Key changes made to the Fair Work Act 2009 by the “Secure Jobs, Better Pay” Act

The Fair Work Legislation Amendment (Secure Jobs, Better Pay) Act 2022 (Cth) came into operation on 7 December 2022.  The Act makes significant amendments to the Fair Work Act 2009 (Cth) (FW Act) in ways that will impact most, if not all, businesses.

Key changes to the FW Act, as summarised below, include changes to:

  • Enterprise agreements and bargaining;
  • fixed term and maximum term contracts;
  • pay secrecy;
  • flexible working arrangements; and
  • sexual harassment and discrimination.

Enterprise agreements and bargaining

In respect of multi-employer bargaining, from 6 June 2023, it will be easier for employees to commence bargaining between multiple employers with common interests who are ‘reasonably comparable’.  Such interests include geographical location, regulatory regime, the nature of the enterprise, and the terms and conditions of employment.  Unless the employer consents, the Fair Work Commission will not authorise multi-employer bargaining where it applies to a business with fewer than 20 employees or involves employers in the civil and commercial construction industry.

In terms of the enterprise agreement approval process, the amendments introduce a newly‑worded requirement that the agreement has been ‘genuinely agreed to’ by employees.  This concept replaces the strict pre-approval requirements with a new, overarching requirement.  The Commission will publish a ‘statement of principles’ to guide employers on how to ensure employees have genuinely agreed to an enterprise agreement.  The ‘better off overall’ test has also been amended to ensure it is applied as a global assessment rather than as a line-by-line comparison.  Whether an agreement remains ‘better off overall’ over time can be reassessed during the life of an agreement if there has been a material change to working arrangements or where relevant circumstances were not properly considered during the approval process.

The Fair Work Commission can now also correct obvious errors, defects, or irregularities in enterprise agreements, removing the current complexity and delay in rectifying these issues.

Fixed term and maximum term contracts

Under the amended FW Act, employers are prohibited from entering into fixed term or maximum term employment contracts with employees for a period of longer than two years in total across all contracts.  The prohibition also prevents fixed term contracts being extended or renewed more than once for roles that are substantially the same or similar. 

There are some exceptions to this general rule, such as for casual employees, apprentices or trainees, high income workers, work covering peak periods of demand, where the work is performed by a specialist engaged for a specific and identifiable task, where the position is funded for a period of more than 2 years with no reasonable prospects of the funding continuing thereafter, where the contracts relates to a governance position that has a time limit under the governing rules of a corporation or association, or where a modern award or the FW Act allows for longer fixed term contracts.  The onus will be on employers to establish that their fixed term or maximum term contracts are not in breach of the FW Act or are otherwise exempt from the above prohibitions.

The maximum penalty for contravening the 2 year limitation is $82,500 for a body corporate, and the employee on the fixed term contract will be considered a permanent employee.

The changes only apply to new contracts entered into after 7 December 2023.  However, any contract that was in place prior to the commencement will be counted towards the two-year limit.  The Fair Work Ombudsman will prepare a Fixed Term Contract Information Statement that employers must provide to employees engaged on new fixed term or maximum term contracts.

Pay secrecy

The amendments provide employees with a positive right to disclose, or not disclose, their remuneration.  For new employment contracts or other written agreements entered into after 6 December 2022, pay secrecy clauses are not permitted.  

Employers who continue to include pay secrecy terms in new agreements from that date will have breached the prohibition, may be liable for a penalty, and the term in the contract will have no effect.  

Pay secrecy clauses in existing contracts have no effect.

Flexible working arrangements

The amendments expand the circumstances in which an employee may request flexible work arrangements and strengthen access to those arrangements by enabling employees to seek conciliation or arbitration from the Fair Work Commission to contest employer decisions or the employer’s failure to respond within the required 21 days.

There are also further steps employers must take prior to refusing a request for flexible working arrangements.  These include discussing the request with the employee, genuinely trying to reach an agreement with the employee, considering the consequences of the refusal for the employee and, when providing their reasons for refusal of a request, informing the employee in writing if there are any other changes in working arrangements, they would be willing to make to accommodate the employee’s circumstances.

These changes will come into effect on 6 June 2023.

Sexual harassment and discrimination

The FW Act has been amended to increase anti-discrimination protections in respect of breastfeeding, gender identity and intersex status.  Provisions for sexual harassment have also been strengthened such that from 6 March 2023, employers may be held vicariously liable for acts for their employees or agents unless they can prove they took all reasonable steps to prevent sexual harassment. 

The amendments also create a new dispute resolution function for the Fair Work Commission that enables people who experience sexual harassment in the workplace to initiate civil proceedings if the Commission is unable to resolve the dispute.

Lavan Comment

The changes summarised above, along with a significant number of smaller amendments to the FW Act, constitute one of the largest single overhauls to the FW Act since its commencement, particularly in relation to enterprise agreements and bargaining.

The changes necessitate a review by businesses of:

  • new flexible working arrangement requests (which are more prescriptive for employer refusals); and
  • employment contracts, especially in respect of fixed term and maximum term employment and pay secrecy clauses,

in order to avoid being in breach of the FW Act and being exposed to penalties and other adverse consequences.

Obligations in respect of sexual harassment are also more onerous, so businesses must ensure that they have adequate processes in place to be able to prove all reasonable steps have been taken to prevent sexual harassment in the workplace.

If you would like to know more about how these changes may impact your workplace, please do not hesitate to contact Lavan’s Employment, Safety and Education team.

Disclaimer – the information contained in this publication does not constitute legal advice and should not be relied upon as such. You should seek legal advice in relation to any particular matter you may have before relying or acting on this information. The Lavan team are here to assist.