Substantial Industrial Relations changes are imminent. Is your business ready?

The Albanese Government's first budget provides increased resources for the Fair Work Commission (FWC) and Fair Work Ombudsman (FWO) to facilitate a broad range of Labor election policies. In addition, budget funding has been allocated to support upcoming changes to Industrial Relations law with regard to job security, gender equity and enterprise agreements.

‍Substantial funding for the FWO and FWC

‍Nearly $70 million in has been allocated to the FWO as it replaces the Australian Building and Construction Commission (ABCC) in overseeing Australia's building and construction industry. The FWO will now enforce the Fair Work Act 2009 (Cth) (FW Act) across the industry and ensure compliance with workplace relations law, inheriting all the functions and powers of the ABCC. The ALP also intends for the FWC to absorb the functions of the soon-to-be abolished Registered Organisations Commission. The staffing levels and resourcing of the FWC will be increased to take on this additional responsibility.

Over $20 million has been allocated to the FWC to fund the establishment of several panels under the "Secure Australian Jobs" policy banner. This includes the creation of Pay Equity and Care and Community Sector expert panels and a specialised research unit. A further $7.9 million will facilitate changes to the small claims process under the FW Act, as well as to increase FWC capacity to assist small businesses with bargaining agreement procedures.

‍Funding for industrial relations reform

‍A total of $43.2 million has been allocated to Industrial Relations legislative reform and safe work initiatives. $15.1 million will go to the FWC and the FWO in response to ALP plans to amend the FW Act to include an explicit prohibition on sexual harassment. This amendment gives effect to Recommendation 28 of the Respect@Work Report, and enforcement will be the responsibility of the FWC.

The ALP plans to amend the FW Act to include a statutory equal remuneration principle that will inform FWC decisions with regard to equal pay cases. Several Respect@Work Report recommendations are being implemented with funding for education and compliance resources in relation to impending 'positive duty' legislation that will require employers to actively prevent sexual harassment, discrimination and victimisation.Remaining Industrial Relations funding has been allocated to:

• address small business concerns about the new paid family and domestic violence leave amendments to the FW Act; and
• enable the FWC to assist employees and small businesses with good faith bargaining and enterprise agreements.

An additional $32 million has been allocated to establishing Working Women's Centres in every state and territory. The few existing Working Women's Centres provide free advice, support and representation to vulnerable workers in South Australia, Queensland and the Northern Territory.

The Budget also details funding to support recently passed amendments to the FW Act in relation to paid family and domestic violence leave. Replacing the current allowance of 5 days of unpaid leave contained in the National Employment Standards, the new amendment provides for up to 10 days paid family and domestic violence leave for all full-time, part-time and casual workers. The changes will officially take effect as of 1 February 2023, as well as granting small business's an additional 6 months, until 1 August 2023, to comply.

It will also be easier for employees to commence litigation. The small claims cap for amounts that can be awarded in a small claims proceeding under the FW Act jurisdiction has been increased from $20,000 to $100,000. This will give employees an easy recourse to litigation.

‍Upcoming Industrial Relations Changes

‍On 27 October 2022, the ALP tabled the 'Fair Work Legislation Amendment (Secure Jobs, Better Pay) Bill' (the Bill). Subject to the passage of legislation, the bill will amend the FW Act to increase job security of non-permanent employees. FWC jurisdiction and enforcement powers will also increase, extending to employees like 'gig-workers' and labour hire contractors.

The Bill amends the FW Act to prohibit employers from including pay secrecy clauses in their employment contracts. The provisions would also protect employees that ask about other employee's pay, including remuneration-related terms and conditions of their contract. The provisions would render existing pay secrecy terms void, and prevent pay secrecy clauses being included in new contracts. If the legislation is passed, including a pay secrecy clause would be a civil remedy provision (meaning breaches would attract substantial fines).

The Bill contains several other amendments that are focused on providing security for employees working in non-permanent roles. The Bill would limit fixed term contracts, placing a cap of 24 months on rolling employment contracts if the employee continues to work in the same role. Contractors and labour hire employees may also benefit from ALP efforts to ensure that they are paid the same amount as a directly employed worker in the same role.

The same job, same pay principle extends to the ALP's efforts to close the gender pay gap. An equal remuneration provision, substantially incorporating the Queensland Equal Remuneration Principle, would prevent unequal pay for work of equal or comparable value. The Bill also prevents the FWC from under-valuing work on the basis of gender, requiring the FWC to consider historical gender-based undervaluation of work.

‍Key Takeaways

‍With the ALP's focus on creating safer workplaces under the banner of "Secure Australian Jobs", the Federal Budget funding will result in the FWC and FWO targeting non-compliance with;

• Building and construction regulations;
• Gender equity;
• Secure work;
• Safe Workplace requirements; and
• Award minimum wages and employee entitlements.

Increased enforcement powers, amendments to the FW Act and wider Industrial Relations reforms will place non-compliant employers at a high risk of investigation and potential prosecution. Employees will also have accessible options to commence their own litigation against current and former employers.

Lack of knowledge of workplace laws is not a valid defence to non-compliance, nor is misunderstanding or misapplication of complex modern awards.

The time to act is now. Employers should review their:

• Employment contracts
• Workplace policies
• Pay arrangements

to assess their own compliance. A proactive approach is the best way to reduce your business' risk.

Pragma Lawyers' employment law team can assist with compliance audits and a review of your employment arrangements. Should you require assistance in relation to any of the information provided above, wish to discuss any aspect of the federal budget, workplace law compliance or employment law generally, contact us on (08) 6188 3340 or libbi@pragma.law.