On 6 December 2022, the Federal Government's received Royal Assent (Amendment Act). The objectives of the Amendment Act are to promote job security, gender equality and collective bargaining, including through greater intervention by the Fair Work Commission (FWC).
We previously provided a of the Amendment Bill in its initial form. Now that the Amendment Act has received Royal Assent with some changes already in operation and others to come in the near future, it is useful for us to review some of the key changes in further detail as they apply to Victorian public sector employers.
Industrial relations (IR)/enterprise bargaining
Changes that have already commenced - as at 7 December 2022
Four key IR changes have already commenced from 7 December 2022, as follows:
- Initiating bargaining - employee bargaining representatives (including employees or unions) can now write to their employer to initiate bargaining for a single-interest employer enterprise agreement in circumstances where:1
- the proposed agreement is to replace an existing agreement which has passed its nominal expiry date
- the existing agreement’s nominal expiry date is within the past 5 years
- the scope of the existing agreement is substantially similar to the proposed agreement.
- Protected action ballot orders - if a protected action ballot order is made by the FWC, permitting protected industrial action, the FWC must also order that the parties attend a conference with the FWC in order to assist the parties to try to reach agreement2.
- Variation of enterprise agreements - the FWC can 'correct or amend an obvious error, defect or irregularity (whether in substance or form)' on its own initiative or on application from a party covered by the enterprise agreement3. Previously there had to be ambiguity or uncertainty arising from the drafting.
- Terminating enterprise agreements - the FWC can terminate an existing enterprise agreement which has passed its nominal expiry date if it is satisfied of one of the following:4
- the continued operation of the agreement would be unfair to the employees it covers
- the agreement does not and is not likely to cover any employees
- the continued operation of the agreement would pose a significant threat to the viability of the business, terminating the agreement would reduce the risk of terminations, and the employer gives a guarantee that it will preserve termination entitlements under the agreement.
From 6 June 2023, the Amendment Act establishes 3 streams of multi-enterprise agreements (ie. agreements which cover more than one employer). These are:
- Co-operative workplace agreement - agreements that are initiated by and made with more than one consenting employer;
- Single interest employer agreements - these can be driven by employee bargaining representatives (or unions) and require an application to be made for a single interest employer authorisation to join several employers with a common enterprise to bargain, provided their existing agreements have passed their nominal expiry date.
- Supported bargaining agreements - which replace low paid bargaining agreements, but extend these types of agreements to any employees and employers that require support to bargain and have not traditionally been covered by an enterprise agreement.
Importantly, an employer in respect of a cooperative workplace agreement and a union in respect of a single interest employer agreement or supported bargaining agreement may apply to the FWC to have the enterprise agreement cover or 'rope in' an employer after the agreement is approved by the FWC. Further, employers will require the agreement of all employee organisations who are bargaining representatives before putting the agreement to a vote of employees.
Intractable bargaining declarations
From 6 June 2023, the FWC will have broader powers to make a bargaining related workplace determination (decision by the FWC about the terms of an enterprise agreement). In particular, the precondition of bargaining orders and a 'serious breach declaration' will be replaced by an 'intractable bargaining declaration', which requires that:
- the FWC has dealt with a bargaining dispute (where the parties are unable to resolve a dispute about the agreement)
- the FWC determines that there is no reasonable prospect that agreement will be reached by the parties
- at least 9 months has passed since the nominal expiry date of the current agreement or bargaining commenced.
Before making a bargaining related workplace determination, the FWC may also order a post-declaration period during which the FWC will assist the parties to reach agreement by conciliation, before it proceeds to a workplace determination.
Changes to the enterprise agreement approval process
From 6 June 2023, key changes to the enterprise agreement approval process will commence including:
- The better off overall test (BOOT) will be simplified to an overall assessment as to whether the enterprise agreement has been genuinely agreed by employees based on the statement of principles which is currently being prepared by the FWC. The final principles will be released by 8 May 2023 (). For employers who are due to engage in or conclude bargaining it would be wise to incorporate these principles into the bargaining process.
- The BOOT will expressly provide that a global assessment rather than a line by line comparison is to be done against the underpinning Award.
- The BOOT won't require that to 'all prospective employees' covered by the enterprise agreement must be considered, but rather just those that it is 'reasonably foreseeable' will be covered, including existing engagements/shift patterns.
- Importantly, the FWC will not be required to accept an undertaking from an employer if it considers the enterprise agreement does not meet the BOOT, but rather the FWC can unilaterally amend the enterprise agreement after seeking the views of the parties.
- In addition, the FWC can also amend an enterprise agreement after its approval, if it is later determined that it does not meet the BOOT in respect of a particular class of employees. Such amendments can also have retrospective operation, but no civil penalties will apply in respect of retrospective changes.
Drop dead date for zombie agreements
The term 'zombie agreement' refers to agreements that are made before 31 December 2009 and the full commencement of the (Cth) (FW Act) (ie. agreements well beyond their nominal expiry date which arguably have outdated terms and conditions). Parties to a zombie agreement will have the option to apply to the FWC by 6 June 2023 to extend the agreement by up to 4 years.
There are some agreements on the list of zombie agreements covering Victorian public sector employers, so it is important to check if there are any agreements on the list that cover your organisation. View the .
Importantly, employers must provide notice to employees covered by a zombie agreement by 6 June 2023 that the employees are covered by a zombie agreement and that the agreement will terminate on 7 December 2023 unless an application is made to the FWC to extend the life of the agreement.
The Amendment Act establishes Expert Panels for: pay equity, the Care and Community Sector, and pay equity in the Care and Community Sector5. The Expert Panels will be chaired by a presidential member, together with at least 2 members who have knowledge of or experience in:6
- gender pay equity and anti-discrimination
- the care and community sector
- a combination of both
The expert panels for pay equity are established to make an equal remuneration order if the President of the FWC considers that 'substantive gender pay equity matters' might require a determination or variation of modern award minimum wages outside the annual wage review. Relevantly, the requirement for a male comparator group has been removed from the process providing broader scope for the FWC to make such orders having regard to whether work has been undervalued on the basis of gender.
As for the Expert Panel for the Care and Community Sector, it is established to make a determination or modern award that the President of the FWC considers might relate to the Care and Community Sector.
Although the Care and Community Sector is not defined in the Amendment Act, the explanatory memorandum notes that sector includes 'the aged care, early childhood education and care and disability care sectors', and that the list 'is not intended to be an exhaustive list'.
Prohibiting pay secrecy
New provisions have been inserted into the FW Act to prohibit pay secrecy clauses in employment contracts.
Relevantly, section 333B of the FW Act provides that an employee may disclose or not disclose information to any other person about their remuneration and any terms and conditions of employment that are reasonably necessary to determine remuneration outcomes. An employee may also ask another employee about these matters. Further, these are 'workplace rights' for the purpose of general protection proceedings.
An enterprise agreement or contract term that is inconsistent with this prohibition will have no effect. Further, any new contract made after 7 December 2022 which includes a pay secrecy clause may attract a civil penalty.
Fixed term contracts
From 6 December 2023, fixed term contracts for two years or more (whether through a single contract or renewal) are prohibited unless an exception applies. A fixed term contract includes a 'contract of employment for a specified period of time, for a specified task or for the duration of a specified season'.
However, these provisions are unlikely to apply to the Victorian public sector as a result of the implied limitation on Commonwealth powers as articulated in Melbourne Corporation v Commonwealth  HCA 26 and Re Australian Education Union; Ex parte Victoria (1995) 184 CLR 188, 232, which provide that terms pertaining to the term of appointment of persons by Victorian government are matters excluded from Commonwealth legislative power. That being said, there may be public policy reasons for applying the fixed term restrictions in any event.
Other relevant exceptions include:7
- The employee is engaged to perform only a distinct and identifiable task involving specialised skills
- The employee is engaged to undertake essential work during a peak demand period
- The Employee is engaged to undertake work during emergency circumstances or during the temporary absence of another employee
- The employee's earnings under the contract is above the high income threshold
- The contract relates to a position for the performance of work that is funded (in whole or in part) by government funding for a period of more than 2 years and there is no reasonable prospects that the funding will be renewed after the end of that period
- The contract is permitted by a modern award.
If an employer wishes to rely on one of these exceptions, they will bear the burden of proving the exception.
Flexible working arrangements
From 6 June 2023, the Amendment Act introduces a number of changes to the regime governing requests for flexible working arrangements. These include:
- an expansion of who can request a flexible working arrangement to include where a person or a member of their immediate family or household is experiencing family or domestic violence and where an employee is pregnant
- insertion of a new section 65A which clarifies the obligations of employers when refusing requests including that before refusing a request, the employer must (amongst other things), meet with the employee, genuinely try and reach agreement with the employee and have regard to the consequences of any refusal for the employee
- new powers of the FWC to deal with flexible work requests.
The Amendment Act inserted a new Part 3-5A into the FW Act which commenced on 6 March 2023, which prohibits sexual harassment in connection with work. Relevantly, unlike the current stop sexual harassment provisions which only apply to constitutional corporations these provisions will extend to all employees in the Victorian public sector.
The new provisions make it unlawful for a person to sexually harass another person who is:
- a worker in a business or undertaking
- seeking to become a worker in a particular business or undertaking
- a person conducting a business or undertaking.
The harassment needs to occur in connection with the business or undertaking. An employer will be vicariously liable for the actions of their employees unless it took all reasonable steps to prevent the employee from doing the acts that constitute sexual harassment.
An aggrieved person will have the option of either seeking a stop sexual harassment order, compensation under the FW Act, or both.
To make an application, an aggrieved person must first apply to the FWC and the matter will be dealt with by mediation or conciliation, before it can be arbitrated by the FWC or an application can be made to the Federal Court or the Federal Circuit and Family Court of Australia.
How does this affect Victorian public sector employers?
Apart from some exceptions (including some in relation to executives), most of the changes under the Amendment Act will apply to the Victorian public sector.
The IR or enterprise bargaining reforms will be particularly pertinent as many Victorian public sector employers embark upon bargaining in the coming year.
General Disclaimer This material is intended only to provide a summary and general overview on matters of interest. It is not intended to be comprehensive nor does it constitute legal advice. We attempt to ensure that the material is current at the time of publishing but we do not guarantee its currency. You should seek legal or other professional advice before acting or relying on any of the material.
Contact our team
Please get in touch with our team if you need assistance with any employment or industrial relations matters.
Frances Anderson Assistant Victorian Government Solicitor, Workplace Relations and Occupational Safety Branch
Rebecca Best Lead Counsel, Workplace Relations and Occupational Safety Branch
Dana Wintermantel Managing Principal Solicitor, Workplace Relations and Occupational Safety Branch
Veronica Belot Managing Principal Solicitor, Workplace Relations and Occupational Safety Branch
5 Amendment Act, s 371 (new section 617(6)-(11) of the FW Act).
6 Amendment Act, s 374 (new section 620(1B)-(1D) of the FW Act).
7 Amendment Act, s 441 (new section 333F).
Reviewed 30 March 2023