ‘reassessment’ of the BOOT if there has been a material change to working arrangements or where relevant circumstances were not properly considered during the approval process. If the FWC has a concern that the agreement does not pass the BOOT as part of the reconsideration process, it must amend the agreement with retrospective effect if it considers it necessary to address the concern.

New provisions have been inserted to the FW Act to ensure that any amendment to an agreement that has retrospective effect does not create liability to pay a pecuniary penalty for past conduct if, but for the retrospective effect of the amendment, the conduct engaged in before the amendment was made would not have contravened a term of the agreement.

Dealing with errors in enterprise agreements

The Bill will empower the FWC to correct obvious errors, defects or irregularities in enterprise agreements and address situations where the incorrect version of an enterprise agreement has been mistakenly submitted to, and approved, by the FWC – removing the current complexity in rectifying these issues.

Bargaining Disputes

The FWC will have the power to issue an intractable bargaining declaration if it is satisfied there is no reasonable prospect of bargaining parties reaching an agreement. If this declaration is made, the FWC would consider whether to exercise its discretion to provide the parties with a further period to negotiate (a post-declaration negotiation period), taking in account the relevant circumstances and whether the post-declaration negotiation period would assist the parties in reaching an agreement. Following this period the FWC will have the power to make a workplace determination to resolve matters still in dispute.

When deciding which terms to include in a workplace determination, the FWC must take into account the significance to the employers and employees of any arrangements or benefits in an enterprise agreement that applies to any of the employers in respect of any of the employees.

Current provisions regarding serious breach declarations and bargaining-related workplace determinations will be repealed.

Industrial Action

Various amendments are proposed to the industrial action provisions of the FW Act that will:

• extend?the validity of a protected action ballot for a period of three months from the declaration of the ballot results (instead of 30 days);
• allow the FWC to pre-approve persons authorised to conduct the ballot in addition to the Australian Electoral Commission;
• require bargaining representatives to attend a conference conducted by the FWC during the protected action ballot period when directed to do so by the FWC;
• in respect to single interest employer agreements and supported bargaining agreements, 120 hours’ written notice will be required to be provided before protected industrial action can be taken.

Varying enterprise agreement to remove employers and employees

The Bill proposes to amend the FW Act to enable an employer and affected employees to make a variation to a single interest employer agreement or multi-enterprise agreement so they cease to be covered. The variation must be approved by the FWC.

Zombie Agreements

All remaining transitional instruments currently preserved under the?Fair Work (Transitional Provisions and Consequential Amendments) Act 2009?(Cth) will automatically sunset (i.e. be abolished). These instruments include,?collective agreement-based transitional instruments?made under the predecessor legislation to the FW Act (e.g. collective agreements, workplace determinations, preserved collective State agreements, pre-reform certified agreements, old IR agreements, Australian Workplace Agreements),?Division 2B State employment agreements, and?enterprise agreements?made during the?bridging period (from 1 July 2009 to 31 December 2009).

Terminating enterprise agreements after their nominal expiry date

The Bill also proposes amendments to the existing powers of the FWC to terminate enterprise agreements that have passed their nominal expiry date, including the insertion of specific provisions to address situations where termination of the existing agreement is proposed in the context of bargaining (including prospective bargaining) for a replacement agreement.

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Restricting pay secrecy

In an environment where aggressive salary negotiations and job hopping for higher pay has become the new normal, Australian employers have increasingly relied on their ability to direct employees?not?to disclose their salary with their co-workers in order to prevent employees from agitating for higher pay.

While pay secrecy has enhanced bargaining powers for employers during salary negotiations, it is argued it has led to actual and perceived wage inequality in the workplace contributing to entrenched gender and racial pay disparity.

In a bid to achieve pay transparency and equity, the Bill introduces?new prohibitions on pay secrecy terms in contracts of employment.?These new terms create new workplace rights:

• allowing employees to discuss and disclose their remuneration and employment conditions (e.g. number of ordinary hours and overtime hours worked); and
• protecting the right of employees to elect not to make a disclosure (including when asked by their co-workers).

These changes will be a civil remedy provision – meaning that employers who insert these clauses into new contracts of employment or attempt to enforce them will be exposed to monetary penalties.

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Sexual harassment and discrimination

Sexual harassment

The Bill implements some of the recommendations in the Respect@Work Report, including recommendation 28, by introducing a?broad prohibition against sexual harassment in connection with work.

The prohibition applies to the wider definition of ‘worker’ under the?Work Health and Safety Act 2011?(Cth), including individuals carrying out work in any capacity for a person conducting a business or undertaking (including, for example, employees, trainees, apprentices, contractors in recommendation 29 of the Respect@Work Report, the?stop sexual harassment order jurisdiction of the FWC will be expanded?and will enable?prospective?workers to seek such orders.

The Bill also creates a?new dispute resolution function?for the FWC, modelled on the FWC's general protections dispute resolution process.?In particular, if an application for the FWC to deal with a sexual harassment dispute does?not?consist solely of an application for a stop sexual harassment order, the FWC can deal with the dispute by mediation, conciliation or by making a non-binding recommendation.

Discrimination

The Bill extends the protections against discrimination under section 351 of the FW Act to include the attributes of breast feeding, gender identity and intersex status.

Flexible work and equal pay

Flexible Work

The Bill introduces important mechanisms to?support employees experiencing family and domestic violence?and?pregnant employees?to access flexible work arrangements.

The amendments will require employers to?provide employees with reasons?for any decision to?refuse a flexible work arrangement?request and inform employees of alternative changes that the employer is willing to make to accommodate the employee.?In circumstances where the FWC is satisfied that the employer has not responded adequately to the employee’s request for flexible work (e.g. the employer has not engaged in adequate discussion with the employee or responded at all) the FWC is empowered to make an order that the employer take further steps as considered appropriate by the FWC.

In addition, an employee will now have the ability to dispute the refusal of a flexible work arrangement where they consider the refusal is unreasonable – with the FWC being empowered to resolve disputes regarding flexible work arrangements.?Unless there are exceptional circumstances, in the first instance when dealing with disputes about flexible working arrangements, the FWC must deal with the dispute through non-binding dispute resolution.

Equal Pay

The Bill amends the requirements relied upon by the FWC to make a determination varying modern award minimum wages, requiring that the FWC consider:

• that the work value must be?free of gender based assumptions; and
• whether the work has historically been undervalued as a result of gender based assumptions (e.g. gendered aged care and health care value judgements).

In an attempt to ensure that wage assessments are judged with sufficient expertise and to promote the above objectives, the Bill also provides for the constitution of?Expert Panels within the FWC?in relation to pay equity and the Care and Community Sector. These newly constituted Expert Panels will be required to preside over substantive pay equity matters in the FWC.

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Increase small claims cap

Under the FW Act, employees can currently take legal action in a small claims court to resolve claims about underpayments that are for $20,000 or less. Small claims proceedings have the benefit of allowing claimants and Courts to dispose of small claims quickly, flexibly and cheaply – with employees easily able to make claims without legal representation if they choose.

The Bill aims to make small claims for employees more accessible by?increasing the monetary cap?on the amounts that can be awarded in small claims proceedings under the FW Act?from $20,000 to $100,000. The monetary cap for small claims will?not?include any amount of interest that may be awarded.

Employees who are successful in the small claims court will also be able to apply to claim their filing fees back from the opposing party (as costs) to ensure they are not penalised for claiming back their entitlements.

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Abolishing the ABCC and ROC

The Bill introduces provisions which abolish:

• the Registered Organisations Committee and the role of the Registered Organisations Commissioner (ROC); and
• the Australian Building and Construction Commission (ABCC).

Conclusion

The Amending Act provides significant reform to the current federal industrial relations regime with specific focus on amending laggard aspects of the enterprise bargaining system. The reforms are expansive and cannot all be covered within this article. Accordingly, this article only provides a brief overview of changes introduced by the Amending Act and should not be relied upon as an extensive consideration of all changes to the federal industrial relations system.

Disclaimer

The information in this article is of a general nature and is not intended to address the circumstances of any particular individual or entity.