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Fair Work Act – Important Changes

In 2023, a number of amendments to the Fair Work Act contained in the Fair Work Legislation Amendment (Secure Jobs, Better Pay) Act 2022 and the Fair Work Legislation Amendment (Closing Loopholes) Act 2023 came into operation. In addition, further amendments were proposed in the Fair Work Legislation Amendment (Closing Loopholes No 2) Bill 2023.

Our commentary below summarises the major amendments that require immediate consideration by employers.

Amendments introduced by the Secure Jobs, Better Pay Act

Prohibition on Pay Secrecy

Many current employment contracts contain a pay secrecy clause preventing the employee from disclosing the employee’s remuneration under the contract. Terms of the contract to anyone.

A contract of employment entered into on or after 7 December 2022 must not include a pay secrecy clause. This is a civil penalty provision.

Pay secrecy clauses in earlier contracts have no effect.

An employee may now disclose his or her remuneration and may ask any other employee about that employee’s renumeration, including disclosing or asking about any terms and conditions that are necessary to determine remuneration.

Employers should review all their template employment contracts to ensure that none of the provisions breach these provisions. We note that employment contracts often contain far reaching “confidential information” clauses that may contravene these provisions.

Fixed Term Contracts

The Fair Work Act now limit a fixed term contracts to a term not exceeding 2 years.

The 2 year term limit includes:

(a) any period for which there is an option to extend the term; and

(b) any period which is served under consecutive contracts.

A fixed term contract is defined as one that will terminate at the end of an identifiable period, notwithstanding that the contract may be terminated before the end of that period. This includes, amongst others, seasonal and fixed tasks contracts.

There are a number of exceptions to these provisions, including for employees earning above the high income threshold.

Employers must provide employees engaged on fixed term contracts with the prescribed Fixed Term Contract Information Statement.

Employers who use fixed term contracts are advised to check any contracts entered into on or after 7 December 2023 and to review their template contracts to ensure they comply in the future.

Multi-Enterprise Agreements

We have dealt with these provisions in an earlier newsletter.

The Fair Work Commission has only granted 2 applications for multi-employer bargaining authorisations, both of which were not contested. However, an application has been made which would have the effect of requiring employers that are competitors to bargain for a multi-employer deal covering supervisors at several mines in NSW.

Employment Advertisements

Employers must not advertise employment at a rate of pay that would contravene either the Fair Work Act or a Fair Work Instrument (e.g. an Award). This is a civil remedy provision that may attract penalties if breached.

The Miscellaneous Award 2020 means that most Australian employees will be covered by a Modern Award.

Employers are advised to ensure that they are applying the correct award or awards when advertising vacancies.

Family and Domestic Violence Leave

Regulation 3.48 of the Fair Work Regulations 2009 prescribe how a payment for family and domestic violence leave should be recorded in a payslip. In summary, the amounts paid must not be reflected as being payment for a period of leave (whether family and domestic violence leave or otherwise) and must instead record it as payment for ordinary hours of work or payment in relation to the performance of work including by way of allowance, bonus or payment of overtime.

At the request of the employee, the payment may be recorded as payment for leave (other than family and domestic violence leave).

Amendments introduced by the Closing Loopholes Act

Small Business Redundancy Exemption

Small businesses (fewer than 15 employees) are not required to pay redundancy pay under the Fair Work Act. Under the amendments, this exemption will not apply in specific circumstances.

There has been considerable comment on these amendments. However, the exemption falls away only where the business is bankrupt or in liquidation (other than because of a member’s voluntary winding up).

The amendments will not affect a small business seeking to downsize.

Labour Hire “Loophole”

These are the provisions that were earlier called “same job, same pay” which attracted significant commentary.

These provisions only affect employers (called the host employer) who:

(a) engage workers through a labour hire arrangement; and

(b) do so in circumstances where the workers, had they been employed directly by the host employer, would be covered by an enterprise agreement that applies to the host employer.

In these circumstances, the labour hire provider may be ordered to pay the workers the rates they would have earned had they been employed by the host employer.

Employers who engage workers through a labour hire arrangement may wish to review those arrangements and the possible impact that these provisions may have.

Workplace Delegates

From 1 July 2024, every Modern Award must include a clause setting out the rights of workplace delegates in workplaces covered by the Award.

A workplace delegate is a person appointed or elected, in accordance with the rules of an employee organisation (i.e. union), to be a delegate or representative for members of the organisation who work in a particular enterprise).

The Fair Work Commission has commenced the process to amend all Awards to include a template clause. We will provide an update once the Commission has published a draft Award term.

Wage Theft (not yet commenced)

These provisions create a criminal offence where an employer intentionally engages in conduct that results in a failure to pay an amount prescribed by the Fair Work Act or a Fair Work Instrument. The is punishable by substantial fines and/or, in the case of an individual, imprisonment of not more than 10 years.

The proposed amendments require the Minister to declare a voluntary Small Business Wage Compliance Code. A small business that complies with the Code will not be referred for prosecution, although it may still be subject to civil proceedings in relation to that conduct.

Employers should be far more diligent in complying with Awards.

Right of Entry – Assisting Health & Safety Representatives

An official of an organisation who is requested to assist a health and safety representative need not hold a permit, produce a permit or give notice of entry to premises for that purpose.

Employers should instruct supervisors and management on this right of entry to avoid any breaches of the Fair Work Act.

Amendments proposed in the Closing Loopholes 2 Bill

The following provisions are contained in the Closing Loopholes 2 Bill which has not been passed by Parliament and will no doubt be subject to political debate and negotiation. The provisions, if passed, may be in a different form.

Casual Employment

The Bill proposes to repeal the current definition of casual employee. A casual employment relationship will arise where:

(a) the employment relationship is characterised by an absence of a firm advanced commitment to continuing and indefinite work; and

(b) the employee is either entitled to a casual loading or specific rate of pay for casual employees under the terms of a Fair Work Instrument or under the contract of employment.

The Commission must determine the absence of a firm advance commitment by reference to the real substance, practical reality and true nature of the employment relationship, not merely the terms of the contract of employment.

After 6 months of employment (12 months for small business) an employee can give notice to the employer that they believe that they no longer meet the requirements of the definition of casual employment. If that dispute is not resolved between the parties, the matter may be referred to the Commission for arbitration.

In addition, casual employees can apply for conversion to full or part-time employment after 12 months employment. A conversion dispute can be notified and, if not resolved between the parties, the Commission may resolve the dispute by arbitration.

Employers who engage casual employees on a regular and ongoing basis should review that practice in the light of these proposed amendments.

Definition of Employment

The Bill proposes to introduce a statutory definition of employee and employer.

Determining whether a person is an employee (as opposed to a contractor) is to be determined:

(a) by ascertaining the real substance, practical reality and true nature of the relationship;

(b) based on the totality of the relationship; and

(c) having due regard not only to the terms of the contract, but also to how the contract is performed in practice.

These provisions effectively restore the test that was applied prior to the 2 decisions of the Australian High Court in 2022.

If the amendments are passed in the proposed form, employers engaging contractors will need to carefully consider whether those contractors are, as a matter of law, employees. An employer will only avoid a finding of sham contracting if it can establish that it reasonably believed that the contract was a contract for services.

Regulated Workers

There are substantial proposals regarding regulated workers, being persons engaged by an employer that is a digital labour platform operator or an employer that is a road transport business.

The essence of these provisions is to ensure that, regardless of whether the regulated workers are employees or contractors, the Fair Work Commission can set minimum standards of engagement for those regulated workers.

Employers in the road transport industry or who operate a digital labour platform will need to consider the proposals and any final form of those provisions carefully.

Bennett Employment Team

If you would like to discuss any of these amendments, please do not hesitate to contact the Bennett Employment Team.

Stephen Kemp

Consultant - Head of Employment Law

Nicholas Parkinson

Senior Associate

Bernard Lock

Senior Associate

Jessica Haddad

Solicitor

Disclaimer: The information published in this article is of a general nature and should not be construed as legal advice. Whilst we aim to provide timely, relevant and accurate information, the law may change and circumstances may differ. You should not therefore act in reliance on it without first obtaining specific legal advice.

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