The IR Changes are coming – 5 Practical Issues to consider for Employers and Human Resources

The IR Changes are coming – 5 Practical Issues to consider for Employers and Human Resources

The imminent IR law change of Fair Work Legislation Amendment (Secure Jobs, Better Pay) Bill 2022 (Bill) is upon us as the cross bench and Greens provide support to the Bill in the Senate.

There are a number of headline changes which has had already a lot of discussion such as:

• The final nail in the coffin for the construction industry watchdog, Australian Building and Construction Commission with its powers shifting to the Fair Work Commission;
• The set up of an Economic Inclusion Advisory Committee to examine the suitability of income support payments ahead of each federal budget;
• Preservation of the BOOT Test (better off overall test), that is with any new enterprise bargaining employees will not go backwards in new negotiations;

Putting aside the headlines what are some of the more practical changes that Employers need to be aware of (and get ready for).

1. Pay Secrecy (and therefore Transparency)

We already foreshadowed this potential change in our article A Way Forward: What Can Human Resources Expect With A New ALP Government (4 Potential Changes To Get Ready For) with the prohibition of “pay secrecy” clauses and the ability for employees to ask and disclose their remuneration.  This will also form a workplace right which has some consequences in the General Protections provisions.

There are a number of ramifications for this.  Firstly, confidentiality clauses in contracts that set out remuneration as confidential will not be prohibited under the proposed Bill.  Secondly, such clauses will have no effect.

This causes some consternation from a number of vantage points:

• Rewarding discretionary effort;
• Succession planning;
• Keeping up with market salaries;
• Using increases in pay to retain key personnel;
• Creating a workplace culture where staff are constantly asking for pay rises (at least initially) and potentially causing toxic behaviour as staff get paid different remuneration.

On the other hand the purpose of the transparency is two fold. 

The first being that Gender equity has been put forward as a key object of the Bill.  The argument being that pay transparency will generally lift the remuneration of all staff whatever gender they may be. 

The other being two people working on one site.  There may well be one employee who works for the Principal and the other a labour hire employee.  The idea being that if they do the same work and all else being equal, the remuneration should be in theory the same.

Contract reviews and communication with staff will be integral to combat this change.

2. Sexual Harassment

The Bill expressly prohibits sexual harassment and is a natural extension of the Workplace health and safety laws and in particular that unlawful sexual harassment and discrimination are work health and safety hazards.

The Bill stresses the positive obligation to manage the psychosocial risks positive obligation on employers and take all reasonable steps to eliminate sexual harassment.  This is a much more pro-active obligation and although there have been avenues in the past in unfair dismissal, general protections and discrimination this Bill provides more express provisions for “stop sexual harassment orders” similar to the current FWC workplace bullying jurisdiction.

However, one prime difference between the bullying jurisdiction and the new sexual harassment provisions is that there is a compensatory avenue.

The new provisions also captures behaviours that is not directed at an individual such as sexual innuendo, banter of a sexual nature, sexualised jokes and displays of offensive material – which would constitute a breach.  

Employers and human resources must expect that sexual harassment complaints will likely increase and unlike bullying complaints there is a direct avenue for compensation for such complaints.

This increases the risk substantially and policies and in particular management training will be integral.

3. Flexible Workplace Requests

As part of the post-covid 19 workplace and with employer branding, war for talent and “quiet quitting” being headlines across all Australian workplaces flexibility has some extended protections under the Bill.

The Bill will enable employees to directly arbitrate any decisions on flexible workplace arrangements in the Fair Work Commission if it cannot be resolved in the workplace. This is a guaranteed dispute resolution mechanism that for many outside of Enterprise Agreement covered employees have not been able to access.

In particular, it will speed up the process of making a decision for a request with a requirement to either approve or reject the request in writing within 21 days.

Flexible working arrangements such as carer responsibilities and family or domestic violence obtain an extension where an employee may request a flexible working arrangement to where the employee has a disability or where a member of the employee’s immediate family or household, experiences family or domestic violence.

4. Enterprise Bargaining

There has been no doubt that many Employers have found the current bargaining system ineffectual and negligible commercial value.  The new changes saw a number of employer and industry associations provide submissions on the proposed changes.

The biggest change is the Single interest bargaining authorisation.  It will allow the making of multi-employer agreements with a group of employers such as franchisees who share “clearly identifiable common interests”.

This change was particularly pushed by the Union movement to allow traditionally non-unionised workplaces to negotiate as a collective. Employers especially those in franchise or quasi-franchise arrangements should be expect an uptick in union initiated bargaining with multiple employers.  Those Employers should be looking at legal advice as a matter or urgency to mitigate liability and risk.

Thankfully, small businesses with less than 20 staff will be excluded (one of the last minute changes from the cross bench) from the multi-employer bargaining.  Furthermore, businesses with less than 50 staff can opt out of the bargaining with the onus on Unions to set out a case as to why they should be included.

Another change that may effect companies with long expired enterprise agreements is that a majority support determination will no longer be required and a Union can initiate bargaining after 5 years have lapsed (past the nominal expiry date).

5. Fixed Term Contracts

Fixed term contracts have come under the microscope with the aim of preventing rolling contracts and in principle providing better job security.

Namely any fixed term contracts exceeding two years will be restricted and require an identifiable term of termination.  Some of the restrictions include:

• changes to the period of time or terms of a fixed term contract
• delaying re-engaging an employee for a period
• changing the nature of the work or tasks the employee is required to perform

There are exclusions including one-off government funded positions, training arrangements and contracts for distinct and identifiable tasks an expressly permitted one under a modern award.

Other requirements include:

• a Fixed Term Contract Information Statement” to be issued
• prohibition for longer than 2 year fixed term contracts

require employers to issue a new ‘Fixed Term Contract Information Statement’ to employees engaged for a fixed or maximum term;

prohibit fixed term or maximum term contracts for a total of more than two years (including under rolling contracts or extension/s) and a right to renew the contract more than once; and

render ineffective any contract that breached these prohibitions (subject to exceptions eg if an applicable modern award expressly permits a particular provision).

Employers with regular fixed term contracts and non-government funded positions should be careful about their engagement of fixed term contracts. The above restrictions will need to be taken into account because penalties could be as high as $82,500 or $16,500 for an individual.

Give NB Lawyers – Lawyers for Employers a call and we can offer an obligation free consultation to work through some of these steps worth taking.  Reach out via [email protected] or +61 (07) 3876 5111 to book an appointment.

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