• Employers must recognise a new definition of de facto partner

  The definition of de facto partner has been amended and is now defined as “another person who, although not legally married to the first person, lives with the first person in a relationship as a couple on a genuine domestic basis (whether the first person and the other person are of the same sex or different sexes)” or a former de facto partner (with the same meaning).

• Individuals experiencing family and domestic violence are now entitled to request a flexible working arrangement

  Employees who are experiencing family and domestic violence – rather than ‘experiencing violence from a member of the employee’s family’ – or who are providing care and support to a member of their immediate family or household who requires care and support because they are experiencing family and domestic violence are entitled to request a flexible working arrangement.

• Employers must follow a defined process when responding to – and refusing – flexible working arrangement requests

  Section 65A of the Fair Work Act sets out the process that employers must follow when responding to a request for a flexible working arrangement. Employers are required to demonstrate greater accountability for any decisions that they reach, particularly when not inclined to approve a request.

  The new process is:

  1. Employers must meet with the employee
  2. Employers must try to reach genuine agreement with thee employee
  3. Employers must consider the consequences that refusing the employee’s request will have on them

  While the employer must still give the employee a written response to a request within 21 days, new provisions require an employer (if a request is to be refused) to discuss the request with the employee, genuinely try to reach agreement with them and have regard to the consequences of the refusal for the employee.

• Employers must be able to justify their refusal on reasonable business grounds

  Section 65A(5) of the Fair Work Act lists the business grounds that will be reasonable (and these remain unchanged). They are:

  1. The new working arrangements requested would be too costly.
  2. There is no capacity or it is impractical to change the working arrangements of other employees to accommodate the request, or to hire new employees.
  3. The new working arrangements would likely result in a significant loss in efficiency or productivity.
  4. The requested arrangement would be likely to have a significant negative impact on customer service.
• If refusing a request, an employer must notify the employee within 21 days and include specific information

  An employer must tell the employee:

  1. the reasonable business grounds for the refusal;
  2. how those grounds apply to their request;
  3. any changes the employer would be willing to make;
  4. that they have a right to raise a dispute, first at a workplace level, then in the Fair Work Commission, and the Commission may deal with the dispute by conciliation or mediation; and that the Commission may arbitrate the dispute.
• Individuals can now raise disputes

  The ability to raise a dispute under the NES provisions has also now been introduced. If the dispute proceeds to arbitration, the Fair Work Commission may make orders which are binding, including an order that an employer grant the employee’s request. If an employer contravenes an order, serious financial penalties apply.

• Case 1: Nature of a valid request?: Jordan Quirke v BSR Australia Ltd [2023] FWCFB 209

  In the first flexible working dispute arbitrated by the Fair Work Commission, an employee’s flexible working arrangements request was denied for failing to meet the criteria required for a valid request.

  The employee initially said her request took the form of an email sent to her employer on 5 April 2023 in which she provided a ‘mock roster’ outlining her proposed changed working hours and said it would be ‘in line with [her] doctor’s recommendations.’ At the hearing, the employee said that a later Microsoft Teams message from 14 August 2023 requesting a discussion about her hours was the ”valid request”.

  At no time did the employee communicate to her employer that she had a disability, and/or that the proposed changes to her working hours were due to her disability.

  The Full Bench declined to arbitrate the dispute as it was not a valid request for flexible working arrangements within the meaning of the Fair Work Act. Leaving aside the jurisdictional issues that the initial request was made prior to the commencement of the provisions and the employee did not have the requisite 12 months’ service, the Full Bench held:

  • the later request by Teams message was simply a request for a discussion and did not communicate an actual request for a change in working arrangements supported by reasons; and

  • neither request expressly stated that the employee had a disability or that the requested change to her working arrangements was due to this disability. There must be a clear nexus between the request and the employee’s circumstances.

  While finding no valid request, the Full Bench took the opportunity to make some observations regarding the “eligible circumstances requirement” and said that in order to have the power to arbitrate a flexible work arrangement dispute, the Fair Work Commission must be satisfied that one of the eligible circumstances applied to the employee at the time of the employee’s request. In this case, the employee did not provide evidence that she had a medically diagnosed disability and, as such, the Full Bench indicated it would have, in any event, had ‘difficulty’ finding this requirement was satisfied.

• Case 2: Guidance on reasonable business grounds: request to work from home: Charles Gregory Gregory v Maxxia Pty Ltd [2023] FWC 2768

  Within a fortnight of the first Fair Work Commission decision described above, the Fair Work Commission handed down another important decision dealing with the new flexible working provisions of the Fair Work Act.

  Maxxia had introduced “Hybrid Working Guidelines” which required employees to work at least 40% of their time in the office unless otherwise authorised. Charles Gregory requested to work exclusively from home. His contract did expressly state that the work location was the office, but the reality was, that like many employees, he had largely worked from home due to the COVID-19 pandemic.

  Charles said his request was because: (1) he was a parent of a school aged child and he anticipated entering a custody arrangement where he would have care for his child every second week and (2) he suffered from irritable bowel syndrome (IBS) and situational crisis, and that these medical conditions were disabilities.

  In assessing the request, Maxxia proposed that he initially work 20% in the office, and then move to 40% in the office, consistent with the Guidelines. Maxxia also offered to move the employee closer to the toilet and allow him to exclusively work from home during the weeks he had sole care for his child. Charles rejected that proposal and restated his request to work entirely from home. It was refused.

  The Fair Work Commission observed that Maxxia was entitled to require its employees to return to the office in accordance with their contracts now that the worst of the COVID-19 pandemic has passed. In upholding the refusal of the request to work entirely from home, the Commission found:

  • Not eligible: the employee was not eligible to make the request on the basis of having a disability as the Commission determined on the basis of medical evidence that his conditions were not a disability within the meaning of the Act. Interestingly, while there was evidence that the conditions were the subject of medical care (e.g. treatment recommendations and referrals) the Commission found there was no clear reference to the condition being a disability.

  • Refusal on reasonable business grounds: Maxxia’s refusal of Charles’ request regarding his childcare was on ‘reasonable business grounds’ noting that Maxxia had agreed to allow him to work from home exclusively on the weeks he had sole care and:
    • Charles' productivity was substantially below his targets despite supports being in place to increase his productivity. The Commission considered that requiring Charles to attend the office would allow for ‘observation, interaction and (if necessary) coaching’ to improve his productivity.
    • given Charles’ long tenure, his knowledge and experience should be available to assist less-experienced employees. The Commission accepted that Charles could be more easily accessed on face-to-face basis.
    • in person attendance would enable Maxxia to provide Charles with greater support. The Commission accepted Maxxia’s submission that its view was that Charles was struggling mentally and that it could not fully support him while he worked from home.

Our recommendations

In light of the above, and given that there is limited to no case law at this stage to shed light on what it means to reach “genuine agreement” or to consider the consequences of refusal, we recommend that employers:

• take detailed records of all discussions with the employee

• consider what consequences a refusal may have for the employee, and document this thought process, as this may be the subject of discussion with the employee

• consider each of the business grounds for refusal – that is, why they apply or don’t apply, and document this process

• ensure that they have sufficient evidence to support their conclusion that a reasonable business ground applies. For example, if an employer asserts that a flexible working arrangement would have a negative impact on customer service from 3-6pm, and an employee is required to be available at these times, the employer should be ready to provide data that shows that customer requests are higher for this time of day

• pay attention to the procedural requirements of responding to a request – act on a request immediately, as not responding in 21 days will entitle an employee to raise a dispute, and include all the matters outlined above in the employer response

• comply with the discussion requirements of the flexible working arrangement if refusing or proposing a different arrangement

Employers will need to assess requests carefully and on a case by case basis, as there is no “one size fits all” in determining the levels of flexibility required on the part of an employer:

• it is vital that an employee clearly requests the change and sets out the reasons for it by reference to their particular eligible circumstances in writing. Discussions regarding proposed changes to working arrangements are not enough to provide the Commission with power to arbitrate a dispute. That said, discussions may be enough to trigger another claim by the employee, including adverse action or discrimination.

• an employer needs to focus on their business reasons – not the options that may be available for an employee to ease the issue in their personal lives or because other employees seem to have the same demands and can cope. If the request is to work away from the office, a view that an employee’s knowledge and experience would be best utilised for training purposes in person, the need for support and low productivity can be reasonable business grounds to require attendance at the office in some circumstances. This is consistent with the reasoning in some post-pandemic unfair dismissal cases where there had been a failure to follow a direction to return to the workplace.

• while there is no express requirement that an employee provide evidence to their employer of their eligibility to make a request, if the refusal of the request is disputed, the Commission must have unambiguous evidence that an eligible circumstance applies (such as a medical diagnosis of an actual disability) to arbitrate a dispute. Employers should always inquire as to the nature of the condition and, if there is doubt, ask specifically for a medical opinion of diagnosis, where disability is the eligible circumstance relied upon.

Fixed Term Contracts: new restrictions and exceptions and how to comply with them

Changes

From 6 December 2023, significant restrictions on the use of both fixed and maximum term contracts will be put in place, with some (limited) exceptions. These changes will encompass anti-avoidance provisions as well as the introduction of civil penalties for non-compliance. In addition, employers will also be required to give employees a ‘Fixed Term Information Statement’, published by the Fair Work Ombudsman, when they are offered a new fixed term contract.

Any fixed term contract entered into, renewed or extended before 6 December 2023 is not subject to these changes – however, the length of the fixed term contract that predates 6 December 2023 may be relevant in determining the permitted length of any future fixed term arrangement.

Employers should seek specific advice if they propose to enter into, renew or extend an existing fixed term contract after 6 December 2023.

For clarity, while these changes will introduce restrictions on ‘fixed term’ contracts, the restrictions will apply equally to maximum term contracts. In this article, we refer to both fixed term and maximum term contracts as ‘fixed term contracts’.

These restrictions will likely not apply to most Victorian public entities due to the way Victoria referred its Industrial Relations powers to the Commonwealth and relevant caselaw. NSW State public sector and local government employees are generally also not covered by the Fair Work Act (other than for some registered agreements) and remain under the state system.

• Restrictions

  In summary, a fixed term contract will generally be prohibited in the following circumstances:

  • the contract is for greater than 2 years (including extensions and renewals); or
  • the contract is renewable either for a period greater than 2 years or can be renewed more than once; or
  • the contract is one of certain ‘consecutive contracts’ if the criteria are satisfied (for example, where the work performed across the contracts is the same or substantially similar, and there is substantial continuity of the employment relationship between the contracts and the total period of the contracts are for more than 2 years, the new fixed term contract can be renewed or extended, the previous fixed term contract was extended or this is the third contract).

  The new restrictions do not apply to casual employees.
  

• Exceptions

  The new limitations will not apply where the fixed term contract:

  • is for the performance of a distinct and identifiable task using specialised skills;
  • relates to a training agreement (for example, an apprenticeship or a traineeship);
  • involves an employee earning above the high-income threshold (currently $167,500 full-time) during the year the contract is entered into;
  • is for essential work during a peak demand period (for example, fruit picking or other seasonal work);
  • is for work during emergency circumstances (for example, during a summer bushfire or a medical emergency) or during a temporary absence of another employee (for example, a parental leave backfill or absence for long service leave or an absence related to workers’ compensation);
  • relates to the performance of work where the employer is reliant on government funding to, in whole or in part, finance the work the employee will perform, the funding is for a period greater than 2 years and there are no reasonable prospects the funding will be renewed;
  • relates to a governance position that has a time limit under the governing rules of a corporation or association; or
  • relates to an employee where a modern award that covers the employee permits the term.
• Anti-avoidance provisions

  Employers are prevented from making changes to the timing or terms of a fixed term contract in order to avoid the restrictions described above. For example, employers cannot:

  • terminate a person’s employment for a period and then re-engage the employee again for the same duties (to artificially break the continuity of their employment);
  • delay re-engaging an employee;
  • end one employee’s employment and then engage another employee to do the same or substantially similar work;
  • artificially change the work duties of an employee between 2 contracts (so that the employee could not be said to be performing the ‘same or similar work’ for the employer);
  • change the nature of the tasks the employee is required to perform; or
  • otherwise make a change to the employment relationship.
• Consequences for using an otherwise prohibited fixed term contract

  Parties who enter into a fixed term contract that is not permitted can still rely on that contract to inform the terms and conditions of their employment – however, the contract will not end at the expiry date. This will mean employees may have rights to unfair dismissal protections and notice and redundancy pay and will become permanent employees.

  Civil penalties apply for breaching the new restrictions, which means penalties of up to $93,900 for each contravention for a corporation. The penalty can be higher for serious contraventions.

Our recommendations

In light of the above, we recommend that employers:

• prepare a list of all staff members engaged on fixed or maximum term contracts, including the date the employee was initially engaged and make notes of any gaps in their overall engagement; and
• make substantive plans for how they intend to manage each employee’s employment beyond 6 December 2023. This may involve:
  • examining each individual contract to determine whether an exception applies;
  • converting employees to permanent (if necessary);
  • reviewing your fixed term contract templates to ensure they do not breach the new provisions or are no longer fit for purpose.

The range of exceptions is complex and untested, so legal advice should be sought before deciding if an exception applies.

Pay secrecy clauses: new provisions and how to comply with them

The Secure Jobs, Better Pay Act also introduced a raft of “pay secrecy” provisions, prohibiting pay secrecy clauses in employment contracts and enterprise agreements and thereby enabling employees to confirm, without consequence, whether they are being remunerated fairly and comparably with colleagues.

These changes arose as a result of increasing concern that pay secrecy clauses, preventing co-workers from discussing – and ultimately comparing their pay or salaries with one another – was contributing to pay disparity and pay gaps and were particularly being used to conceal gender pay discrepancies.

• The new provisions

  The new section 333B of the Fair Work Act now permits an employee to disclose, or not disclose, information about either their remuneration; or terms and conditions of their employment that are reasonably necessary to determine “remuneration outcomes”. Employees can also ask any other employee – whether a colleague or employed by a different employer – the same information. This begs the question: what terms are “reasonably necessary to determine a remuneration outcome”.

  We know for certain that the number of hours that an employee works is considered to be a term that is reasonably necessary to determine a remuneration outcome. This is provided as an example in a note to the new section, with the rationale being that two employees working in the same role could earn the same amount, however if they are working different hours – whether one is full time and the other is part time, or not – their remuneration would in fact not be fair and comparable. And so, a term which prevents an employee from disclosing the number of hours they work to a colleague, or anyone else for that matter, is now prohibited. Beyond this, we consider the following terms would also be captured by the “reasonably necessary to determine a remuneration outcome” phrase:

  • clauses regarding formulas used to calculate renumeration;
  • clauses describing financial benefits to which an employee is entitled (such as bonus schemes, company shares or equity plans, allowances and incentives);
  • clauses regarding superannuation contributions (subject to how they are drafted).

  The rights to disclose remuneration details, and ask others about their remuneration details, are now enshrined workplace rights. This means an employee cannot be treated adversely because they have asked about another employee’s remuneration details, or shared their remuneration details with another person. If they are the subject of adverse action because of this, an employer faces exposure under the civil penalty regime of the general protections jurisdiction.

• The critical dates

  Any pay secrecy terms in employment contracts or enterprise agreements entered into since 7 December 2022 have been of no effect. Any such terms that were in existence before 7 December 2022 don’t infringe the new provisions, however it is important to note that should there be any form of variation to an employment contract after 7 December 2022 – for example, as a consequence of a pay-review – that contract will now be captured and subject to the pay secrecy prohibitions.

  Critically, from 7 June 2023, it has been unlawful to include pay secrecy terms in new employment contracts or enterprise agreements. Rather than just be of no effect, any pay secrecy clause in a new agreement beyond that date could attract maximum penalties of up to $13,320 or $133,200 for serious contraventions. This makes it all the more important for employers to carefully review new employment contracts or enterprise agreements being entered into from 7 June this year to ensure they don’t fall foul of this provisions (and face hefty fines).

Our recommendations

As noted above, the primary thing employers should be doing is carefully reviewing their employment contracts (noting these provisions also apply to enterprise agreements).

• Do your contracts limit, in any way, the sharing of an employee’s salary or remuneration? If so, if the contract was entered into after 7 December 2022 (but before 7 June 2023), that provision will be of no effect. If the contract was entered into after 7 June 2023, civil penalties could be imposed.
• Carefully consider all the terms of your contracts. Does your definition of “confidential information” go too far in light of these changes? If so, you will need to limit the scope of the term.
• Have any pre-7 December 2022 contracts or letters of offer been varied since that date? If so, it is probable the new prohibitions now apply to those instruments, so be mindful to review those documents as well.

New bargaining streams: how to comply

The Secure Jobs, Better Pay Act also amended the enterprise agreement provisions in the Fair Work Act. The changes, which relate to multi-enterprise bargaining, came into effect on 6 June 2023 and created new bargaining streams.

• Single interest bargaining

  The single interest bargaining regime applies to two or more employers who have a clear common interest and their business operations and activities are reasonably comparable (this also applies to franchisees of the same franchisor and/or related bodies corporate of the same franchisor).

  Summary

  Single interest agreements can only be made where a single interest employer authorisation is in operation immediately before the agreement is made.

  Upon application from a bargaining representative or employer, the Fair Work Commission may make a single interest employer authorisation (in relation to common interest employers) covering employers with or without their consent if:

  • at least some of the employees that will be covered by the proposed agreement are represented by a union;
  • the employers have clearly identifiable common interests;
  • the employers and bargaining representatives of employees have had an opportunity to express their views to the Commission;
  • the employers' operations and business activities are reasonably comparable with those of the other employers; and
  • it is not contrary to the public interest for the authorisation to be granted.

  The Fair Work Commission must also be satisfied of additional matters before making a single interest employer authorisation depending on whether employees or the union make the application (and if unions make an application without the employer’s consent, the employer must not be covered by a current enterprise agreement, must have at least 20 employees covered by the agreement and a majority of employees must want to bargain).

• Supported bargaining

  This replaces the previous low-paid bargaining arrangements and is intended to assist where employers and employees find it difficult to bargain for a single enterprise agreement (often in low paid industries).

  Summary

  Supported bargaining agreements can only be made where a supported bargaining authorisation is in operation immediately before the agreement is made.

  Upon application from a union or employer, before making a supported bargaining authorisation that covers an employer (and in the absence of a Ministerial declaration), the Commission will take into account sector pay and conditions; whether employers have a clear common interest; whether the number of bargaining representatives is manageable and any other matters the Commission considers appropriate.

  Once a supported bargaining authorisation is made, the Commission has powers to assist parties during bargaining to agree on an enterprise agreement that meets their needs. Employers will also be subject to different rules in relation to bargaining (such as in relation to bargaining orders).

• Cooperative workplace agreements

  These agreements can apply where multiple employers agree to bargain together.

  Summary

  Employers can join with other employers to bargain for a cooperative workplace agreement. A cooperative workplace agreement will only be made if the Commission is satisfied that at least some employees are represented by a union during the bargaining process. The Commission can assist parties to negotiate agreements, exclude parties (in certain circumstances) and vary an existing cooperative workplace agreement to add employees and employers, where appropriate (this can only be achieved by the joint application of relevant employers and employees).

If you have any questions about how the Secure Jobs, Better Pay Act changes will affect your organisation in 2024 please feel free to reach out to a member of our employment law team.