Legal Insights

What's next for the Fair Work Act?

By Ross Jackson, Lindy Richardson

• 02 March 2023 • 9 min read
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It is now over a decade since the Fair Work Act 2009 (FW Act) came into operation.

Over that period, we have seen the rise of general protection claims accompanied by the decline of enterprise bargaining – and, famously, the stagnation of wages growth.

The Albanese Government came to power on a platform that included ‘getting wages moving’.

But what levers does the government actually have to achieve such an objective? And what does it mean for councils?

The Fair Work Legislation Amendment (Secure Jobs, Better Pay) Bill 2022 was passed through the Parliament on December 2 2022. After a rushed but intense debate, we can now see exactly how the law will change in 2023, though many of the intended and unintended implications of the legislation are yet to play out.

There are many topics covered in the over 200 pages of the amending legislation. Councils need to be aware of the main themes of the amendments and how these changes, which are the most fundamental in over ten years, will affect their employment and industrial relations issues.

Prohibiting pay secrecy to address the gender pay gap

The legislation inserts provisions into the FW Act that will prohibit pay secrecy to help address the gender pay gap. These are designed to bring the gender pay gap into the open, thus making it more likely that the gap will be shamed out of existence.

Councils that utilise executive contracts requiring employees to keep the contents of their contracts confidential and would see these provisions overridden by the requirements of the FW Act. This would mean employees may disclose, or not disclose, their renumeration and any terms and conditions of their employment that are reasonably necessary to determine remuneration outcomes.

Importantly, employees would also have a workplace right to ask other employees about their remuneration, terms and conditions.

Interestingly, these workplace rights are not expressly related to gender equity, meaning there is no need for that to be the purpose of someone’s inquiry. Employees will therefore be able to exercise their workplace right to request other employees to disclose their remuneration for some unrelated, perhaps industrial, purpose.

Employers will be liable for a civil penalty if it enters into a contract of employment that includes a term inconsistent with these rights.

Workers exercising such a right may place undue pressure on their colleagues, so it would be useful if the legislation expands on how the right to not disclose interacts with the right to request another employee’s remuneration.

New provisions will also be included prohibiting sexual harassment in connection with work. A possible unintended consequence of these reforms will be individual complainants are faced with an even greater array of potentially confusing options when it comes to enforcing rights against sexual harassment. Apart from the alternative federal avenues of the Fair Work Commission, the Australian Human Rights Commission, and the Federal Courts, Victorian council employees can of course bring a complaint through the Victorian Equal Opportunity and Human Rights Commission and/or VCAT.

Implications for council

Having up-to-date policies, training, and a proactive risk assessment in respect of sexual harassment in the workplace will be a must have for every council.

It is important to note that Victorian councils already have a positive duty to eliminate sexual harassment under the Victorian Equal Opportunity Act 2010. Much of the debate around the desirability (or otherwise) of placing a positive duty on employers ignores the fact that this has already been in place across the State for some years.

Restrictions for fixed or maximum term employment contracts

Another area of importance for local governments will be the new restrictions proposed for fixed or maximum term employment contracts.

While there are many exemptions (including for executives who would previously have been employed as ‘senior officers’ earning above the ‘high income threshold’ in the FW Act), there is still the potential for impact upon councils using fixed or maximum term contract employment at lower remuneration levels within their organisations.

The basic requirement for fixed or maximum term contracts is that they must not run for a period greater than two years. However, there continues to be some debate over whether the two-year period is too short. With some exclusions already in place for councils, it will be important to see how this plays out in practice.

Currently, there are exemptions in respect of government funded positions which provide for funding over a period of more than two years, and there are ‘no reasonable prospects' that the funding will be renewed after the end of that period. It is fair to say that councils could be left in the dark with respect to funding, making it difficult to determine whether there are or are not reasonable prospects that funding would be renewed after the end of the initial period.

Many councils utilise temporary employment for backfilling parental leave positions. This will still be permissible since one exception is where an employee is engaged ‘during a temporary absence of another employee’, which usually does not run for more than two years in any event.

There is also a more general exception regarding employees engaged to ‘perform only a distinct and identifiable task involving specialised skills’.

Perhaps the most contentious element of the reform package is providing for multi-enterprise bargaining.

Multi-enterprise bargaining

Prior to the election, Labor said it would strengthen the capacity of workers in low-paid industries such as childcare, cleaning, and the like to bargain across multiple businesses and employers.

What was not so apparent was that the concept of multi-enterprise bargaining would spread to all those employers who could be considered by the Fair Work Commission to have a ‘common interest’.

Importantly for local government, matters which may be relevant to determining whether employers have a common interest include geographical locations, regulatory regimes, the nature of the enterprises to which the agreement relates, and the terms and conditions of employment in those enterprises.

Given it is unclear just how far such a concept could extend, it is possible to conceive of a scenario in which Victorian local governments are found to have a common interest due to their geographical location within Victoria. Their common regulatory regime under the Local Government Act 2020 may also be recognised, as is their common nature as local governments, enjoying terms and conditions established by a common award applicable to all of them.

Much of the debate to date has been around the concept that the amendments would result in a union being able to apply to the Fair Work Commission for something agreed to by others and to apply to another employer and its workers. In a sense, being ‘roped in’ to someone else’s bargain is not bargaining engaged in which that employer is engaged at all. Nor is it an ‘agreement’ to which they have agreed.

It may well be that the existing universal usage of single enterprise agreements within local government in Victoria will provide an effective bulwark to multi-enterprise ‘one size fits all’ terms and conditions across the sector.

However, it can readily be said that the features and capacity to pay by a small rural council are vastly different to those enjoyed by a major Melbourne metropolitan council. This may well be enough to resist any suggestion that, for example, Boroondara and Buloke Council are ‘common interest’ employers. Moreover, the late amendment requiring the employers’ operations to be ‘reasonably comparable’ may, especially when coupled with the ‘public interest’ requirement, further lessen the likelihood of a multi-enterprise bargaining landscape across Victorian councils.

At this stage, the outcome of how these tests will be applied in any given context is simply unknown.

Requesting flexible work arrangements

Finally, the right to request flexible work arrangements in certain circumstances under Section 65 of the Fair Work Act will be converted into an enforceable right that can be determined by the Fair Work Commission.

A number of councils will already have provisions in their enterprise agreements permitting an aggrieved employee to raise a dispute about anything arising under the national employment standards, of which a right to request flexible work is an example.

For those councils, nothing much will change, as employees already have the ability to challenge their employer’s decision to reject a request on ‘reasonable business grounds’- as that council has agreed to give that employee the right to do so through the enterprise agreement.

Councils should always carefully examine each and every request on its merits against the impact upon the area of the organisation’s operations that is affected. The reality is that very few jobs cannot be performed either part-time or on a job share basis. Furthermore, in a tight labour market, most councils are keen to attract and retain people who wish to work flexibly.

There are many other provisions dealing with matters such as simplifying the better off overall test, procedural steps prior to bargaining and prior to protected industrial action, and getting rid of ‘zombie’ agreements dating from the Work Choices from 2005.

Wider considerations

This legislative package has the potential, if not already the reality, to be the most far-reaching reforms since the 2009 passage of the Fair Work Act. For Victoria’s councils, it will be one to watch and prepare for what is shaping up as another busy year, with a second tranche of amendments to the Fair Work Act - expected to further regulate labour hire, amongst other things - also expected.

If you have any employment law questions, contact our Partners Ross Jackson or Lindy Richardson, from our Employment, Safety and People Team.

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