In brief - On 6 June 2023, through the Fair Work Legislation Amendment (Secure Jobs, Better Pay) Act 2022 (SJBP), the Federal Government announced further amendments to workplace laws. Below we provide an overview of these changes which will impact most employers and employees across a range of industries.
From this date, several significant changes to workplace laws will be implemented which the government claims enhances employee rights and improves the bargaining process.
A summary of the key changes is outlined below:
- Flexible Work Requests: Employers are required to meet with employees to discuss requests for flexible working arrangements. The categories of persons able to make such requests has been extended to employees who are pregnant or experiencing family and domestic violence. Such requests might include reduced work hours, work from home arrangements and changes to work hours and other changes which may help a worker to meet work and home demands.
- Unpaid Parental Leave: Employers can now be required to discuss requests for extended unpaid parental leave. Employers must provide written reasons for their responses to such requests.
- Multi-Employer Bargaining: Employers and employees may now be compelled to participate in multi-employer bargaining. Small businesses and businesses with existing agreements that are not past their nominal expiry date are exempt from this requirement. Unions have already foreshadowed an intention to focus on the child care sector.
- Better Off Overall Test (BOOT): The Fair Work Commission (FWC) is to adopt a 'global assessment approach' to the BOOT, replacing the existing line-by-line comparison of proposed agreements against relevant awards. In some circumstances, the Commission will also now have power to amend a proposed agreement that has been lodged if it is assessed to fail the BOOT.
- Agreement Making: section 188 of the Fair Work Act is amended to clearly outline what constitutes the 'genuine agreement' of employees, including matters set out in the Statement of Principles for example, whether the employees who vote in favour of an agreement have a sufficient interest in it and are representative of its coverage.
A more detailed look at each of these reforms is provided below.
Flexible Work Arrangements
For some time now, certain employees have had the right to request flexible work arrangements under the National Employment Standards (NES).
Previously, an employer's decision about such requests were final, provided they were made on 'reasonable business grounds'. Employers were not obliged to negotiate or compromise on arrangements if they did not accept the terms of the request.
Going forward, amendments to the Act define the process by which such requests must be reviewed and how they can be appealed.
Criteria to make a request
From 6 June 2023, under section 65, the categories of employees able to make flexible work arrangement requests is expanded to include pregnant employees, as well as broadening the right to employees who are 'experiencing family and domestic violence'.
Increased right to request flexible work arrangements
Under the amendments in section 65A, employers are now obliged to discuss any request with the employee and make genuine efforts to reach an agreement. This can include where a subsequent agreement is different in substance to the initial request. In such cases, the employer's response must set out the new agreement.
Employers are still entitled to deny a request on 'reasonable business grounds' within 21 days of receiving the request. The criteria for this remains the same (ie cost, capacity to change, impracticality of request, loss in efficiency or productivity etc); however, employer's must now specifically refer to these reasons in their written reasons for denial under section 65A(6).
New right to appeal and jurisdiction of the FWC
Under new sections 65B and 65C, employees can now lodge disputes over employer decisions rejecting flexible working arrangements requests and can be referred to the FWC up to and including arbitration. It is available to the FWC to make an order such as whether or not the employer's reasons are 'reasonable business grounds', or ordering that the employer grant the request or grant the request with certain changes.
The FWC's power to make orders is limited to orders that are both fair and consistent with the Fair Work Act. Further, it must be satisfied that there is no reasonable prospect of the dispute between the employer and employee being resolved without the order being made.
Unpaid parental leave
From 6 June 2023 employers will be required to discuss requests for extended unpaid parental leave with eligible employees and provide written reasons for requests being denied. Employers can propose counter-proposals. The criteria for 'reasonable business grounds' again remain the same.
Similar to disputes for flexible work requests, new provisions have been inserted allowing employees to lodge a dispute in relation to a refusal of an extension for unpaid parental leave. Any dispute can be referred to the FWC for up to and including arbitration.
Key takeaway: Employers are now positively required to discuss and negotiate employee requests with respect to flexible work and unpaid parental leave. The extended jurisdiction of the FWC to deal with disputes in relation to these matters is a strong incentive to respond to any requests carefully and in a reasonable manner.
Multi-employer bargaining
Understanding the bargaining process is as critical as ever for employers. This begins with knowing the different 'streams' of bargaining in which parties can bargain.
1. Multi-enterprise Agreements
a. Single Interest bargaining Stream
From 6 June 2023, both employers and employees (including their bargaining representatives) can apply to the FWC for a single-interest employer authorisation (SIEA).
The FWC must make the authorisation if it is satisfied that:
- The employers have agreed to bargain collectively, and were not coerced into doing so;
- The employers are 'common interest' employers and carry on similar business activities, which may have regard to factors set out in s.249(3) of the FWA, including:
- geographical location;
- regulatory regime;
- the nature of the enterprises (size and scope) to which the agreement will relate, and the terms and conditions of employment in those enterprises;
- where it is not contrary to public interest to make the SIEA;
- At least some of the employees to be covered by the proposed agreement are represented by a union; and
- Each of the parties have had an opportunity to express their views to the FWC.
Importantly for employers with at least 20 employees, if a union applies for a SIEA, the FWC can make the SIEA without the consent of the employers to be covered if the majority of the employer's employees want to bargain for the agreement.
b. Supported bargaining stream
The introduction of this stream replaces the 'low-paid bargaining stream' previously in place. Under the new section 242 of the FWA, the power to apply for a supported bargaining authorisation (SBA) is extended to bargaining representatives and authorised employee organisations.
This stream is more forgiving than the SIEA: to be added to a SBA, the employer cohort (ie the majority of the employer's employees) must vote in favour of being added.
In any application, the FWC will have regard to factors set out in the new section 243 of the FWA, including:
- Pay and conditions prevailing in the relevant industry including whether low rates of pay are prevalent.
- Common interests of the employers (regarding the same factors as SIEA's).
SBA's cannot be made for general building or construction companies or companies with existing agreements not passed their nominal expiry.
In each of the above streams, the FWC has broad powers to make bargaining orders with respect to disputes or stalemates and employees or their representatives are entitled to take protected industrial action.
c. Cooperative bargaining stream
If neither of the above authorisations are made under the new SJBP reforms, then a cooperative workplace agreement can be made.
This is a voluntary multi-employer bargaining stream that is familiar to existing practices. It excludes bargaining orders and protected industrial action is not allowed.
2. Single Enterprise Agreements / Greenfields Agreements
The Single Enterprise Agreement bargaining stream will remain available to employers.
Key takeaway: Employers who are likely to fall within any of the multi-employer bargaining streams need to review their current enterprise agreements, particularly if their nominal expiry date has passed or is approaching, and ensure their industrial and bargaining strategies are fit-for-purpose for future negotiations.
Better Off Overall Test (BOOT)
The SJBP Act clarified the BOOT is a global assessment of whether an employee is better off overall - and not a meticulous line-by-line comparison. In making this assessment, the FWC will only consider the patterns or kinds of work that are reasonably foreseeable with respect to the nature of the enterprise(s) to be covered by the proposed agreement.
The 6 June 2023 amendments also ensure the parties' views towards an agreement are given primacy, particularly where each party holds a common view about whether the agreement should pass the BOOT (subject to independent assessment). Importantly, the FWC will have power to make amendments as necessary to ensure the agreement passes the BOOT.
Agreement making
Parts 14, 16 and 18-23A of Schedule 1 to the SJBP Act amend provisions to the FWA dealing with making and approving enterprise agreements. These changes are intended to simplify the approval process, replacing existing requirements for approval with a single broad requirement that the enterprise agreement has been 'genuinely agreed to' by the employees.
Genuine agreement
Genuine agreement will be established with respect to an amended section 188 of the Fair Work Act, factoring in:
- The matters set out in the Fair Work (Statement of Principles on Genuine Agreement) Instrument 2023;
- Whether the employees who are requested to vote on the agreement have a sufficient interest in its terms, and are sufficiently representative of the employees to be covered;
- For multi-enterprise agreements, whether written agreement to put the agreement to a vote is obtained from the relevant employee organisations;
- Where notice of employee representational rights was required, whether such notice was given;
- Whether the terms of the agreement have been sufficiently explained to the employees who are requested to vote.
The existing safeguard which allows for enterprise agreement approval despite minor technical or procedural deficiencies will continue.
Statement of principles
The statement, provided for in section 188B of the Fair Work Act, sets out several prescribed factors that may influence if an assessment has been 'genuinely agreed to', including things like:
- Informing employees of bargaining for a proposed enterprise agreement;
- Informing employees of their right to be represented by a bargaining representative;
- Providing employees with a reasonable opportunity to consider a proposed enterprise agreement;
- Explaining to employees the terms of a proposed enterprise agreement and their effect;
- Providing employees with a reasonable opportunity to vote on a proposed agreement in a free and informed manner, including by informing employees of the time, place and method for the vote;
- Any matter prescribed by the regulations for the purposes of this paragraph;
- Any other matters the FWC considers relevant.
Key takeaway: Employers who are approaching or engaging in bargaining must be aware of these amendments and ensure that they are complying with Statement of Principles to get the genuine agreement of their employees.
Important next steps for employers
As an immediate action, employers might:
- Ensure that position descriptions, reporting requirements, team functions and dynamics, the importance of certain prescribed hours, positions and work be clearly explained to employees and are accurately reflected in contractual documents. Such documents may provide reasonable business grounds for refusing such requests.
- Employers might also ensure managers who receive such requests understand these changes and how to suitably respond to requests.
- Update relevant policies and procedures relating to flexible working arrangements and parental leave .
- Understand where they are in the bargaining cycle. Engage with unions and employees about upcoming negotiations and seek advice on the impact of these reforms on your negotiation strategy.