Asia-Pacific employment law bulletin 2023
2022 was a significant year for employment law in Australia, with a change of Federal Government following Labor’s success in the May election, along with the ongoing impact of Covid-19. Although by the second-half of 2022 most of Australia had loosened public-health measures and border restrictions, and largely moved to a ‘post-pandemic’ environment, the impact of these restrictions is still being felt as many employers experience acute labour shortages. While migration levels are expected to increase in 2023, labour shortages will remain an ongoing issue.
The ‘new’ federal Labor Government has moved quickly to introduce reforms to employment and labour laws in line with its commitments regarding job security, wages and gender equality. The Secure Jobs Better Pay Act 2022 (Cth), which amends the Fair Work Act 2009 (Cth) (FW Act) (the primary employment legislation in Australia), was passed on 2 December 2022, and brings about some of the most significant industrial relations reforms in decades, including changes to enterprise bargaining, limits on the use of fixed term contracts, and a raft of changes intended to decrease the gender pay gap (including a ban on pay secrecy clauses in contracts).
Restrictions on fixed-term contracts
Under these reforms, employers’ ability to engage employees via fixed-term (or maximum-term) contracts for the same role is limited to two consecutive contracts or a maximum duration of two years. There are exceptions to these limitations, including where the employee has a specialised skill, is engaged during a peak demand period, or the employee’s earnings exceed the high-income threshold for the first year of the contract (currently AUD 162,000 (approx. USD 113,000)). The fixed-term contract reforms will come into effect from December 2023, unless proclaimed earlier. Broadly speaking, the reforms will not affect pre-existing contracts, unless an employee is offered a subsequent fixed-term contract after the reforms commence. Breach of these limitations will attract a civil penalty.
Ban on pay secrecy clauses
In an effort to promote pay transparency, reduce constraints on employees bargaining for pay rises and remove what has been seen as an inhibitor to women being paid equitably, the new reforms largely restrict, or render unenforceable such clauses.
Employees are now lawfully permitted to disclose their remuneration and to ask any other employee about their remuneration (and are protected from retaliation for doing so). It is now unlawful for employers to include a pay secrecy clause in a new contract. Such clauses that are in existing contracts will continue to have effect until such time as the contract is varied. Breach of these prohibitions will attract a civil penalty.
Gender equity and sexual harassment reforms
Gender equity is now included as a formal objective of the FW Act. The reforms also include additional ‘protected attributes’ of breastfeeding, gender identity and intersex status, meaning it will generally be unlawful for employers to discriminate against employees on the basis of those characteristics.
Employees’ rights to pursue formal flexible working arrangements (FWAs) have also been strengthened. Although employers retain the right to refuse a request on ‘reasonable business grounds’, there are now more onerous procedural obligations for responding to such requests. Employees will also have the right to refer disputes about an FWA or an employer’s refusal to the Fair Work Commission (FWC).
The reforms also create a new jurisdiction in the FWC for sexual harassment disputes, as well as the ability to apply for specific ‘stop sexual harassment’ orders.
Significantly, in addition to reforms introduced to the FW Act, separate amendments to the Sex Discrimination Act 1984 (Cth) create a ‘positive duty’ upon employers to take reasonable and proportionate measures to eliminate, as far as possible, “sex discrimination, sexual harassment, victimisation, or conduct that creates a ‘hostile work environment’”. This latter term refers to an environment that is “offensive, intimidating or humiliating” to a person by reason of the person’s sex or related characteristic, including, for example, environments where sexual banter, innuendo or offensive jokes are made. What actions the ‘positive duty’ requires will vary for each company, but it will be expected that employers with more resources do more to discharge the duty.
While the positive duty now exists, provisions pertaining to enforcement and compliance will not take effect until 13 December 2023. It is therefore important in 2023 that employers spend time reviewing and, if necessary, improving their practices, policies, and procedures, in order to be prepared for the commencement of the enforcement powers at the end of the year. While there is no ‘one size fits all’ approach to this process, undertaking a detailed risk assessment to identify risks of gender-based harms in the employer’s specific working environment is likely to be an appropriate starting point.
As of 1 February 2023 (1 August 2023 for employers with less than 15 employees), employees are also entitled to 10 days of paid family violence leave each year.
The state of the enterprise bargaining system (and the effective ‘opting-out’ of bargaining by many large employers) was a cause for concern for the union movement and the Labor Party, so the reforms provide employees and unions with an increased ability to force employers to the bargaining table, whether for single or multi-employer agreements (between ‘reasonably comparable’ employers). The greatly expanded scope for multi-employer bargaining is the most controversial reform, particularly given the ability for unions to organise protected industrial action across multiple businesses to support their claims, and to apply to effectively force an employer to be added to an ‘agreement’ which has already been negotiated with other employers (if a majority of the employer’s employees agree). Further, the reforms allow for intractable bargaining disputes to be resolved by the FWC through compulsory arbitration. The full impact of these reforms remains to be seen, but there is little doubt we will see more single and multiple employer enterprise agreements and an increased arbitral role for the FWC in the new bargaining regime.
Looking ahead to 2023
Looking ahead to 2023, the Labor Government has promised further rounds of reform, with the expected introduction of ‘Same Job, Same Pay’ legislation, which is principally designed to ensure that labour hire workers are paid the same as direct employees of the principal business. The form of this legislation will remain unknown given the significant practical difficulties likely to arise in its implementation. The Labor Government has also promised to give the FWC power to regulate ‘employee-like’ forms of work (such as contracting models in the gig economy), including by prescribing minimum terms and conditions of engagement. It is also expected that the ‘wage theft’ legislation will be introduced to criminalise the deliberate underpayment of wages. All in all, 2023 should be another year of significant regulatory reform which will bring challenges and opportunities for employers.
Corrs Chambers Westgarth: Shea Wilding
Kathleen Healy Partner
Stephanie Chiu Counsel
Ada Chan Associate
Fan Li Associate
River He Associate