Proposed amendments to the Fair Work Act - what public sector employers need to know

Published:: Thursday 3 November 2022 at 1:45 pm

On Thursday 27 October 2022, the Federal Government introduced the Fair Work Legislation Amendment (Secure Jobs, Better Pay) Bill 2022 into the House of Representatives (Bill). The Bill, if passed in its current form, represents some of the most significant reforms to the Fair Work Act 2009 (Cth) (Fair Work Act) in recent times.

We highlight some of the key changes relevant to Victorian public sector employers proposed in the Bill in its current form.

Reducing the gender pay gap

Reducing the gender pay gap has been at the forefront of the Federal Government's agenda for employment and industrial relations reform. This closely aligns with the Victorian Gender Equality Act 2020 and is reflected by the following amendments proposed in the Bill:

Including gender equity as an overarching object of the Fair Work Act;
Inserting an equal remuneration principle in the modern award and minimum wages objectives that seeks to eliminate gender-based undervaluation of work and providing conditions that facilitate women's full economic participation;[1]
Establishing a Pay Equity Expert Panel and a Care and Community Sector Expert Panel in the Fair Work Commission (FWC);
Prohibiting pay secrecy clauses in employment contracts.

Prohibiting Sexual Harassment

The Bill seeks to insert a new Part 3-5A into the Fair Work Act which prohibits sexual harassment in connection with work.

The proposed Part 3-5A makes it unlawful for a person to sexually harass a worker. An employer will be vicariously liable for the act of an employee or contractor unless it 'took all reasonable steps to prevent the employee or agent from doing acts' that constitute sexual harassment.[2] The provisions prohibiting sexual harassment will be civil remedy provisions.[3]

A sexually harassed worker will have the option of either seeking a stop sexual harassment order or compensation under the Fair Work Act and the Bill significantly expands the FWC's current ability to make orders to stop sexual harassment orders. Enforcement of the sexual harassment prohibitions must first be dealt with by the FWC by way of mediation or conciliation, before having the option of either arbitration by the FWC or an application to the Federal Court or the Federal Circuit and Family Court of Australia.

Flexible work arrangements

The Bill introduces two new changes to the current provisions regarding requests for flexible work arrangements. Relevantly, they are:

Employers can only refuse a request, despite having reasonable business grounds, if they have discussed the request with the employee and 'genuinely tried to reach an agreement with the employee' to accommodate their circumstances.[4]
A new section 65B of the Fair Work Act will allow an employee who is aggrieved by the refusal to take the dispute to the FWC for arbitration.[5]

Industrial relations

The Bill also proposes significant amendments in the area of industrial relations, including:

Initiating bargaining - removing the requirement for employee bargaining representatives to obtain a majority support determination to initiate bargaining if the bargaining is seeking to replace an earlier agreement that had passed its nominal expiry date.
Clarifying the operation of the Better Off Overall Test - the test will apply as a global assessment rather than a line-by-line comparison, and the FWC will have the power to directly amend or excise a term in the proposed agreement that does not meet the test without requiring undertakings or the parties' consent.
Removing barriers to the Single Interest Bargaining stream - this include removing certain limitations on eligibility to bargain for single interest enterprise agreements for employers with identifiable common interests.
Simplifying enterprise agreement approval requirements - replacing the majority of the pre-approval requirements for enterprise agreements with a single, broad requirement that the FWC must be satisfied that the agreement has been genuinely agreed to.

Fixed term contracts

Under the Bill, fixed term contracts for two or more years (including renewals) will be prohibited unless an exception applies.[6]

Some of the relevant exceptions include where:[7]

The employee is engaged to perform a distinct and identifiable task involving specialised skills;
The employee is engaged to undertake essential work during a peak demand period;
The employee is engaged to undertake work during emergency circumstances or during the temporary absence of another employee;
The employee's earnings under the contract are above the high income threshold;
The contract relates to a position for the performance of work that is funded (in whole or in part) by government funding for a period of more than 2 years; or
The contract is permitted by a modern award.

If an employer wishes to rely on one of the exceptions, they will bear the burden of proving the exception.[8]

Other reforms

Finally, it should be noted that the Bill will abolish the Australian Building and Construction Commission and the Registered Organisations Commission (ROC). The powers and functions of the ROC will be transferred to the FWC, while its regulatory function will be transferred to the General Manager of the FWC.

How do these proposed changes affect Victorian public sector employers?

If the Bill is passed in its current form, public sector employers will only be allowed to refuse a request for flexible work arrangements on reasonable business grounds, if they can demonstrate that they have consulted with the employee and genuinely tried to reach agreement with them. Any decision to refuse such a request will be able to be challenged in the FWC.

Where sexual harassment reform has occurred in the workplace, employers may be subject to civil penalties in addition to any compensation payable to victims, a feature that is not present in the Equal Opportunity Act 2010 (Vic) and Sex Discrimination Act 1984 (Cth).

Public sector employers should also review any employment arrangements that rely on the use of long-term fixed term contracts (for two or more years), and consider alternative employment arrangements where appropriate.

The VGSO will provide a further update on the final form of the Bill as passed.