New Changes to the Fair Work Act have started! Are you Ready?
Posted on December 15, 2022
The Federal Government has now passed the Fair Work Legislation Amendment (Secure Jobs, Better Pay) Act 2022 (the Act) which introduces the most extensive amendments to the Fair Work Act (2009) Cth (FW Act) since its introduction. The proposed changes will impact how some Australian employers structure and manage their workforce and the terms and conditions of employment and will commence in stages over a 12-month period.
The key changes, when they come into effect, and how they may impact you are set out below.
Pay Secrecy Clauses
As of 7 December 2022, pay secrecy clauses will have no effect for employment contracts that were entered into on or after this date and employment contracts entered into before this date where the contract doesn’t include pay secrecy terms that are inconsistent with these rights. Where a contract entered into before 7 December 2022 has pay secrecy terms that are inconsistent with these rights, and the contract is changed after 7 December 2022, these rights apply after the contract is changed. Pay secrecy clauses have historically been included in employment contracts to prohibit employees sharing their salaries with one another to prevent employees comparing salary deals and pushing for pay rises. As a result of the changes, employees are now able to ask each other and disclose their remuneration and any associated terms (such as hours of work).
Discrimination and Sexual Harassment
As of 7 December 2022, the Act extends the protections against discrimination in section 351 of the FW Act to include the attributes of breast feeding, gender identity and intersex status.
As of 6 March 2023, workplace sexual harassment is prohibited under the Fair Work Act. This is intended to complement and not replace the existing prohibition on sexual harassment in the Sex Discrimination Act. The prohibition of sexual harassment in the workplace extends to all “workers”, including employees, contractors, subcontractors, outworkers, apprentices, trainees, students and/or volunteers, as well as prospective workers and third parties such as clients and customers. Workers, prospective workers, and persons conducting a business or undertaking will each be able to seek remedies under the Fair Work Act.
“Sexually harass” is defined to include:
- if a person makes an unwelcome sexual advance or an unwelcome request for sexual favours, or
- if the person engages in unwelcome conduct of a sexual nature that would, by the standards of a reasonable person, be anticipated to result in the person harassed being offended, humiliated or intimidated.
Flexible Work Arrangements
No later than 6 June 2023, the Act will expand the scope for flexible work arrangements to include circumstances for employees caring for family members over 55, family and domestic violence and pregnant employees. An employer will have 21 days to either approve or reject a request for flexible work arrangements and must provide reasons for refusing the request.
Should a dispute arise, the Act will allow employees to go directly to the Fair Work Commission (FWC) if the issue cannot be resolved in the workplace.
Fixed Term Contracts
No later than 6 December 2023, fixed term contracts for the same role will be limited to two years, or two consecutive contracts, including any renewals to the contracts. Contracts that do not adhere to this limitation will be unenforceable by the employer, and employees will be made permanent once the limit has expired. There are several arrangements that this change will not apply to, including:
- employees engaged only to perform a distinct and identifiable task involving specialised skills
- employees engaged in essential work during a peak period
- apprenticeships and traineeship
- if the contract is government funded
This provision will be a civil remedy provision meaning that employers could be subject to monetary penalties under the FW Act if they engage employees on extended or rolling fixed term contracts. Employers will also be required to provide a ‘Fixed Term Contract Information Statement’ to new employees engaged for a fixed or maximum term.
Enterprise Bargaining
A range of changes to enterprise bargaining will officially commence no later than 6 June 2023, including —
- broader powers for the FWC to make workplace determinations and intervene in relation to bargaining disputes;
- broader access to single and multi-employer enterprise bargaining, multi employer enterprise bargaining meaning that some agreements may cover multiple employers;
- an automatic sunsetting for agreements that predate the FW Act (also known as “zombie agreements”) which means the agreement will cease to operate, and minimum pay and conditions will be set by the relevant modern award unless a new agreement is negotiated;
- simplification of the Better Off Overall Test (BOOT) which will provide employers with greater certainty about how the BOOT is applied while ensuring that employees will not be worse off;
- a quicker process for the agreement making process and approval requirements.
The abolishment of the Australian Building and Construction Commission (ABCC) and the Registered Organisations Commission (ROC)
No later than 6 February 2023, the Act will formally abolish the ABCC and transfer amended regulatory responsibilities and existing ABCC matters to the Fair Work Ombudsman (FWO). Therefore, the FWO will be the sole workplace relations regulator for the building and construction industry. The Act will also repeal the Code for the Tendering and Performance of Building Work 2016 (the Building Code), as well as parts of the Building and Construction Industry (Improving Productivity) Act 2016 in relation to penalties.
No later than 6 June 2023, the Act will also abolish the ROC and the General Manager of the FWC will absorb these functions.
Unpaid parental leave extension requests
From 7 June 2023 there are expanded obligations on employers in relation to requests for extensions of unpaid parental leave, which includes a requirement for businesses to give reasons for any refusal, limitations on reasons for refusing a request and FWC arbitration powers to deal with disputes.
Small claims proceedings to recover unpaid work entitlements
From 1 July 2023 the Act will increase the cap on the amount that can be awarded to employees recovering their unpaid work entitlements through the small claims court from $20,000 to $100,000. The impact of this is that it will provide low-cost, faster and more informal means of resolving employment disputes in court (such as underpayment), meaning that a large number of workers are able to access dispute resolution through small claim court proceedings. Costs will also be reduced for employers responding to these claims.
Prohibitions on advertising roles at less than the applicable rate of pay
From 7 December 2022 it will be unlawful to advertise a job at a pay rate that is less than the applicable minimum rate of pay. This provision will be a civil remedy provision meaning that employers could be subject to monetary penalties under the FW Act if employers advertise jobs at a pay rate that is lower than the minimum rate prescribe din the FW Act. This will apply to jobs advertised from 7 January 2023.
What Steps You Need to Take
We recommend you take the following steps to ensure you are meeting your legal obligations:
- Immediately: if you have used pay secrecy clauses, you should review your employment contracts immediately.
- By 7 January 2023: ensure all job advertisements are in compliance with any applicable minimum pay rates
- By March 2023: review your current sexual harassment and discrimination policies and procedures to ensure that they are directed at both preventing and responding to sexual harassment.
- By June 2023: review how you respond to requests to flexible work arrangements and see if you need to incorporate these changes.
- By December 2023: if you engage employees on fixed term contracts, you should review these arrangements to ensure they are limited to two years, or to two consecutive contracts, or seek legal advice on whether an exception applies.
Other recent changes
From 1 February 2023 businesses (other than a small business) will be required to provide 10 days of paid family and domestic violence leave to full-time, part-time and casual employees. This requirement will apply to small businesses from 1 August 2023. The leave renews every year, it does not accumulate from year to year.
Please contact our workplace relations team if you require assistance.
