New employment laws 'shift bargaining power away from employers'

Employers will need to be fully aware of legislated workplace changes as the new year kicks into focus.

Late last year, the new Fair Work Legislation Amendment (Secure Jobs, Better Pay) Bill 2022 was passed, marking significant industrial relations reform for the first time in more than a decade.

“The act expands the concept of multi-enterprise bargaining, meaning that more employees will be covered by enterprise agreements and many businesses will likely be forced to bargain together, potentially even with competitors,” Rohan Doyle, HSF employment partner, said.

“In addition, The Fair Work Commission will have a new and much broader power to arbitrate enterprise agreements where bargaining has been protracted and there is no reasonable prospect of reaching agreement. This will significantly shift bargaining power away from employers, and more employers can expect to see bargaining end in the FWC as a result.”

Several employer groups have voiced frustration with the changes.

Impact on hiring

The act will influence how Australian businesses structure and manage their workforces and hire new employees. For instance, the legislation includes new prohibitions on the operation of fixed-term contracts in certain circumstances.

“Employers will be prohibited from engaging an employee on a fixed/maximum term contract of more than two years, two such contracts that cumulatively exceed two years, a contract that allows for renewal so that the employee will be employed for more than two years, or on consecutive contracts of employment (where the employee is performing the same or substantially similar work), subject to a range of exceptions,” Doyle said.

The prohibition also applies even if there is a gap in employment, but there is “substantial continuity” between two periods of employment, he said, so employers should be particularly mindful when re-engaging previous employees.

“In sectors that use fixed/maximum term and seasonal work — including in the education, resources and agricultural industries — these changes could substantially impact common employment practices.”

The act also amends the Fair Work Act to prohibit employers from advertising employment at a rate of pay that would contravene the Fair Work Act or a Fair Work Instrument. Before advertising for a position, businesses should ensure that the rate of pay, and other workplace conditions offered comply with the Fair Work Act or other fair work instruments, including Modern Awards and Enterprise Agreements.

The role of HR

With significant penalties for non-compliance and an ever-diligent watchdog, human resources departments will need to be aware of the new legislative changes and ensure acquiescence.

“In particular, HR directors should consider whether their organisation is likely to be susceptible to multi-employer bargaining and revise their bargaining strategies in light of the increased union leverage created by these reforms,” Doyle added.

“Preparing bargaining and industrial action mitigations strategies, ahead of time, is more important than ever. Plans for start-up EAs and terminating existing agreements will also need to be re-considered.”

HR directors should also review template employment contracts and remove pay secrecy provisions. It is also worth giving some thought to how pay transparency might impact organisational reputation, the morale of staff and relationships between staff, he said.

The reason an employer would have a pay secrecy clause in a contract is primarily to avoid workplace conflict, said Julian Arndt, associate director at Australian Business Lawyers & Advisors.

Consideration should be given to whether any changes are required to remuneration as a result, said Doyle. It is also an opportune time for employers to consider how their organisation is managing gender pay equality more generally.

“In terms of the changes to flexible work and unpaid parental leave extension requests, HR directors must update their processes and train their teams on these changes,” he said.

“The act requires the provision of more detailed information and prescribes tighter timeframes for responding to a flexible work request, so employers will need to familiarise themselves with and prepare for the introduction of these new regimes, including the dispute settlement powers.”

With some of the reforms already in effect, employers should urgently get advice as to how these extensive changes may impact their business.