The IR Geek: Closing the Loopholes and Other Changes – Summary, Implications, and Actions for Employers

The recent legislative changes to Australia’s industrial relations landscape have introduced several key provisions that significantly impact employers across various sectors. These changes are designed to enhance job security, improve pay conditions, and strengthen workplace rights. Here, we expand on each element, providing a fuller description of how these will operate and their implications for employers.

Over the next few weeks, we will look to take a deeper dive into each of these changes and develop more detailed possibilities for their management.

1. Better Off Overall Test (BOOT) Enhancements

Operation: The Fair Work Commission (FWC) now has greater authority to review and potentially reject enterprise agreements that do not ensure employees are better off overall compared to the relevant award. This involves a more detailed examination of the terms of the agreement, including pay rates, working hours, leave entitlements, and other conditions.

Implications for Employers: Employers must carefully construct their enterprise agreements to ensure they genuinely improve upon award conditions for all employees covered. This may require more detailed negotiations and possibly restructuring of certain agreement terms to meet the BOOT requirements, potentially increasing the complexity and duration of the bargaining process. For employers seeking to move from a multiple Agreement strategy to a Single Enterprise Agreement strategy should note that the BOOT for the new Agreement in this instance will be against the most beneficial of the previous agreements, not the Award.

2. Multi-Employee Agreements

Operation: Unions can negotiate collective agreements covering multiple employers and their employees. This enables collective bargaining on a broader scale, potentially across entire industries or sectors.

Implications for Employers: Employers, especially smaller ones, may find themselves negotiating in a collective framework alongside other businesses. This could lead to standardized wages and conditions across sectors, potentially reducing individual employers’ flexibility in determining their employment terms. Employers will need to engage actively in these processes to ensure that the agreements reflect their operational realities and maintain competitiveness. If you are working in an industry that is more at risk from Multi-Employer bargaining then we highly recommend you get in early and get your Agreement sorted to avoid the possibility of being caught up in this sort of process later on.

3. Expansion of Flexible Working Arrangements

Operation: The criteria and process for requesting flexible working arrangements have been broadened, making it easier for employees to request and obtain changes to their working patterns, locations, or hours.

Implications for Employers: Employers must be prepared to handle an increase in requests for flexible working arrangements and to engage in meaningful discussions about accommodating these requests. This will require a more adaptable approach to workforce management and potentially, the implementation of new policies and systems to support flexible working while ensuring operational efficiency. A robust Policy and Procedure for the governance and response to these requests is an essential element of being able to respond effectively and protect the organisation from claims

4. Changes to Sexual Harassment Provisions

Operation: Increased penalties and stronger enforcement mechanisms have been introduced for dealing with sexual harassment in the workplace. Employers are required to take proactive steps to prevent sexual harassment and to address incidents effectively when they occur.

Implications for Employers: Employers need to ensure that their workplaces are safe and respectful environments for all employees. This includes implementing comprehensive policies on sexual harassment, providing training to employees and managers, and establishing clear procedures for reporting and addressing complaints. An important change to these provisions is the preventative duty of care that has now been established where historically this has been a reactive duty. Non-compliance can result in significant legal and financial penalties, as well as reputational damage.

5. Prohibition of Pay Secrecy Terms

Operation: Employment contracts cannot include clauses that prevent employees from discussing their pay with others. This measure aims to promote wage transparency and help address wage inequality.

Implications for Employers: Employers must review and, if necessary, revise their employment contracts to comply with this provision. This change may lead to increased discussions about pay among employees, requiring employers to be more transparent about their compensation structures and to ensure that pay levels are fair and equitable. Clear and transparent wages and salary banding attached to a well-defined and objectively measurable competency framework is highly recommended!

6. Small Business Redundancy Exemption Provisions

Operation: Specific exemptions from redundancy payment obligations have been introduced for small businesses, defined by the number of employees. Notably these provisions are focussed on the NES and do not override any requirements specified by an Award. A good example are the provisions provided by the Onsite Building and Construction Modern Award.

Implications for Employers: Small business employers may have reduced financial burdens in situations of business downturns or restructurings. However, they must be aware of the criteria that define a small business under this provision and ensure compliance to avoid legal challenges. It is also essential that they check their relevant Award coverage for any Redundancy Terms that may continue to apply. Importantly Employers who are currently considered to be “large” employers who gradually become a “small” employer due to bankruptcy or liquidation will not be able to take advantage of small business provisions. This ensures that employees who stay on to assist in the wind-up of a business do not lose their entitlement to redundancy pay under the NES

7. Regulated Labour Hire Arrangements

Operation: Essentially labour hire workers must receive the same pay and conditions as direct employees performing the same work. These arrangements allow the Fair Work Commission (FWC) to make orders regarding the employment conditions of labour-hire workers to ensure they are not disadvantaged compared to direct employees. Key aspects include the ability of the FWC to issue regulated labour hire arrangement orders, obligations on employers and hosts under these orders, provisions for dealing with disputes, anti-avoidance measures, and specific conditions regarding the application and cessation of these orders. This aims to ensure fair treatment of labour hire workers and prevent undercutting of conditions.

Implications for Employers: Employers using labour hire arrangements will need to ensure that these workers are paid equitably compared to their direct employees. This may involve reviewing and adjusting the terms of contracts with labour hire firms and may increase the cost of using labour hire workers. Interestingly this also presents as an opportunity for Employers seeking to establish terms with Labour Hire providers as the calculation of labour cost will need to be completed based on direct engagement leaving only very small variations between cost and margin. This may create far more transparency for Employers when negotiating rates.

8. Delegates’ Rights Terms

Operation: The Delegate Rights requirements enhance protections for workplace delegates by ensuring they have specific rights and protections under the Fair Work Act 2009. These amendments aim to safeguard workplace representatives from unfair treatment and ensure they can effectively represent their members. Key provisions include the requirement for enterprise agreements to contain a term that outlines delegates’ rights, protections against adverse action for workplace delegates, and explicit recognition of the role and rights of workplace delegates. The impact of these requirements is to strengthen the position of workplace delegates, promote fair representation of employees, and contribute to a more balanced workplace relations environment.

These Rights specifically include:

a) Representation Rights: Workplace delegates are entitled to represent the industrial interests of their members and any other persons eligible to be such members, including in disputes with their employer. This provision ensures that delegates can act on behalf of employees in negotiations or disputes with management, promoting fair and effective representation in the workplace.

b) Communication Rights: Delegates have the right to reasonable communication with members and eligible persons in relation to their industrial interests. This facilitates open and effective communication between delegates and the employees they represent, ensuring that members’ concerns and interests are accurately conveyed to employers.

c) Access Rights – these include

• Workplace Access: Delegates are entitled to reasonable access to the workplace and workplace facilities where the enterprise is being carried on. This access is crucial for delegates to perform their roles effectively, allowing them to meet with members, address workplace issues, and participate in discussions with management.
• Paid Time for Training: Unless the employer is a small business employer, delegates have the right to reasonable access to paid time during normal working hours for the purposes of related training. This provision recognizes the importance of training for delegates to develop the skills and knowledge necessary to represent their members effectively.

Implications for Employers: Employers will need to include and respect these new provisions in their agreements, policies and management practices. Training regarding the operation of these rights for Line Management is also essential as will updates to current approaches.

9. Right to Disconnect

Operation: The Right to Disconnect provision in the Fair Work Amendment (Right to Disconnect) Bill 2023 mandates that employers cannot contact employees outside their working hours unless it’s for emergencies, welfare matters, or if the employee receives an availability allowance. Employees are also not required to monitor, read, or respond to communications from their employer outside working hours without such an allowance. This aims to protect employees’ personal time and reduce after-hours work stress. There are still some unknowns regarding this Amendment in terms of the penalties that may be applied for breaches and/or how enforcement may occur

Implications for Employers: For employers, this means adapting workplace policies to respect these boundaries, potentially requiring adjustments in operational protocols and communication practices to ensure compliance while maintaining productivity. Employers may seek to define the operational hours within which Employees are operating more clearly and/or provide a specified Allowance in order to enable outside-of-hours contact should this be a priority feature of their operating model.

10. Wage Theft Provisions

Operation: New provisions targeting wage theft will be applied, including potential criminal penalties for deliberate underpayment of wages.

Implications for Employers: Employers must ensure strict compliance with wage payment obligations. This includes accurate record-keeping, timely payment of wages, and adherence to award rates and entitlements. Failure to comply can result in severe penalties, including criminal charges. Critical to an Employers ability to comply will be the correct selection, configuration and deployment of payroll software as well as regular audit processes together with proactive monitoring of changes that may occur in Legislation and Awards.

These changes underscore the importance of employers staying informed about their obligations under the evolving industrial relations framework. Given the complexity and speed at which some of these changes are coming, engagement with an expert to help navigate your way through them is essential.