Changes coming in 2023 to Employment Law & Workplace Relations

Industrial Relations reform was a dominant political battleground between the major parties, and a clear focus for the Albanese Federal Government throughout 2022.

The Federal Government has now successfully passed arguably the most significant reforms to the Fair Work Act since its introduction some 13 years ago.  Some amendments will have immediate impacts for employers, whilst others will result in medium and long term changes and implications.

This update provides an overview of the Secure Jobs, Better Pay legislation and discusses how it  might impact employers in practice in 2023.

Multi-Employer Bargaining

One of the most contentious aspects in the lead in to the passing of the legislation is the expansion of multi-employer bargaining. Under the new laws, multi-employer bargaining is due to commence on 6 June 2023, unless brought forward by the Workplace Relations Minister.

Multi-employer bargaining allows employees at different companies within an industry to join together to collectively bargain for pay and working conditions.  This has been a rarer form of bargaining, as most enterprise bargaining involves employees from one employer bargaining with that one employer only. While multi-employer bargaining has existed under the Fair Work Act for some time, it has largely been restricted to a process where only the employer can initiate bargaining. The substance of the recent changes is that unions will also now be able to initiate multi-employer bargaining. The changes to multi-employer bargaining will be subject to the requirement that a majority of employees at each employer must want to bargain with the employers.

Further, unions have been empowered to compel employers to bargain (if they have the support of a majority of employees). Importantly, employers with fewer than 20 employees cannot be compelled to participate in the single-interest multi-employer bargaining stream (even if a majority of their employees would be in favour).

The Act aims to achieve expanded multi-employer bargaining in two “streams”.

Firstly, the replacement of the existing low-paid bargaining stream (which was only utilised 4 times between 2010 and 2014 and only once successfully) with a new supported stream for employees to negotiate pay deals across multiple employers. The previous low-paid bargaining stream was intended to assist employees in low-paid industries to bargain, but it proved too difficult to access because of onerous and unclear eligibility criteria. For the FWC to make an order for multiple employers to bargain with their employees in this newly reformed stream, it must be satisfied that it is appropriate to do so taking into account the pay and conditions in the relevant industry, including whether low rates of pay prevail. This is in addition to the requirement that there are clearly identifiable “common interests” between the employers, which will be discussed further below. The Workplace Relations Minister may also designate particular industries as subject to the supported stream and the FWC will be obligated to make such an order.

Secondly, the expansion of the single-interest stream will allow workers from workplaces with clearly identifiable “common interests” to bargain together when it is in the public interest for them to do so. The matters which are specified as being potentially relevant to determine ‘common interests’ include the geographic location of the employers and the nature of the enterprises to which the agreement will relate.

Importantly, for employers who employ 50 employees or more (taking into account related entities), a common interest will be presumed and will apply unless the employer can prove otherwise. For small employers, the onus will be on the employees and their representatives to satisfy the common interest test.

For the FWC to make an order allowing bargaining to occur in either of these multi-employer bargaining streams, it must be satisfied that at least some of the employees who would be covered by the agreement are represented by an employee organisation.

Unions have also been given substantially more power within the multi-enterprise bargaining stream, as employers must now obtain written agreement from each union involved in bargaining before they put an agreement to a vote of employees, except where the FWC orders that obtaining such agreement is unreasonable in the circumstances.

Roping-in to Existing Agreements

A somewhat controversial feature of the new legislation is that multi-employer agreements may be varied, once made, to include additional employers, meaning that employers can, subject to an employer successfully arguing against it, be ‘roped-in’ to an existing agreement.

While an employer must seek a vote of employees if they wish to ’opt in’ to an agreement, unions will not need to conduct such a vote, but they do need to be able to satisfy the FWC that a majority of employees want to be covered by the existing agreement. Employers may be able to defend being ‘roped-in’ to an existing agreement if they can satisfy the FWC:

  • they are bargaining for another agreement in good faith;
  • they have a history of effective bargaining; and
  • less than 9 months have passed since the nominal expiry date of an existing agreement that the employer has been engaging in effective bargaining in relation to.

Pay Secrecy Ban

Another significant feature of the amendments is that employees have been granted a express right to ask other employees about their remuneration, whether the other employee works for the same employer or not, and disclose (or not disclose) their own remuneration, including disclosing any matter that would assist the person making the request to determine what the employee is paid (including their hours of work). Employees cannot be compelled by another person (including a colleague) to disclose their remuneration.

The Federal Government says that this information will empower employees to assess whether their own remuneration is fair and comparable to other employees in the same workplace or industry, and help to close the gender pay gap.

Any employee whose employment contract is entered into or varied on or after 7 December 2022 will gain these rights on entering into that contract. However, not all employees in Australia have these rights from 7 December, and the Secure Jobs, Better Pay legislation has created three tiers of commencement which are set out in the following table.

Employees …

will gain the new rights relating to pay secrecy…

whose existing contract or agreement does not include a pay secrecy term

on 7 December 2022

whose existing contract or agreement does include a pay secrecy term

on entering into a new contract or on varying the previous contract

who enter into a new employment contract or
agreement on or after 7 December 2022

on entering into the new contract or agreement

If an employment contract or agreement entered into on or after 7 December 2022 contains a pay secrecy clause, it will have no effect. Importantly, employers should note that after 7 June 2023, employers who continue to include pay secrecy clauses in their new (or varied) employment contracts or agreements will be committing an offence and could be liable to penalties of up to $66,600 for companies and $13,320 for individuals.

Employment contracts will commonly include a pay secrecy term, but it might not be immediately obvious. An example of a common pay secrecy term that is now unlawful is one which says:

The terms and conditions of this agreement are confidential and must not be disclosed to any other person.”

Employers should review their contracts and seek advice if they believe that their current contracts contain unlawful clauses.

Fixed-Term and Maximum-Term Contracts

The Fair Work Act will now limit the use of fixed-term and maximum-term contracts to 2-year terms, and no more than one renewal. These changes will take effect from 6 December 2023, unless brought forward by the Workplace Relations Minister. There are exemptions to the new restrictions, including:

  • where the work is for a distinct and identifiable task involving specialised skills;
  • training arrangements;
  • for essential work during a peak demand period;
  • for work during emergency circumstances or during a temporary absence of another employee;
  • where the employee earns above the high-income threshold during the year the contract is entered into;
  • a position that is funded by government or funding of a prescribed kind for more than two years, and where there is no reasonable prospect it will be renewed after the end of that period;
  • a governance position that has a time limit under the governing rules;
  • where a modern award allows it; or
  • where the contract is a prescribed kind.

Any contract clause that does not comply with these proposed limitations will be unlawful and have no effect from 6 December 2023. Penalties will apply to noncompliance with these new parts.

Small Claims

The Fair Work Act includes a small claims jurisdiction which entitles employees to apply to the Courts to deal with underpayment claims in a cost-effective and straightforward way that does not require the court to comply with rules of evidence and formality.

These scope claims that can be heard in this jurisdiction has been significantly expanded from claims up to $20,000 to allow claims up to $100,000. This reform saw opposition from employer groups, as employers are not entitled to be represented by a lawyer or paid agent in response to a small claims action without permission of the court.

The small claims process changes will come into effect on 1 July 2023, unless brought forward by the Workplace Relations Minister.

‘Zombie’ Enterprise Agreements

The amendments to the Fair Work Act will force to an end the operation of industrial agreements which were struck prior to the introduction of the Fair Work Act 2009 (pre-1 January 2010). These so called “zombie agreements” have remained in operation after being created under previous workplace relations frameworks like the much-maligned WorkChoices regime. Some of these “zombie agreements” have allowed some employers to obtain the benefit of terms and conditions in those agreements which are significantly less favourable than the otherwise applicable modern awards.

These zombie agreements will automatically terminate on 6 December 2023, unless the employer secures an extension from the Fair Work Commission (with extension of up to 4 years possible).

Employers will need to identify whether they have any enterprise agreements (most will be called collective agreements of some description) that were created before the Fair Work Act came into operation, or during the ‘bridging period’ between 1 July 2009 and 31 December 2009.

 Sexual Harassment – Respect@Work Reforms

In fulfilling one of its election promises, the Federal Government recently successfully guided through the Parliament the Anti-Discrimination and Human Rights Legislation Amendment (Respect at Work) Act 2022 which implemented recommendations from the Respect@Work report.  While the former Morrison Federal Government implemented some of the recommendations, these proposed reforms have legislated a further seven recommendations.

Most significantly for employers, the reforms to the Sex Discrimination Act (1984) have introduced a positive duty on employers to take reasonable and proportionate measures to eliminate unlawful sex discrimination and sexual harassment as far as possible.  The changes also created a new offence which makes it unlawful to subject a person to a hostile workplace environment. These changes have effect from 13 December 2022.

The Positive Duty

A positive duty already exists in workplace health and safety laws to eliminate or manage hazards and risks to a worker’s health, which includes risks to psychological health and therefore sexual harassment risks.

However, the Respect@Work report considered this did not go far enough and needed to be supplemented because it did not specifically reference sexual harassment. The report proposed this reform because the existing framework was otherwise only reactive and concerned with responding to and addressing conduct that had already occurred. The report argued that the regime would be more successful if it shifted focus to employers proactively identifying risks and eliminating discrimination and harassment in their workplace.

So, what will employers need to do to comply with this positive duty? Employers should ensure that they have robust workplace policies in place that inform employees as to what constitutes sexual harassment, and what is and is not appropriate in the workplace. It will also be essential for employers to ensure that employees not only receive the policies, but that they understand them, and regularly receive refresher training. It will also be important that employers respond to complaints of sexual harassment in a timely, responsive fashion, and in compliance with their policies.

Aitken Legal recommends employers conduct safety audits of its workplaces to proactively identify areas of risk of sexual harassment or sex discrimination.

If employers do not discharge the positive duty, employers will be exposed to risk following an incident of sexual harassment or sex discrimination in their workplace (and where a complaint is made).

Further, as is the case with safety investigations by statutory regulators for workplace health and safety issues, the Australian Human Rights Commission is now empowered to proactively investigate workplaces of its own volition and recommend prosecution for employers who breach the new positive duty even where there is no complaint.

Hostile Workplace Environments

It is also now an offence for a person to subject another person (where those persons work in the same workplace) to a hostile work environment. An example of a hostile workplace environment is one where a person of one sex is made to feel uncomfortable or excluded by conduct such as displaying obscene or pornographic materials, general sexual banter, or innuendo or offensive jokes.

The key difference between a hostile workplace environment and forms of unlawful conduct such as sexual harassment is that the conduct need not be directed toward a particular person, but results in a generally hostile environment.

Aitken Legal expects that this offence is open to a wide interpretation, and we expect to see allegations of breach of these provisions made regularly, including concurrently to allegations of sexual harassment and sex discrimination.

Family and Domestic Violence Leave

 Employees in Australia who are impacted by family and domestic violence (FDV), including casual employees, now have a right to paid FDV leave. For non-small business employers, the amendments will come into effect on 1 February 2023, and for small business employers they will take effect from 1 August 2023.

FDV leave will be the first form of paid leave permanently available to casual employees. The new paid leave will entitle employees to be absent from work if they need to do something to deal with the impact of FDV and it is not practical for them to do so during work hours.

Full-time, part-time, and casual employees will be entitled to 10 days’ paid FDV leave per annum from 1 February 2023 for non-small business employees, or 1 August 2023 for small business employees.

Casual employees are entitled to the leave for shifts that have been offered and accepted prior to their request to take paid FDV leave. Employees are entitled to be paid at their full rate of pay (including the casual loading for casuals), as opposed to their base rate of pay, during the ten-day leave period.  The full rate of pay will be calculated as if the employee had worked the hours for which the employee was rostered during the period subject of the request.

The full ten days of FDV leave becomes available to employees at the outset of their employment and then resets annually on the employment anniversary date – unused FDV leave does not accumulate from year to year.  Consistent with the previous unpaid FDV leave entitlement, evidence that the leave is taken for FDV reasons can be sought by the employer.

As you can see, these law changes have significant consequences for employers, if they do not take steps to prepare for and adapt to the changes. Aitken Legal will endeavour to keep you updated on developments in this space. Should you have any questions around any of these changes or other aspects of employment law, please get in touch with one of our specialist employment lawyers.

Disclaimer: The information contained this article is general and intended as a guide only. Professional advice should be sought before applying any of the information to particular circumstances. While every reasonable care has been taken in the preparation of this update, Aitken Legal does not accept liability for any errors it may contain. Liability limited by a scheme approved under professional standards legislation.