Secure Jobs, Better Pay Bill – The devil is always in the detail

Security of Jobs

Objects of the Act

The Fair Work Legislation Amendment (Secure Jobs, Better Pay) Bill 2022 (Cth) (Secure Jobs Bill) proposes to update the objects of the Act to include the promotion of job security and gender equity.  The Fair Work Commission (Commission) will need to take these objects into account in its decision-making.

The Secure Jobs Bill also introduces corresponding amendments to modern awards and minimum wage objectives of the Act, which the Commission will also need to take into account when exercising relevant powers or functions.

Fixed term contracts

The amendments proposed by the Secure Jobs Bill will limit an employer’s ability to utilise fixed term contracts, subject to some limited exceptions. 

While it is recognised that fixed term contracts continue to serve a legitimate purpose, their ongoing use by some employers is seen as another form of “insecure work” and as exacerbating job insecurity for employees.  This is considered to be the case when they are used for the same role over an extended period, or where employees are subject to rolling contract renewals for jobs that would otherwise be ongoing.

The key changes proposed include:

• Prohibition on fixed term contracts in certain circumstances – a new civil penalty will be introduced for employers entering into a fixed term contract (or maximum term or outer limit contract) for a period of more than two years on and from the commencement date of the Secure Jobs Bill.
  The prohibition extends to contracts that could be extended or renewed for an aggregate period that exceeds two years, as well as consecutive contracts where the employee is required to perform the same, or substantially similar, work that they were performing under the previous contact.
  If a fixed term contract is entered into which contravenes this provision, the end date will be invalid but the remaining provisions of the contract will otherwise continue to apply.
• Fixed term contracts permitted in certain circumstances - the prohibition does not apply in certain circumstances, including:
  • government contracts – if employer is reliant on government funding (or other funding prescribed by the regulations) to fund the employee’s position where the funding is payable for a period of more than 2 years and there are no reasonable prospects that the funding will be renewed after that period;
  • type of work performed – if the employee is engaged to perform only a distinct and identifiable task involving specialised skills, or in relation to a training arrangement;
  • peak periods, emergencies, and temporary absences – if the employee is engaged to undertake work during a peak period (e.g. fruit picking), in emergency circumstances, or another employee’s temporary absence (e.g. parental leave);
  • high-income threshold – if the employee earns more than the high-income threshold (currently $162,000 for fixed remuneration and excluding mandatory superannuation) for the first year of the contract (or would have earned above the high-income threshold if the employee worked full time);
  • modern awards permitting fixed term contracts – if a modern awards permits the entering into of a fixed term contract;
  • casual employees – if the employee is a casual employee; and
  • governance positions – if the employee is employed in a governance position that has a time limit under the governing rules of the corporation.
• Onus of proof – where an employer is relying upon one of the above exceptions, the employer must be able to evidence that reliance.  One way for an employer to do this will be to include the exception that they rely on within the terms of the fixed term contract, and the basis on which they consider the exemption applies.
• Effect of entering prohibited fixed term contract – where an employer and employee enter into a prohibited fixed term contract, they can still rely on the terms and conditions in that contract and the term that ends the contract after a certain period will be considered to be invalid.
• Fixed Term Information Statement – employers will be required to provide a copy of this statement to all new employees engaged under a fixed term contract.  Civil penalties apply if they fail to do so.
• Anti-avoidance protections – anti avoidance protections will be included to prevent an employer from avoiding the application of the new protections. 
• Disputes – a mechanism will be introduced for dealing with disputes which includes the ability to refer to the matter to the Commission to resolve the dispute.

Flexible work

The Secure Jobs Bill proposes to expand the circumstances in which an employee may request a flexible working arrangement, to strengthen an employer’s obligations when considering an employee’s request and to introduce dispute resolution provisions.

The key changes proposed are:

• Family and domestic violence - an employee will be able to request changes to their working arrangements in circumstances where they, or a member of their immediate family or household, experience family or domestic violence, to align the coverage of family violence with the entitlement to family and domestic violence leave.  These amendments also seek to broaden the language used throughout the Act to ensure the definition of ‘family and domestic violence’ aligns with family and violence leave.  See our related KWM article here.
• Request refusals - the Secure Jobs Bill proposes changes to strengthen the current procedure for responding to an employee’s request for flexible working arrangements, to require an employer to discuss an employee’s request for flexible work arrangements and genuinely try to reach an agreement before notifying the employee of their decision within 21 days.
  If an employer refuses the employee’s request, it must provide detailed reasons for the refusal (including the ‘reasonable business grounds’ on which it relies).  The employer must also set out any other changes it is willing to make and which would accommodate the employee’s circumstances, inform the employee of any alternative working arrangements it is willing to make instead to accommodate the request, and provide information on the new dispute resolution procedures.
  ‘Reasonable business grounds’ will include that the new working arrangement will be too costly for the employer, there is no capacity or it would be impractical to change the working arrangements of other employees to accommodate the request, the changes will likely result in significant loss of efficiency or productivity, or the changes will likely have a significant negative impact on customer service.
• Dispute resolution procedures - if an employer refuses an employee’s request or does not respond to a request within 21 days, the new dispute resolution provisions will apply requiring both parties to try and resolve the dispute before referring the matter to the Commission.  The Commission will be given the power to deal with the dispute by way of arbitration and make various orders in respect of the request, including that the employer must grant the employee’s request or make changes to accommodate the request.

Wages and enterprise agreements

Termination of enterprise agreements after nominal expiry date

The Secure Jobs Bill proposes to replace the rules for terminating an enterprise agreement after its nominal expiry date has passed, including to stop the practice of employers applying to the Commission to unilaterally terminate an agreement where the termination would result in reducing employees’ entitlements (other than in particular circumstances).  Currently this can occur where the Commission is satisfied that termination of the agreement is not contrary to the public interest and where it has taken into account the views of the relevant parties.

The key proposed changes are:

• Grounds for termination - an expired agreement can only be terminated if its continued operation would be unfair, if the agreement will no longer cover any employees, or if the agreement would have an adverse effect on the viability of the employer’s business.
• Termination in the context of potential redundancy or insolvency / bankruptcy - in those circumstances the Commission must terminate the agreement if satisfied that its continued operation would pose a significant threat to the viability of the business, the termination would be likely to reduce the potential for termination of employees’ employment, and the employer covered by the agreement has given the Commission a “guarantee of termination entitlements”.  This guarantee will, in effect, preserve an employee’s redundancy entitlements under the agreement.
• Termination in the context of bargaining for a new agreement – in those circumstances the Commission must have regard to whether the application was made at or after the notification time for a proposed agreement that will cover the same or substantially the same group of employees, whether bargaining is occurring, and whether the termination would adversely affect the bargaining position of the employees that will be covered by the proposed agreement.  It is intended to prevent an agreement being terminated as an unfair bargaining tactic.

Sunsetting of "Zombie" agreements

The Secure Jobs Bill provides for the sunsetting of all remaining agreement based transitional instruments, State employment agreements and enterprise agreements made during the ‘bridging period’ for the Act between 1 July 2009 and 31 December 2009 (commonly referred to as “zombie agreements”).

The Zombie Agreements will expire 12 months after the Secure Jobs Bills commences and employees who are covered by a Zombie Agreement must be notified in writing that the agreement will be terminated at least 6 months prior to its expiry.

The sunset period for Zombie Agreements may be increased up to 4 years on application, but only where the Commission is satisfied it is reasonable in the circumstances.

Enterprise agreement approval

The Secure Jobs Bill aims to simplify the requirements for approval of an enterprise agreement by removing some of the steps that an employer must currently take within strict timeframes, while maintaining necessary employee safeguards.  This is seen as a shift away from a rigid rules-based approach to bargaining, to a more suitable, principles-based approach.

For example, this objective is intended to be achieved, at least in part, by removing the requirement to provide employees with access to the enterprise agreement during a 7 day ‘access’ period ending immediately before voting commences and, in some circumstances, by removing the requirement to wait 21 days after the issue of a notice of employee representative rights to vote on the agreement.

In order to be satisfied that an enterprise agreement has been genuinely agreed to, the Secure Jobs Bill requires the Commission to be satisfied that:

• the employees are sufficiently representative of the agreement, having regard to the employees the agreement is expressed to cover; and
• the employees have a sufficient interest in the agreement.

A small cohort of employees will not be considered sufficiently representative where the agreement is intended to ultimately cover a much wider workforce, including following transfers of employment within a corporate group.

Finally, the Bill requires the Commission to publish a statement of principles that sets out clear guidance for employers on the requirements for an enterprise agreement to be genuinely agreed, and the Commission will be required to take into consideration that guidance when determining whether an agreement has been genuinely agreed.

Initiating bargaining

The Secure Jobs Bill aims to simplify the process of initiating bargaining of a single-enterprise agreement.  In particular, where the following conditions are met:

• the proposed agreement will replace an earlier agreement that has passed its nominal expiry date;
• the nominal expiry date of the earlier agreement was within the last 5 years;
• the making of that agreement did not cause a single interest employer authorisation to cease to operate; and
• the same, or substantially the same, group of employees will be covered by the proposed agreement as was covered by the earlier agreement,

an employee, via a bargaining representative, could initiate bargaining for an agreement simply by making a written request to the employer. 

Better off overall test

The Secure Jobs Bill proposes to introduce a number of amendments to the Better Off Overall Test (BOOT) to remove any unnecessary complexity and ensure the assessment is simple, flexible and fair.

The key proposed changes are:

• the Commission is empowered to give primary consideration to the views of specified persons (including employee representatives) when making an assessment of whether the agreement will pass the BOOT;
• the Commission’s assessment of the BOOT is to be conducted on a holistic and “global” basis, rather than a line by line assessment (in line with existing case law);
• the Commission is to only have regard to work patterns and employment types that are reasonably foreseeable in the future when making its assessment, and to that end, there will be no requirement to consider hypothetical scenarios that are not reasonably foreseeable;
• the Commission will have the power to amend or remove a term in an agreement that does not meet the BOOT – this is designed to limit the use of undertakings which can make it harder to interpret an agreement, lead to future legal disputes if poorly drafted, and can cause delays in agreements commencing; and
• the Bill enables the BOOT to be reassessed where a material change in the agreement arises.  This is a principal safeguarding feature of the amendments, and means that specified persons can apply to have the Commission reassess whether their agreement passes the BOOT in some circumstances.

Notably, any amendments made to the BOOT will not operate retrospectively.

Dealing with errors in enterprise agreements

The changes proposed in the Secure Jobs Bill are designed to simplify the process for correcting any obvious errors, defects or irregularities in enterprise agreements and providing a simple remedy to address versions of an agreement that were incorrect.  In particular, the Secure Jobs Bill will enable the Commission the discretion to amend an agreement on its own initiative (without any application or approval process) to correct any obvious errors such as typographical errors or obvious omissions, in addition to simply being as a result of an application by a party.

Bargaining disputes

The amendments proposed in the Secure Jobs Bill repeal the existing, underutilised provisions for “serious breach declarations” and “bargaining-related workplace determinations” and replace them with a new regime comprising an “intractable bargaining declaration” and “intractable bargaining workplace determination”.  These changes are designed to re-establish a mechanism for industrial dispute resolution by the Commission where parties have bargained for an extended period and exhausted all reasonable avenues to reach agreement.

An intractable bargaining declaration can be made at the discretion of the Commission, but only in circumstances where:

• steps are taken to deal with the dispute under existing section 240 of the Act, which provides for bargaining representatives to seek the assistance of the Commission in circumstances of disagreement; and
• there is no reasonable prospect of agreement being reached if the Commission does not make the declaration.

Such a declaration cannot be made in relation to a proposed multi-enterprise agreement, unless a supported bargaining authorisation is in place.  A declaration can also not be made in respect of a greenfields agreements.  Under the proposed changes, a declaration can be followed by a post-declaration negotiation period (at the Commission’s discretion), and a subsequent determination on any matters which cannot be agreed by the parties. 

Supported bargaining

The Secure Jobs Bill introduces a regime of “supported bargaining”, which will permit bargaining across multiple employers and, in doing so, afford protections to employees (and employers) in low paid industries (such as aged care, disability care, and early childhood education) and those who may face barriers to bargaining.

These provisions will operate so that a “supported bargaining authorisation”:

• will require an application to the Commission by a bargaining representative or an industrial organisation entitled to represent the industrial interests of an employee (unless excluded by a Commission order);
• will occur preceding the approval of any such agreement and cannot specify an employee who is covered by a single-enterprise agreement which has not passed its nominal expiry date;
• must be made if the Commission is satisfied that it is appropriate for the employers and employees to bargain together, having regard to matters such as prevailing pay and conditions within the industry or sector (e.g. if low rates of pay prevail), whether the employers have clearly identifiable common interests, and whether the likely number of bargaining representatives would be consistent with a manageable collective bargaining process; and
• if made, requires that any specified employer must not initiate bargaining, agree to bargain or be required to bargain for any other kind of agreement with their employees who are specified in the authorisation (unless an application is made to the Commission to remove the authorisation).

A supported bargaining agreement can be varied to add further employers or employees on application to the Commission, with or without consent.  In the absence of employer consent, the Commission must vary the authorisation if:

• a majority of employees want to be covered by the agreement (with the method for reaching this conclusion left open to the Commission); and
• it is appropriate for the employees to be covered by the agreement (having regard to the views of each employee organisation covered and employer who would be covered).

Single interest employer authorisations

This proposed change under the Secure Jobs Bill will permit multiple employers to bargain together for a “single interest employer authorisation” in wider circumstances than currently allowed under the Act and create a regime for variation of single interest employer agreements to include additional employers (and employees of those employers).

In the Secure Jobs Bill, a “single interest employer authorisation”:

• will require an application to the Commission by employer(s) who would be covered or a bargaining representative of an employee (unless excluded by a Commission order); and
• must be made in circumstances where existing single interest employer authorisations are made, that is, if there is agreement by employers to bargain together or the employers carry on similar business activities under the same franchise.

A “single interest employer authorisation” must also be made in circumstances where:

• there is employer consent to the application, or a majority of employees who are employed by the employer(s) and who will be covered want to bargain;
• the employers have clearly identifiable interests;
• the group of employees to be covered by the agreement was fairly chosen (having regard to whether the group is geographically, operationally or organisationally distinct);
• at least some of the employees that will be covered by the agreement are represented by an employee organisation;
• the employers and bargaining representatives of employees of those employers have had an opportunity to express to the Commission their views on the authorisation; and
• it is not contrary to public interest to do so (e.g. broader economic ramifications).

An application cannot be made where the employer is a “small business employer” (except by consent) or is covered by an enterprise agreement which has not passed its nominal expiry date.

There are also proposed additional provisions relating to:

• the variation of single interest employer authorisations to remove an employer, which requires a change in the employer’s circumstances;
• variation of single interest employer authorisations to add a new employer (either by the employer or by a bargaining representative), which requires, broadly, that the conditions for the original authorisation remain satisfied on inclusion of the new employer; and
• the timing for single interest employer authorisations, which cease to have effect when an agreement is approved.

The Secure Jobs Bill also includes provisions for the variation of existing single interest employer agreements to include further employers and employees of those employers (either by an employee organisation, or together with a prospective employer).  Along with a number of procedural requirements, the proposed regime mirrors the authorisation provisions.

The Commission is permitted to exclude a person from a single interest employer agreement or supported bargaining agreement by its own initiative or on application by a bargaining representative, employer or employee organisation.  The Commission is also required to do so where there has been some past non-compliance.

Varying enterprise agreements to remove employers and their employees

The Secure Jobs Bill will empower an employer and affected employees to jointly make a variation to a single interest employer agreement or multi-enterprise agreement (as the case may be), so they cease to be covered. The variation will take effect if approved by the Commission.

Cooperative workplaces

The Secure Jobs Bill proposes to amend existing provisions relating to making multi-enterprise agreements, to be known as “cooperative workplace agreements”.  These agreements will replace the process of bargaining for and making multi-enterprise agreements where a supported bargaining authorisation is not in operation.

The proposed framework for cooperative workplace agreements will have some differences to the existing multi-enterprise provisions, allowing the Commission to exclude persons for the purposes of an enterprise agreement (in certain circumstances) and vary an existing cooperative workplace agreement to add employers and employees where necessary.

Industrial action

The proposed changes under the Secure Jobs Bill in this area are designed to accompany the changes around multi-employer enterprise agreements.  The key changes are around timeframes for industrial action and are designed to avoid disruptions to business and provide an opportunity to arrange contingencies:

• for all enterprise agreements where protected action ballot order can be made, it is proposed that protected action will be able to be taken 3 months after ballot results (not the current 30 days); and
• 120 hours (5 days) notice will be required to be given for protected action in relation to single interest employer agreements or supported bargaining agreements.

The Secure Jobs Bill provides that the protected action cannot relate to a cooperative workplace agreement, which is a multi-enterprise agreement other than a supported bargaining agreement. 

There are additional procedural changes of note which require the Commission to direct parties to attend conferences prior to the closure of voting on a protected action ballot in order to de-escalate disputes.  In addition, changes are proposed to the appointment and processes undertaken by a “protected action ballot agent”, including the pre-approval of a person or entity other than the Australian Electoral Commission.

Gender pay gap

Equal remuneration

The Secure Jobs Bill introduces new powers, requirements and guidance for the Commission in considering equal remuneration and work value cases.  As part of the proposed changes, the Commission will be able to make equal remuneration orders on its own initiative, rather than simply on application.  This change is designed to give the Commission more flexibility to order pay increases in relevant industries, for example by responding to pay equity findings reached in existing matters.

The Secure Jobs Bill will also clarify that the Commission must not consider gender-based assumptions in assessing work value, but it will be required to consider whether the relevant work has historically been undervalued because of such assumptions.  The Secure Jobs Bill also introduces gender equity considerations that the Commission may take into account when assessing equal remuneration matters, and removes the ‘male comparator’ evidence threshold for the Commission to grant an equal remuneration order.

Expert panels

The Secure Jobs Bill proposes that the Commission introduce new expert panels on Pay Equity and the Care and Community Sector, to ensure the Commission has the appropriate expertise to better assess pay and conditions for relevant workers.  These panels will exercise functions including making determinations, orders and awards relating to pay equity and the Care and Community Sector respectively.  

Prohibiting pay secrecy

Under the Secure Jobs Bill employers will be banned from including pay secrecy clauses in new employment contracts, and pay secrecy clauses in existing contracts will be unenforceable. These changes are intended to encourage pay transparency – allowing employees to assess whether their pay is fair and comparable – and address gender pay discrimination.

The key proposed changes are:

• Employees not subject to pay secrecy - employers will not be able to stop employees disclosing their pay details to others.  Employees will have express workplace rights to ask others about and discuss their own pay-related terms, with a corresponding right not to share that information if they choose not to.
• Pay secrecy terms to have no effect – the terms of an employment contract that provide for pay secrecy will have no effect.  Employers will be prohibited from including pay secrecy clauses in new employment contracts.
• Penalties for including pay secrecy clauses in new contracts - an employee, prospective employee, industrial organisation or an inspector can bring an action against an employer for entering into a contract or agreement with an employee which contains prohibited pay secrecy terms.  The maximum civil penalty is $66,600 for a corporation (or $666,000 for a serious contravention by a corporation) as at October 2022.

Prohibiting sexual harassment in connection with work

The Secure Jobs Bill proposes to introduce a number of changes to strengthen the existing regulatory and legal framework in respect of sexual harassment and sex discrimination, including the prohibition on sexual harassment and the introduction of three additional sex-based protected attributes into the Act’s anti-discrimination provisions.

They key changes proposed are:

• Prohibiting sexual harassment in connection with work - a new part will be introduced into the Act which contains a prohibition on sexual harassment in connection with work in the Act, supported by a dispute resolution framework modelled on the framework which applies in cases of general protection claims.
  The prohibition will apply to not only existing “workers” (as that term is used in the model work health and safety legislation) but also prospective workers, and also include sexual harassment by third parties (such as customers).

• Application for the Commission to deal with a sexual harassment dispute – this mechanism is modelled on the general protections provisions and will allow for the making of an application to the Commission to deal with a sexual harassment dispute.  Applications could be made by a person who alleges they have been sexually harassed or by an industrial association entitled to represent the industrial interests of an aggrieved person.
  In making the application, an aggrieved person or industrial association could apply for the Commission to make a stop sexual harassment order and/or otherwise deal with the dispute.  A stop sexual harassment order is intended to prevent any future harassment, while an application for the Commission to otherwise deal with the dispute is intended to remedy past harm caused by sexual harassment.

• Stop sexual harassment orders - the existing stop sexual harassment order provisions will be repealed and replaced with the introduction of this new “combined” stop sexual harassment jurisdiction.

Anti-discrimination and special measures

The Secure Jobs Bill proposes the introduction of three further protected attributes - breastfeeding, gender identity and intersex status - into the anti-discrimination provisions in the Act to bring the Act into alignment with Federal anti-discrimination legislation.

The key proposed changes are:

• Enterprise agreements - amendments to confirm that ‘special measures to achieve equality’ are matters pertaining to the employment relationship and therefore matters about which an enterprise agreement may be made.  These amendments will also clarify that ‘special measures to achieve equality’ are not discriminatory terms and therefore not unlawful terms in an enterprise agreement.
• Non-discriminatory enterprise agreement term – clarification that a term of an enterprise agreement does not discriminate against an employee if the term is a special measure to achieve equality, to the extent that action that may be taken because of the term is not unlawful under any operative anti-discrimination law in force where the action may occur.

Regulatory changes

Abolition of the Registered Organisations Commission and additional enforcement options

The Secure Jobs Bill proposes to abolish the Registered Organisation Commission (ROC) and the role of the Registered Organisations Commissioner.  The ROC was established in 2017 to regulate and educate registered organisations in Australia.  

Under the Secure Jobs Bill, the functions of the ROC will be taken over by the General Manager of the Commission, with the General Manager’s broad functions intended to “promote efficient management, high standards of accountability and to promote compliance with financial reporting and accountability requirements of the [Fair Work (Registered Organisations) Act 2009 (Cth)]”.  The role of the General Manager will also be to “… embed within organisations a culture of good governance and voluntary compliance with the law”.

The Secure Jobs Bill also creates additional registered organisations enforcement options; setting out the standardised provisions relating to an infringement notices and enforceable undertakings scheme that are available to comparable Federal regulators.

Abolition of the Australian Building and Construction Commission

The Secure Jobs Bill proposes to abolish the Australian Building and Construction Commission (ABCC) and significantly repeals and replaces the main object of the Building and Construction Industry (Improving Productivity) Act 2016 (Cth) (BCIIP Act) with a new object to “… promote work health and safety in relation to building work undertaken by a constitutional corporation, the Commonwealth or a corporate Commonwealth entity”.  This new object largely reflects the purpose of the Federal Safety Commission’s functions and powers.  Current ABCC matters will be taken over by the Fair Work Ombudsman.

These proposed changes will also see the repeal of Chapters 3, 5, and 6 of the BCIIP Act (which concern the issuing of a Building Code by the Minister, prohibitions on picketing and certain industrial action, and  coercion, discrimination and unenforceable agreements in respect of building work)  These changes are designed to have the effect of ensuring building industry participants have the same rights as participants in other industries in relation to enforcement of the Act.

Enhancing small claims processes

The current small claims procedure provides specified courts, being the Federal Circuit and Family Court and state and territory magistrates’ courts (or their equivalent), with the flexibility to dispose of small claims under the Act simply, quickly and cheaply.  The current threshold for these claims was set with the introduction of the Act but has not since changed.

Prohibiting employment advertisements with pay rate that would contravene the Act

The Secure Jobs Bill proposes to introduce the following two new offences into the Act:

• it will be an offence to advertise employment that provides for pay below the minimum wage required under the Act or a fair work instrument (such as a modern award or enterprise agreement); and
• if a periodic rate of pay applies to piecework (that is, where an employee is paid by the piece produced) then the employment advertisement must specify the periodic rate of pay.

A civil penalty applies to both provisions.

What is next?

The Federal Government has made it clear that we will see workplace relations reform beyond what is contained in the Secure Jobs Bill.  In his speech introducing the Secure Jobs Bill to the parliament, Mr Burke also said:

“This Bill is just the start of this Government's reform of the workplace relations system.  There will be more reforms next year dealing with a fair definition of casuals, preventing wage theft, protecting workers who are "employee-like", and embedding the principle that if you work in the same job as the person next to you, you should get the same pay.”

The KWM team will provide further updates as the Secure Jobs Bill progresses through parliament and other changes are introduced by the Federal Government.