What the Federal IR changes mean for your business
The Federal Government has passed a suite of changes to the current industrial relations landscape — how will you be affected?
The Federal Government has unveiled the most significant piece of IR reform in many years through the Secure Jobs, Better Pay Bill (the Bill).
With the Bill passed by Parliament on December 2, some of the critical areas of reform include:
- Amending the Objects of the Fair Work Act (FW Act)
- Broadening of the single-interest employer test and substantial changes to multi-employer bargaining
- Changes to the Better-Off Overall Test (BOOT)
- Limitation on the use of fixed-term contracts
- Changes to flexible work
- Increased avenues for arbitration of dispute
The Bill also abolishes the Registered Organisations Commission (ROC) and the Australian Building and Construction Commission (ABCC). The Government announced in the Budget on October 25 that the Fair Work Ombudsman would receive nearly $70 million in funding to replace the functions of the ABCC.
Objects of the Fair Work Act
The Government is seeking to amend the FW Act by introducing the promotion of job security and gender equity into the Objects of the FW Act. The Fair Work Commission (FWC) must take into account these Objects when performing its functions or exercising its powers under the FW Act. However, there is no definition of job security, so there remains a lack of clarity around the impact this amendment will have.
Of significant concern is the concept of multi-employer bargaining. The Bill seeks to widen the single-interest employer test and provide the FWC with a broad scope to determine if particular employers have a ‘clearly identifiable common interest’ which may include geographical location, regulatory regime or the nature of the enterprises to which the agreement will relate and find them to be a single-interest employer.
If determined to be a single-interest employer, then those enterprises may be required to bargain collectively in situations where they, and their workforce, have no interest in doing so, which may result in terms and conditions that may be unaffordable and unsuitable to the needs of their workplace.
This may occur if employee bargaining representatives make an application for the FWC to determine if employers have a clearly identifiable common interest where this has the majority support of the relevant employees.
“This suggests that majority support determinations may be available across a workforce of employers who have been determined to have a clearly identifiable common interest, as opposed to within individual enterprises, which will have the effect of collective bargaining no longer being a voluntary process,” says CCIWA Associate Director, HR and Workplace Relations Ryan Martin.
“Further, it pulls into the bargaining process employees who might not want to be involved — in other words, workforces in businesses who are happy with their existing terms of employment.”
Arbitration of disputes
There are many avenues proposed by the Bill for the FWC to become involved in workplace matters and arbitrate outcomes.
For example, where there is dispute over fixed-term contracts, where an employer refuses an employee’s request for flexible work, the FWC is empowered to resolve the dispute by mandatory arbitration.
During a bargaining dispute, the new Bill allows the FWC to resolve intractable disputes by making a determination that there is no reasonable prospect of agreement between employers and their workforce and arbitrate a bargaining outcome for any outstanding matters that have not been agreed.
“This has the potential to create the risk of union-driven arbitration to secure wage rates and entitlements in addition to the already existing regulation through awards and will almost certainly create an increase in costs and time for small and medium-sized businesses when dealing with workplace disputes,” says Martin.
Changes to the BOOT and enterprise agreements
The Bill makes clear the FWC’s ability to correct or amend obvious errors in enterprise agreements and confirms that the FWC must undertake a global assessment of whether employees will be better off under the agreement rather than a line-by-line comparison against the award.
It also clarifies that the FWC can only give consideration to patterns or kinds of work or types of employment if they are reasonably foreseeable at the time of the BOOT. This should have the effect of reducing the hypothetical analysis of rosters that the employer does not have in place at the time of making an agreement.
However, the Bill proposes a “reconsideration process”, which will enable employers, employees and their representative to, at any point, apply to have the agreement retested against the relevant award where there has been material change in working arrangements or where relevant circumstances had not been properly considered during the approval process.
“This essentially means the FWC has the power to vary an enterprise agreement mid-term in certain circumstances,” says Martin.
The proposed reform will also include further tightening of the already strict test for unilateral termination of nominally expired agreements and adds a ‘guarantee of termination entitlements’ for certain workers if the agreement is terminated because its continued operation poses a threat to their employer’s viability.
The FWC will also be able to issue exclusion orders to unions found to have breached the FW Act in the previous 18 months, preventing them from bargaining for a specific single-interest employer agreement or multi-enterprise agreement.
Prohibiting sexual harassment and expanding anti-discrimination
The Bill makes it clear that sexual harassment in connection with work is expressly prohibited under the FW Act and outlines remedies if it does occur, including civil penalties and a new dispute resolution framework aimed at preventing sexual harassment in connection with work.
This includes powers for the FWC to arbitrate any disputes in respect to sexual harassment as well as expanding access to stop sexual harassment orders.
There is also an expansion of the anti-discrimination provisions of the FW Act aimed and reducing discrimination based on gender, including a protection from discrimination on the grounds of breastfeeding, gender identity and intersex status.
Pre-Fair Work Agreements
The Bill also amends the Fair Work Transitional Act in respect to pre–FW Act transitional agreements providing a sunset date of 12 months from the time the legislation is passed. This means any employers currently operating under these industrial instruments will need to start planning to revert to the underpinning award or commence bargaining a new enterprise agreement.
The Bill seeks to impose a limitation of two years for fixed-term contracts (including extensions) or on a contract which may be extended more than once.
There are some exceptions to the amendments, including fixed-term contracts that are funded in part or whole by government funding.
"However, this exception only applies where the funding is for a period of more than two years and there are no reasonable prospects that the funding will be renewed after the end of the period — a high threshold to meet," says Martin.
The Bill proposes to amend the FW Act by incorporating the additional obligations from the model award terms that require an employer to:
- consider requests for flexible work arrangements;
- provide reasons for any decision to refuse a request for flexible work; and
- inform the employee of changes to working arrangements that the employer is willing to make to accommodate the employee’s circumstances.
Under the proposed changes, the employer may only refuse the request if they have genuinely tried to reach an agreement with the employee about making changes to accommodate their circumstances, has had regard to the consequences of the refusal and the refusal is on reasonable business grounds.
If the employee is not satisfied with this outcome, they will have an avenue to apply to the FWC for conciliation, and should conciliation fail, arbitration for a binding decision.
Pay equity and pay secrecy
The proposed amendments require the FWC’s consideration of work value to be free of assumptions based on gender and must include consideration of whether historically the work has been undervalued because of assumptions based on gender. It also establishes expert panels to hear gender pay equity matters.
The Bill also removes any restrictions on employees disclosing their salary details if they wish and employees will also have a workplace right to ask other employees about their salary details. There is a prohibition on pay secrecy and any clause of a contract that restricts an employee from disclosing their pay will have no effect under the new law.
Changes to the small claims process
There is a proposed increase to the limit on the value of small claims that can be brought by employees informally through the small claims process from $20,000 to $100,000. Furthermore, employees who are successful in their claim would be able to apply to have their filing fees repaid by the other party.