The Labor Government’s Fair Work Legislation Amendment (Secure Jobs, Better Pay) Bill was passed in Federal Parliament at the end of 2022. It introduced a long list of updated industrial relations laws with the goal of increasing wages, supporting job security and reducing Australia’s gender pay gap.

The changes sit across a number of different areas and will have varying levels of impact on small businesses. If you’re an employer, you may be wondering which reforms will apply to you and whether or not you need to make changes to policies or standard practices.

To give a brief overview, the most notable changes include:

• limiting the use of fixed-term employment contracts
• expanding rights around flexible working arrangements
• banning pay secrecy clauses
• updating workplace harassment and discrimination rules
• terminating WorkChoices “zombie” agreements
• encouraging bargaining for single-enterprise agreements by making it easier to bargain and simplifying approval requirements
• changes to multi-employer bargaining.

Below is some more information about each area of industrial relations reform, plus the potential action you will need to take:.

Fixed-term contracts

Businesses will no longer be able to roll over fixed-term contracts indefinitely. At most, the changes will allow a maximum of two consecutive contracts or a single contract that spans two years — whichever is shorter.

The limitations on fixed-term contracts are aimed at providing job security for more Australians.

Do you need to take action?

If your business has non-permanent workers who roll from contract to contract, or if you create contract agreements that last for more than two years, you may need to sit down with your hiring team to figure out a different approach. You have some time up your sleeve; changes will not apply until December 7th, 2023.

Flexible working arrangements

Under the changes to the Fair Work Act, employees will be able to seek formal arbitration with the Fair Work Commission if their employer refuses to negotiate a flexible working arrangement.

Going forward, businesses will have to provide a ‘reasonable’ answer as to why they may refuse a flexible work option. As reported by the ABC, the changes give the Fair Work Commission the ability to hear and arbitrate disputes about whether an employer’s reason for refusal is valid.

Do you need to take action?

This update may require a change to your policies and responses when it comes to requests for flexible work. Work with your HR and/or legal team to understand what counts as ‘reasonable’ when it comes to rejecting a request for fair work. You might also decide to look for circumstances under which someone may be able to work from home or complete tasks outside of the company’s standard business hours, plus review the impact such a change would have on your business in terms of revenue and productivity.

Pay secrecy clauses

In the past, employers have been able to ask their team not to discuss their pay. The Secure Jobs, Better Pay bill changes this.

Employees now have the right to discuss their pay and the terms of their employment if they choose to, and/or to ask their colleagues about how much they are paid. This is the case even if there is an existing clause in their contract.

It’s worth noting that employees aren’t obliged to disclose pay information to their colleagues if they are asked.

Do you need to take action?

Have a look at existing contracts and update them to have secrecy clauses removed. If you have people on your team who perform similar roles and have similar skill sets/qualifications but who do not have equal pay, you may face questions. Be prepared to answer them and address people’s concerns.

Respect@Work: Sexual harassment and discrimination

This area of industrial relations reform places a positive duty on employers to take reasonable and proportionate measures to eliminate sex discrimination, sexual harassment and victimisation. It also strengthens the Australian Human Rights Commission, giving it new functions to assess and enforce compliance with this new requirement, including the capacity to issue compliance notices to employers who are not meeting their obligations.

Conduct that results in a hostile workplace environment on the basis of sex is now expressly prohibited (believe it or not, wording about this issue was not specific in the past). There have also been changes to reduce discrimination regarding breastfeeding, intersex status and gender identity.

Do you need to take action?

If you haven’t already done so, now is the time to review and update sexual harassment policies, procedures, guidelines and controls. As an employer, it is important to ensure your policies contain appropriate prevention and response strategies and that they are enforced. You may need to host training sessions for your staff so they understand the behaviour that is expected of them.

Terminating “zombie agreements”

The term ‘zombie’ agreements refers to enterprise agreements that have passed their nominal expiry date but remain preserved in law. These agreements may mean people are paid less than the current award or that they are working under outdated conditions. As part of this round of industrial relations reforms, the Amending Act automatically terminates agreement-related instruments made before the commencement of the FW Act and during the bridging period (1 July-31 December 2009).

Do you need to take action?

Zombie agreements will automatically terminate in early December 2023, unless that period is extended following an application to the Fair Work Commission. If you have people working under old agreements, you can either consider seeking an extension or prepare to negotiate a new agreement. This may mean your budget for wages needs adjusting, so loop in your accounting team to make a plan.

Single enterprise agreements

What’s known as a single interest employee will be able to initiate the bargaining process for an Enterprise Agreement by making a request to their employer in writing. In addition to this, the Fair Work Commission will have greater power to arbitrate bargaining disputes.

Do you need to take action?

You may have employees coming to you to negotiate their agreement. Work with your HR, legal and accounting teams to ensure you’re prepared.

Multi-employer bargaining

Multi-employer bargaining updates will make it easier for unions to negotiate pay deals to cover multiple similar businesses. Nursing, childcare and aged care are examples of industries that may be affected, although employers with fewer than 20 employees will be exempt.

Do you need to take action?

Multi-employer bargaining reforms may prompt your business to initiate new enterprise agreements directly with employees during the first half of this year. Doing so will save you from being subject to unpredictable multi-employer deals when the reforms become active towards the second half of 2023.

Will Secure Jobs, Better Pay affect your workplace?

Some small businesses will find these industrial relations reforms do not have a large impact other than needing to update harassment policies and reissue employee contracts that have pay secrecy clauses. Others may find there is quite a lot of work to be done.

AFS & Associates are your partners in providing peace of mind. Get in touch if you would like advice about how your business can adapt and remain compliant.