Taking a closer look: new employment laws promoting job security and gender equalityJune 16, 2023
The passing of the Fair Work Legislation Amendment (Secure Jobs, Better Pay) Bill 2022 (Bill) on 2 December 2022 marked the most significant industrial relations reform since the introduction of the Fair Work Act in 2009.
From enterprise bargaining, job security and gender equality, to compliance and enforcement, and workplace conditions, this new legislation will change the way businesses approach industrial relations and how terms and conditions in the workplace are set.
Here, we take a deeper dive into some of the key changes focusing on job security and gender equality, including new restrictions on the use of fixed-term contracts, prohibiting pay secrecy clauses and changes to requests for flexible working arrangements and unpaid parental leave.
Objects of the Fair Work Act
The Secure Jobs, Better Pay Act amended the Fair Work Act 2009 (Cth) (Fair Work Act) to embed principles of job security and gender equality into the object of the Act and the decision-making process of the Fair Work Commission (FWC). In particular, amendments have been made to:
- Section 134 (the modern awards objective) to include improving access to secure work across the economy and the need to achieve gender equality in the workplace; and
- Section 284, to include the promotion of gender equality in the minimum wage objective.
The FWC is required to take these matters into account in exercising its powers, including when setting terms and conditions in modern awards, approving enterprise agreements, exercising powers in relation to dispute resolution. These changes came into effect on 7 December 2022.
Establishing expert panels
The Fair Work Act has also been amended to establish two new Expert Panels in the FWC for Pay Equity and the Care and Community Sector. The new Expert Panels will hear wage-related matters and are designed to help address low wages and challenging workplace conditions in the care and community sector.
To support the Expert Panels, four new FWC members will be appointed with expertise in gender pay equity, anti-discrimination and the care and community sector. A dedicated research unit will also be established to support the FWC with its work.
Arguably, one of the biggest changes for workforce planning and employment practices for 2023 and beyond are those in relation to fixed-term contracts. Rolling fixed-term contracts and fixed-term contracts used over an extended period have been considered by the Government to be a form of insecure work. As part of the reforms under the Secure Jobs, Better Pay Act, significant amendments have been made to place limits on the use of fixed-term contracts.
Under a new section 333E, it will be a contravention of the Fair Work Act to enter a fixed-term contract with an employee:
- Where the contract is for a period greater than two years,
- If the contract provides for an option or right to extend or renew the contract more than once, or
- If the sum of renewable contracts is greater than two years
These prohibitions also apply to maximum-term contracts, that is, contracts with an end date but also a right to terminate prior to the expiry.
If an employer enters a contract which contravenes the new section 333E, the term of the contract that provides the contract will terminate at the end of an identifiable period is taken to have no effect (i.e., the employee becomes permanent), however the contravention does not otherwise affect the validity of any other term of the contract. The practical effect of this is that the employee will gain access to unfair dismissal and entitlements to notice of termination, redundancy payments from the start of the employment.
There are exceptions available which permit fixed-term contracts beyond the limits, these include, but are not limited to:
- Performing a discrete task involving specialised skills.
- Undertaking essential work during a peak demand period (such as fruit picking or other seasonal work).
- Temporarily replacing an employee on leave (such as workers compensation).
- Apprentices and trainees.
- The performance of work where government funding, or funding of a kind prescribed by the regulations, is payable for a period of more than two years without any reasonable prospect the funding will be renewed after that period.
- Governance positions that have a time limit under the governing rules of a corporation or association.
- In the year the contract is entered into the employee’s earnings are above the high-income threshold (currently $162,000 per annum).
Importantly, if there are proceedings for a civil penalty for a contravention of these provisions and the employer wishes to rely on an exception, then the employer bears an evidential burden in relation to exception. Anti-avoidance provisions have also been introduced to prevent employers from avoiding any right or prohibition under the new laws. For example, by changing the nature of the work or tasks or delaying re-engaging an employee for a period.
Employers are also required to provide a Fixed-Term Contract Information Statement (to be developed by the Fair Work Ombudsman) to all employees entering a fixed term contract.
The changes relating to fixed-term contracts will commence from 6 December 2023. This is designed to give employers the time to understand their new obligations and allow consultation about sector specific rules required through the regulations. In this time, employers will need to review the circumstances when they use fixed-term contracts, identify any relevant exemptions that apply (and ensure there is evidence of those exemptions), review their fixed-term contract templates to ensure compliance, and implement controls on when fixed-term contracts can be used in the business and the length of those contracts.
Prohibiting pay secrecy
Prior to the introduction of the new legislation, it was common practice for contracts of employment to contain a term that requires the employee to keep their pay confidential. In seeking to promote pay transparency, the Secure Jobs, Better Pay Act introduced provisions which:
- Make it a workplace right for an employee to:
- Disclose (or not disclose) information concerning their own remuneration and related terms and conditions of employment, including information concerning bonuses and hours of work; and
- Ask other employees about their remuneration and related terms and conditions of employment.
- Make it an offence to enter a contract which includes pay secrecy terms.
- Result in pay secrecy clauses in contracts entered after 7 December 2022 having no effect.
These provisions came into effect on 7 December 2022, but some transitional arrangements apply. Employers need to ensure all new contracts entered after 7 December 2022 do not include terms which prohibit an employee from disclosing the terms of their remuneration and related terms and conditions of employment. From 7 June 2023, penalties will apply for new contracts that have pay secrecy terms. Pay secrecy terms in existing contracts which are inconsistent with these new provisions will continue to operate, until those contracts are varied or replaced – in which case the clause will no longer have effect.
As the right to disclose (or not disclose) or to ask other employees information concerning remuneration and related terms and conditions has become a workplace right, employers are prohibited from taking adverse action against an employee because of the exercise of those rights or to prevent the exercise of those rights.
Rights to flexible work arrangements
Employees’ rights to request flexible work arrangements will been bolstered from 6 June 2023. The amendments under the Secure Jobs, Better Pay Act will achieve this by:
- Expanding the circumstances in which an employee may request a flexible working arrangement where the employee is pregnant, or where they, or a member of their immediate family or household, experiences family or domestic violence;
- Strengthening employer obligations when considering an employee’s request, based on the model award term developed by the FWC; and
- Introducing dispute resolution provisions enabling the FWC to deal with a dispute about a request for flexible working arrangements, by conciliation, mediation or arbitration.
The amendments mean that when an eligible employee makes a request for a flexible working arrangement, the employer must:
- Discuss the request with the employee.
- Provide reasons in writing if the request is refused.
- Consider and inform the employee in writing if there are any other changes in working arrangements that the employer is willing to make which will accommodate the employee’s circumstances.
Under the new dispute resolution procedure, the FWC must first deal with the dispute by means other than arbitration (i.e., conciliation or mediation), unless exceptional circumstances apply. If the FWC deals with the dispute by arbitration it has the power to make orders under a new section 65C. This includes orders where the employer has not given a written response within 21 days, has not responded adequately, or has refused the request. Significantly, if the FWC is satisfied there is no reasonable prospect of the dispute being resolved without orders being made, the FWC has the power to make orders that the employer grant the request, or orders that the employer make specified changes in the employee’s working arrangements to accommodate their circumstances. Civil penalties will apply for breaching an order of the FWC.
Unpaid parental leave
The rights of employees to request an extension to unpaid parental leave under the Fair Work Act will also be strengthened from 6 June 2023. As part of these changes, if an employee makes a request to extend their unpaid parental leave, the employer must:
- Discuss the request with the employee.
- Provide a written response within 21 days.
- Provide reasons in writing if the requested extension is refused.
- Consider and inform the employee in writing if there is any other period of extension the employer will be willing to agree to.
The ability to refuse a request on reasonable business grounds, remains unchanged, however the Fair Work Act will include examples of reasonable business grounds to provide additional guidance.
Similar to the amendments to requests for flexible working arrangements, there will be access to dispute resolution through the FWC if employees and employers are unable to resolve disputes about an extension of unpaid parental leave. The FWC will be given powers to deal with the dispute by conciliation, mediation, or arbitration. If a dispute is arbitrated, for example if mediation or conciliation have been unsuccessful or if exceptional circumstances exist, and if there is no reasonable prospect of the dispute being resolved, the FWC has the power to make orders relating to a refusal.
It is crucial that employers update their processes and ensure HR staff are trained on these changes (and changes to flexible work requests) to familiarise themselves with the new requirements, processes, and dispute settlement powers of the FWC before they come into effect from 6 June 2023.
If this information has raised any further questions, or you have another matter you need advice on, please reach out to the team at FCB for a confidential discussion. You can call us on 02 9922 5188 or email us at firstname.lastname@example.org .