Amendments to the Fair Work Legislation – Secure Jobs, Better Pay

Introduction

The Fair Work Legislation Amendment (Secure Jobs, Better Pay) Bill 2022 (Amending Act), passed by Parliament on 2 December 2022, is the first tranche of the Albanese Government’s industrial relations reform agenda and amends the Fair Work Act 2009 (Cth) (FW Act).

The Amending Act has not passed without controversy, with many critics of the government weary of the impact of changes to enterprise bargaining on small businesses, and larger enterprises alike. As such, this article is predominately concerned with providing a summary of the changes to the enterprise bargaining system and the implications for businesses.

Fixed term contracts

Fixed term contracts allow employers to end an employment relationship at a specified date without risk of the employee bringing an unfair dismissal claim. To provide greater protections to employees, the Amending Act will restrict the use of fixed term contracts by only allowing them to be used for:

1. government contracts (with rollover funding);
2. employees with specialised skills needed to complete a specific task;
3. employees engaged as part of a training arrangements (e.g. an apprentice or a trainee);
4. peak periods, emergencies, and temporary absences (e.g. harvest contracts or back-filling);
5. employees who earn over the high income threshold;
6. where a modern award permits it; or
7. governance positions.[1]

The onus will be on the employer to demonstrate that one of the exceptions above applies.

Better Off Overall Test

The Amending Act has changed the Better Off Overall Test (BOOT) to ensure it is more simple, flexible, and fair. It does so by amending section 193A of the FW Act to:

1. require the Fair Work Commission (FWC) to give consideration to the views of specified persons, including primary consideration to any common views expressed by the specified bargaining representatives, when applying the BOOT;
2. apply the BOOT as a global assessment as opposed to a line-by-line comparison between the proposed agreement and relevant modern award;
3. require the FWC to only have regard to patterns or kinds of work, or types of employment, that are reasonably foreseeable at the test time;
4. enable the FWC to directly amend the agreement if the FWC is satisfied the amendment addresses the concern; and
5. enable the BOOT to be reassessed for example if, there has been a change in working patterns or kinds of work, types of employment engaged in, or to be engaged in, and the relevant circumstances were not considered at the time of the approval process (referred to as the reconsideration process).[2]

Interestingly, the global assessment approach adopts the position taken in earlier caselaw interpreting the BOOT, whereby an agreement is assessed for its overall benefit, rather than conducting a line-by-line consideration of the terms contained within the agreement.[3]

Bargaining disputes

Part 18 of the Amending Act now provides for the FWC to issue an ‘intractable bargaining declaration’ for a proposed enterprise agreement (other than a greenfields agreement) if satisfied that:

1. the applicant participated in a FWC process to deal with a dispute under s 240 of the FW Act;
2. there is no reasonable prospect of the bargaining parties reaching an agreement; and
3. it is reasonable in all the circumstances to make the declaration, taking into account the views of all the bargaining representatives for the agreement.[4]

If the FWC makes an intractable bargaining declaration, the FWC can consider whether include a further period in which the parties can negotiate.

The further period to negotiate will be called a ‘post-declaration negotiating period’ and occurs in circumstances where the FWC is satisfied that a post-declaration negotiating period may assist the parties to reach agreement without a determination.

Sunsetting of ‘Zombie Agreements’

Zombie agreements are workplace instruments that are past their nominal expiry date but continue to operate as they have not been terminated or replaced by another agreement.

The Amending Act provides for an automatic sunsetting of remaining transitional instruments, Division 2B State Employment agreements, and enterprise agreements made during the ‘bridging period’ – referred to colloquially as ‘Zombie Agreements’.[5]

After the sunset date, if businesses have not negotiated a new agreement with employees, they will be bound by the relevant modern award.

Industrial action

The Amending Act includes changes in relation to undertaking industrial action including:

1. that employers can only take responsive action following a successful protected action ballot (PAB) if it starts and finishes within the three-month period commencing on the date of the declaration of results of the ballot;
2.  removes the AEC as the default PAB agent and instead empowers the FWC to pre-approve a person as an ‘eligible PAB agent’. More than one person can be approved as an ‘eligible PAB agent’ by the FWC;
3. industrial action for supported bargaining will not be available if a proposed enterprise agreement is a greenfields agreement or a cooperative workplace agreement. This amendment repeals the reference to a multi-enterprise agreement to allow protected industrial action to occur for the newly coined supported bargaining; and
4. the notice requirements for industrial action contained in the FW Act now provides that 120 hours is the default notice period before protected industrial action is permitted to commence, so long as the proposed enterprise agreement is a single interest employer agreement or a supported bargaining agreement.[6]

Enterprise agreement approval

The Amending Act has simplified the requirements for enterprise agreement approval by removing the requirement to provide employees with access to the enterprise agreement during a 7 day ‘access’ period ending immediately before voting commences.[7]

The Amending Act replaces all pre-approval steps with a principle-based approach such that the FWC must be satisfied that an enterprise agreement has been genuinely agreed to by the employees covered by the agreement.

This process will now include an assessment of:

1. whether the employees who have agreed are sufficiently representative of the employees intended to be covered by the agreement; and
2. if the employees have a sufficient interest in the proposed agreement.

The FWC will be required to issue a public statement of principles which sets out guidelines for employers to ensure that the agreement is genuinely agreed which needs to include details such as informing employees of bargaining and providing reasonable opportunities to work.

Supported bargaining

The Amending Act has introduced a supported bargaining stream which permits bargaining on behalf of multiple employers in low paid industries – such as, aged care and childcare.

An employee bargaining representative, including an employee organisation, can now apply to the FWC to require multiple employers to bargain together.

When making a determination as to whether the supporting bargaining authorisation is warranted, the FWC will consider various factors including whether:

1. low rates of pay prevail in the industry or sector;
2. the employers to be covered have clearly identifiable common interests; and/or
3. the likely number of bargaining representatives for the agreement would be consistent with a manageable collective bargaining process.

Previously, the FWC was also required to take into consideration the history of bargaining in the applicable industry. After the changes in the Amending Act, this factor will no longer need to be considered. Additionally, once authorisation has been granted, the authorisation can be varied with or without the consent of the employer. If the employer does not consent to the variation, the FWC must vary same if:

1. a majority of employees wish to be covered by the authorisation; and
2. it is appropriate for these employees to be covered by the agreement.[8]

The FWC may reject an application for variation of an authorisation with the consent of all parties if the FWC is satisfied that there are ‘serious public interest grounds’ for doing so.[9]

Conclusion

The Amending Act provides significant reform to the current federal industrial relations regime with specific focus on amending laggard aspects of the enterprise bargaining system. The reforms are expansive and cannot all be covered within this article. Accordingly, this article only provides a brief overview of changes introduced by the Amending Act and should not be relied upon as an extensive consideration of all changes to the federal industrial relations system.

If you require advice on the above amendments, or other amendments introduced by the Amending Act, Gadens is well positioned to provide you with tailored advice.

Gadens has extensive experience in negotiating enterprise bargaining agreements, the application of the FW Act to employment relationships, and provision of general workplace relations advice to ensure employers are prepared for any potential issue before it arises.

To enquire as to how Gadens may be able to assist, please contact Jonathon Hadley in Brisbane by email jonathon.hadley@gadens.com or phone +61 7 3231 1653.

If you found this insight article useful and you would like to subscribe to Gadens’ updates, click here.

Authored by:

Jonathon Hadley, Partner

[1] Fair Work Legislation Amendment (Secure Jobs, Better Pay) Bill 2022 (Cth) Part 10.

[2] Fair Work Legislation Amendment (Secure Jobs, Better Pay) Bill 2022 (Cth) Part 16.

[3] Armacell Australia Pty Ltd [2010] FWAFB 9985; (2010) 202 IR 38 at [41].

[4] Fair Work Legislation Amendment (Secure Jobs, Better Pay) Bill 2022 (Cth) Part 18.

[5] Ibid Part 13.

[6] Fair Work Legislation Amendment (Secure Jobs, Better Pay) Bill 2022 (Cth) Part 19.

[7] Ibid Part 14.

[8] Fair Work Legislation Amendment (Secure Jobs, Better Pay) Bill 2022 (Cth) Part 20, Subdivision AB.

[9] Ibid.