Changes to the Fair Work Act: An Overview

On 6 Decem­ber 2022 the Fair Work Leg­is­la­tion Amend­ment (Secure Jobs, Bet­ter Pay) Act 2022 passed into law (Amend­ing Leg­is­la­tion). The Amend­ing Leg­is­la­tion made sig­nif­i­cant changes to the Fair Work Act (Act) and relat­ed leg­is­la­tion. Some of these changes have already tak­en effect, while oth­ers will take effect through­out this year. It is imper­a­tive employ­ers be across these amend­ments and imple­ment nec­es­sary change to achieve compliance. 

The Amend­ing Leg­is­la­tion is intend­ed to address var­i­ous issues that have arisen in work­place rela­tions in recent years, includ­ing enter­prise bar­gain­ing, the rec­om­men­da­tions in the Aus­tralian Human Rights Com­mis­sion’s Respect@Work report of 2020, the pro­mo­tion of gen­der equal­i­ty and job secu­ri­ty, boost­ing wages, and to restore fair­ness and integri­ty to Fair Work insti­tu­tions”.

This arti­cle briefly sum­maris­es some of the key changes in the Amend­ing Legislation. 

Objects of the Fair Work Act

On 7 Decem­ber 2022, the objects of the Act were amend­ed and expand­ed to include the pro­mo­tion of job secu­ri­ty and gen­der equal­i­ty. The aim is for employ­ees to enjoy ongo­ing, sta­ble and secure employ­ment and for peo­ple of all gen­ders to have equal rights, oppor­tu­ni­ties and treat­ment in the workplace.

The Amend­ing Act changes the Act to give prac­ti­cal effect to these new objects. 

Pro­hibit­ing Pay Secrecy 

Either by a term in the employ­ment con­tract, or by employ­er direc­tion, it has been com­mon prac­tice for employ­ers to require employ­ees to keep their rate of pay confidential.

The foun­da­tion of the pro­hi­bi­tion on pay secre­cy is a new work­place right for employ­ees to dis­close or not dis­close (as they elect) their remu­ner­a­tion and, impor­tant­ly, any terms and con­di­tions of the employ­ee’s employ­ment that are rea­son­ably nec­es­sary to deter­mine remu­ner­a­tion out­comes (Remu­ner­a­tion Dis­clo­sure Right).

An exam­ple giv­en in the Act of the terms and con­di­tions rea­son­ably nec­es­sary to deter­mine remu­ner­a­tion out­come is the num­ber of hours worked. The inten­tion is to enable employ­ees to make mean­ing­ful and informed com­par­isons about their respec­tive remuneration. 

As well as the Remu­ner­a­tion Dis­clo­sure right, the Amend­ing Leg­is­la­tion also imple­ment­ed a right for an employ­ee to ask anoth­er employ­ee about the remu­ner­a­tion and any terms and con­di­tions of the oth­er employ­ee’s remu­ner­a­tion (Remu­ner­a­tion Enquiry Right). (The terms Remu­ner­a­tion Dis­clo­sure Right and Remu­ner­a­tion Enquiry Right are terms adopt­ed for con­ve­nience in this arti­cle rather than appear­ing in the Act – that said, in gen­er­al pro­tec­tions appli­ca­tions in the future there is lit­tle doubt sim­i­lar terms will be used to describe a work­place right alleged­ly breached.) 

The Remu­ner­a­tion Enquiry Right is an obvi­ous corol­lary to the Remu­ner­a­tion Dis­clo­sure Right. It has, how­ev­er, been some­what over­looked and is a bit of a trap for employ­ees and employ­ers alike to fall into. Some employ­ees might find enquiries from col­leagues about pay to be some­what gauche or inap­pro­pri­ate. While it is both the pre­rog­a­tive of an employ­ee to hold that view, and to not dis­close their remu­ner­a­tion if they do not wish to do so, it is imper­a­tive that adverse action (such as dis­ci­pli­nary action of any kind) is not tak­en against an employ­ee for hav­ing exer­cised the Remu­ner­a­tion Inquiry Right. Employ­ers will need to man­age any dis­qui­et between employ­ees aris­ing from the ques­tion in a way that is con­sis­tent with these new rights. 

To give effect to these new rights, the Amend­ing Leg­is­la­tion also inval­i­dates any terms of either an indus­tri­al instru­ment (such as an enter­prise agree­ment) or a con­trac­tu­al term that is incon­sis­tent with either the Remu­ner­a­tion Dis­clo­sure Right or Remu­ner­a­tion Enquiry Right, in oth­er words, a clause that impos­es pay secre­cy on employ­ees (described in the Act as employ­ee rights relat­ing to pay secrecy). 

From 7 June 2023 there is a pro­hi­bi­tion on terms being includ­ed in employ­ment con­tracts that are incon­sis­tent with the Remu­ner­a­tion Enquiry Right or Remu­ner­a­tion Dis­clo­sure Right, with the pos­si­bil­i­ty of penal­ties for a breach of this prohibition. 

While exist­ing pay secre­cy pro­vi­sions in con­tracts don’t need to be removed it is imper­a­tive employ­ers do not add such terms to employ­ment con­tracts or oth­er­wise engage in con­duct incon­sis­tent with these new pay secre­cy rights. 

Lim­i­ta­tion on Fixed Term Contracts

There has been con­cern that the use of fixed term con­tracts by employ­ers has under­mined job secu­ri­ty for employ­ees, deny­ing long term employ­ees some of the pro­tec­tions asso­ci­at­ed with per­ma­nent employ­ment. The gov­ern­ment has sought to address this prob­lem in the Amend­ing Legislation.

The new amend­ments will take effect on 7 Decem­ber 2023. Fixed term con­tracts are pro­hib­it­ed if:

  1. the con­tract is for two or more years;
  2. the term of the con­tract and the peri­od of any option for renew­al and exten­sion in the con­tract exceeds 2 years; or
  3. the con­tract pro­vides an option or right to extend or renew the con­tract more than once.

The pro­hi­bi­tion also applies for a new con­tract if there was a pre­vi­ous fixed term con­tract and:

  1. the pre­vi­ous fixed term con­tract was for the employ­ee to per­form the same, or sub­stan­tial­ly sim­i­lar, work for the per­son as the employ­ee is required to per­form under the new con­tract; and
  2. there is sub­stan­tial con­ti­nu­ity of the employ­ment rela­tion­ship between the employ­er and employ­ee dur­ing the peri­od between the new con­tract and pre­vi­ous con­tract; and
  3. either:
    • the sum of the peri­od the pre­vi­ous con­tract was in effect and the term of the new con­tract exceeds two years;
    • the new con­tract con­tains an option for renew­al or extension;
    • the pre­vi­ous con­tract con­tained an option for exten­sion that has been exer­cised; or
    • the pre­vi­ous con­tract came after anoth­er ear­li­er con­tract (Ini­tial Con­tract) which was for a fixed term per­form­ing the same or sub­stan­tial­ly the same work and there was a sub­stan­tial con­ti­nu­ity of the employ­ment rela­tion­ship between the Ini­tial Con­tract and pre­vi­ous contract.

There is an impor­tant point to note in rela­tion to this pro­hi­bi­tion. While it is expressed to apply to fixed term’ con­tracts, it also applies to max­i­mum term con­tracts, that is where the con­tract can be ter­mi­nat­ed dur­ing the term by the giv­ing of notice. Specif­i­cal­ly, the Amend­ing Leg­is­la­tion states the pro­hi­bi­tion applies whether or not the con­tract also includes oth­er terms that pro­vide for cir­cum­stances in which it may be ter­mi­nat­ed before the end of that peri­od”.

Employ­ers will also need to give a Fixed Term Con­tract Infor­ma­tion State­ment to employ­ees who enter into a fixed term con­tract. This state­ment will inform the employ­ee of their rights under the Act in rela­tion to fixed term con­tracts. There are also some (lim­it­ed) excep­tions to the pro­hi­bi­tion, the most notable of which is that the pro­hi­bi­tion will not apply to employ­ees above the high income thresh­old. Anti-avoid­ance pro­vi­sions have been includ­ed that seek to pre­vent employ­ers struc­tur­ing employ­ment arrange­ments in a way to seek to defeat the prohibitions. 

Anti-Dis­crim­i­na­tion and Spe­cial Measures

Three addi­tion­al pro­tect­ed attrib­ut­es have been added to the anti-dis­crim­i­na­tion pro­vi­sions of the Act, being:

  1. breast­feed­ing;
  2. gen­der iden­ti­ty; and
  3. inter­sex status. 

These terms are defined in Sec­tion 12 of the Act.

The inclu­sion of these attrib­ut­es aims to bring align­ment between the Act and oth­er fed­er­al anti-dis­crim­i­na­tion legislation.

Job Adver­tise­ments

A new pro­vi­sion has been added to the Act which pro­hibits employ­ers from adver­tis­ing roles at a rate of pay which would be in con­tra­ven­tion of the Act or an indus­tri­al instrument. 

Pro­hibit­ing Sex­u­al Harassment

The Amend­ed Leg­is­la­tion amends the Act to intro­duce a pro­hi­bi­tion on sex­u­al harass­ment of work­ers, per­sons seek­ing to become work­ers and any­one con­duct­ing a busi­ness or under­tak­ing. This will take effect from 6 March 2023. (To be clear, this is in addi­tion to the pro­hi­bi­tion on sex­u­al harass­ment con­tained in the Sex Dis­crim­i­na­tion Act (SDA)).

An employ­er may also be vic­ar­i­ous­ly liable for sex­u­al harass­ment com­mit­ted by an employ­ee. As with vic­ar­i­ous lia­bil­i­ty under the SDA, in order to avoid lia­bil­i­ty the employ­er must be able to demon­strate it took all rea­son­able steps” to pre­vent the sex­u­al harass­ment. On the basis of present author­i­ty apply­ing to the SDA, that will not be an easy test to satisfy. 

The Amend­ing Leg­is­la­tion also con­fers pow­ers on the Com­mis­sion to deal with dis­putes about sex­u­al harass­ment. The Com­mis­sion will be able to arbi­trate such dis­putes by con­sent. This is in addi­tion to the exist­ing stop sex­u­al harass­ment’ orders the Com­mis­sion can make (a pow­er con­ferred upon the Com­mis­sion in late 2021).

Flex­i­ble Work­ing Arrangements 

Under the NES, an employ­ee cur­rent­ly has a right to make a request for a flex­i­ble work­ing arrange­ment in cer­tain cir­cum­stances. From 6 June 2023 the Act will be amend­ed to: 

  1. expand the cir­cum­stances in which a request for a flex­i­ble work­ing arrange­ment can be made to include cir­cum­stances where the employ­ee, or a mem­ber of their imme­di­ate fam­i­ly or house­hold, expe­ri­ences fam­i­ly or domes­tic vio­lence, and preg­nant employees;
  2. impose stricter and more com­pre­hen­sive oblig­a­tions on an employ­er when con­sid­er­ing an employ­ee’s request for flex­i­ble work­ing arrange­ments (includ­ing a writ­ten response which needs to sat­is­fy spe­cif­ic require­ments); and
  3. impose an oblig­a­tion on an employ­er and employ­ee to attempt to ini­tial­ly resolve any dis­pute by dis­cus­sion between the par­ties and, if that fails, the FWC is empow­ered to then deal with dis­putes where it is alleged an employ­er has unrea­son­ably refused or ignored an employ­ee’s request or flex­i­ble work­ing arrangements. 

From 6 June 2023 there will also be addi­tion­al require­ments relat­ing to requests for exten­sion to peri­ods of unpaid parental leave. 

Small Claim Procedures

The max­i­mum mon­e­tary com­pen­sa­tion that can be award­ed in small claims pro­ceed­ings (known as the small claims cap) will increase from $20,000 to $100,000.

Enter­prise Agreements

A num­ber of amend­ments relat­ing to enter­prise agree­ments have been, or will be, imple­ment­ed. In sum­ma­ry, such changes relate to: 

  1. the rules for ter­mi­nat­ing an enter­prise agree­ment after its nom­i­nal expiry date has passed.
  2. sun­set­ting of remain­ing tran­si­tion­al instru­ments com­mon­ly referred to as zom­bie” agree­ments (of which the Com­mis­sion has recent­ly pro­duced a list).
  3. the approval process of an enter­prise agree­ment, where­in the pre­vi­ous­ly oner­ous and com­plex require­ments for approval are now sim­pli­fied (such sim­pli­fi­ca­tions include the removal of strin­gent timeframes).
  4. ini­ti­at­ing the bar­gain­ing process, sim­pli­fy­ing the process.
  5. the Bet­ter Off Over­all test (BOOT), which will be amend­ed in sev­er­al ways to ensure it is applied in a sim­ple, flex­i­ble and fair way.
  6. sim­pli­fy­ing the process for rec­ti­fy­ing errors, defects or irreg­u­lar­i­ties in enter­prise agreements.
  7. sup­port­ing the Com­mis­sion to assist par­ties in a bar­gain­ing dis­pute, includ­ing by allow­ing it to issue an intractable bar­gain­ing dec­la­ra­tion, in cir­cum­stances where the Com­mis­sion is sat­is­fied that there are no rea­son­able prospects of a suc­cess­ful resolution.
  8. indus­tri­al action process­es — specif­i­cal­ly in rela­tion to pro­tect­ed action bal­lots, mul­ti-enter­prise agree­ments, notice require­ments for indus­tri­al action, and manda­to­ry conciliation. 
  9. reform of the low-paid bar­gain­ing stream and the cre­ation of the sup­port­ed bar­gain­ing stream’ which will assist employ­ers and employ­ees of low paid indus­tries such as aged and dis­abil­i­ty care. 
  10. the sin­gle-inter­est employ­er autho­ri­sa­tion stream and less­en­ing the restric­tions to access­ing it. 
  11. employ­ers and employ­ees joint­ly vary­ing a mul­ti-enter­prise agree­ment to remove them­selves from it, pro­vid­ed the vari­a­tion is approved by the Commission.
  12. the intro­duc­tion of coop­er­a­tive work­place agreements’.

Good­bye to the ABCC and ROC 

The Aus­tralian Build­ing and Con­struc­tion Com­mis­sion (ABCC) has been abol­ished, enabling the Fair Work Ombuds­man (FWO) to reg­u­late work­place rela­tions in the build­ing and con­struc­tion indus­try. Fur­ther, the Gen­er­al Man­ag­er of the FWC will take over the duties of the Reg­is­tered Organ­i­sa­tions Commission.

Watch­ing Brief

After years of rel­a­tive sta­sis, work­place rela­tions has now entered a peri­od of sub­stan­tial reform. A sec­ond tranche of changes has been fore­shad­owed for lat­er this year. Employ­ers need to keep across these changes, not just for the pur­pose of com­pli­ance, but also to reflect upon the oppor­tu­ni­ties these amend­ments might present to evolve their organisations.