Major changes to the Fair Work Act proposed

A woman is standing in an open-plan office. She is looking at the camera with one elbow resting on a high benchtop, where an open laptop computer lies in front of her.

Workplace Relations Minister Tony Burke has introduced the Fair Work Legislation Amendment (Secure Jobs, Better Pay) Bill 2022 into Parliament (Bill). The Bill proposes major changes to the Fair Work Act 2009 (Cth) (FW Act).

This article outlines the key features of the Bill. We will provide more detailed analysis of the Bill's likely consequences as it continues to move through Parliament.

Key features of the Bill

Better Off Overall Test (BOOT)

The Bill proposes to amend the BOOT to address inflexibilities that have arisen in its application over time.

The Fair Work Commission (FWC) will be required to afford "primary consideration" to any "common view" of the bargaining representatives as to whether an agreement passes the BOOT, which should ease the passage of uncontroversial enterprise agreements.

The FWC will also be expressly required to:

  • conduct a global, rather than line-by-line assessment
  • consider only actual and reasonably foreseeable patterns of work, rather than an unlikely hypothetical

These requirements reflect current case law but the experience of parties before the FWC is that they are not always applied consistently.

Employers will be more concerned by provisions that reduce the certainty provided by an enterprise agreement and increase the role of the FWC in setting its terms, namely:

  • the FWC will reconsider the application of the BOOT to an enterprise agreement where there has been a material change in working arrangements
  • the FWC will be empowered to amend or excise terms that otherwise prevent an agreement from passing the BOOT

Enterprise bargaining overhaul

Resolving intractable disputes

The Bill would empower the FWC to deal with "intractable bargaining" disputes by arbitrating matters that have not been agreed in bargaining. This will operate in a similar manner to current "workplace determinations" but will be more accessible.

This option will not be available:

  • unless the parties have first unsuccessfully attempted to resolve the disputes, with the help of the FWC, through section 240 of the Act; or
  • for multi-employer agreements unless a supported bargaining authorisation is in operation

Revamping multi-employer bargaining

The Bill largely retains but expands existing multi-employer bargaining streams.

The existing process for multi-employer enterprise agreements will be rebranded "cooperative bargaining". This will continue to be voluntarily entered into by employers and protected industrial action will not be available.

The existing low-paid bargaining scheme will become known as the "supported bargaining scheme" and will have lower barriers to entry. The FWC will be able to make a "supported bargaining authorisation" for multi-employer bargaining in lower paid industries (such as aged care, disability care and early childhood education) if it considers it appropriate having regard to a number of factors. Protected industrial action may be taken in support of claims for agreements covered by this stream.

The single interest bargaining stream that currently exists will also remain, but in a simplified form, again with lower barriers to entry. Employers with clearly identifiable common interests will be able to access this form of bargaining, which will continue to allow protected industrial action.

Bringing employers to the bargaining table

The Bill would allow a bargaining representative to initiate bargaining for an agreement to replace an enterprise agreement that nominally expired within the previous five years and covered the same (or substantially the same) group of employees who would be covered by the proposed new agreement.

This is a significant change - currently, a majority support determination would be required to force an employer to start bargaining in these circumstances.

If this measure is passed into law, it will be much easier to require employers to bargain once the nominal expiry date of an agreement expires.

Changes to industrial action

Where a protected action ballot order is made, the Bill would require the FWC to hold a compulsory conciliation conference between the bargaining representatives for the agreement before the vote is scheduled to take place.

Industrial action which is authorised by a vote will be able to be commenced any time within 3 months, rather than the current 30 day (unless extended by the FWC) time limit.

Acknowledging that industrial action affecting multiple employers is likely to require more time to prepare, the minimum notice period for such action will be 120 hours. For other action, the default notice period will remain 3 working days.

Prohibiting pay secrecy

The Bill proposes a number of measures aimed at improving gender equity, including by prohibiting pay secrecy clauses in employment contracts and providing employees with a positive right to disclose (or not) information about their own remuneration, and any related terms and conditions, as well as the right to ask other employees about their remuneration and terms and conditions of employment.

It also provides that a term of a fair work instrument or contract of employment that attempts to prohibit employees from discussing their remuneration or terms and conditions would have no effect.

Prohibiting sexual harassment in connection with work

The Bill inserts a new prohibition on sexual harassment to implement recommendation 28 of the Respect@Work National Inquiry into Sexual Harassment in Australian Workplaces, which stated that "the Fair Work system be reviewed to ensure and clarify that sexual harassment, using the definition in the Sex Discrimination Act, is expressly prohibited".

It also creates a new sexual harassment dispute resolution function for the FWC, modelled on the existing dispute resolution mechanism for general protections dismissal disputes. A person alleging they have been sexually harassed at work will have the ability to apply to the FWC to make a stop sexual harassment order. Under the Bill, as an alternative course of action, the employee may seek that the FWC deal with the dispute via a mediation or conciliation conference. In the event this does not successfully resolve the dispute, the FWC must issue a certificate to that effect, and receipt of this certificate will be a precondition for a person to initiate civil proceedings in a court in relation to the sexual harassment at work.

The Bill also proposes to add three further protected attributes to the existing anti-discrimination framework in the FW Act. These three attributes are breastfeeding, gender identity and intersex status, and are designed to align the FW Act with attributes contained in other Commonwealth anti-discrimination legislation, such as the Sex Discrimination Act 1984.

Strengthening the right to seek flexible work

The Bill proposes to add teeth to the existing right for certain employees to request flexible working arrangements under section 65 of the FW Act.

The Bill would empower the FWC to deal with disputes (including by arbitration) about whether an employer has reasonable business grounds to refuse such a request.

Restricting fixed term contracts

Employers will no longer be able to engage an employee on a fixed term contract for more than 2 years (whether through a single contract or consecutive contracts), unless an exception applies.

The exceptions of broad relevance to employers can be summarised as applying where:

  • there is a true fixed term purpose to the employment - eg the person is engaged to perform a particular task, backfill another role, provide overflow assistance during a period of peak demand or their employment is subject to government funding that has no reasonable prospects of being renewed beyond two years
  • a modern award permits the employment; and
  • the person earns above the high-income threshold

Abolition of the Australian Building and Construction Commission and Registered Organisations Commission

As anticipated, the Bill abolishes the Australian Building and Construction Commission and charges the Fair Work Ombudsman with regulating workplace relations in the building and construction industry. The Registered Organisations Commission will also be abolished, with its functions transferred (back) to the General Manager of the FWC.

Sunsetting of "zombie" agreements

Finally, the Bill proposes to terminate remaining transitional instruments preserved by the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009. This includes agreement-based transitional instruments, Division 2B State employment agreements and enterprise agreements made during the "bridging period", on the basis that many of these agreements will contain inferior terms and conditions compared to the modern award that would otherwise apply.

These agreements will terminate after 12 months from commencement of the new legislation unless a party successfully applies to extend the period for up to 4 years.

Key takeaways

  • The changes proposed by the Bill are major and sweeping, impacting on many areas of the employment relationship
  • The Bill proposes to significantly increase the work of the FWC, including the role it will play in determining the actual (not just minimum) terms and conditions as between employers and employees

The Workplace Relations & Safety Team at Lander & Rogers will be closely monitoring the progress of the Bill through Parliament and will provide further information and analysis on the impacts of these changes as the Bill progresses.

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All information on this site is of a general nature only and is not intended to be relied upon as, nor to be a substitute for, specific legal professional advice. No responsibility for the loss occasioned to any person acting on or refraining from action as a result of any material published can be accepted.

Key contacts

Isabella Woolley

Isabella Woolley

Senior Associate