THE KEY CHANGES FOR EMPLOYERS AND RECOMMENDED 2023 ACTION ITEMS

On 6 December 2022, the Fair Work Legislation Amendment (Secure Jobs, Better Pay) Act 2022 (“the Act”) received royal assent. As the name suggests, the Act amends the Fair Work Act 2009 (Cth) (“FW Act”) and has the objective of promoting job security and gender equality.

This is our first update on the most important changes regarding the Act in a three-part series to follow weekly throughout January 2023.  The updates will identify key changes that our national system employer clients need to know about and list recommended action items for our clients to consider implementing in 2023.

Although the changes we explain in these updates are the most significant changes for national system employers seen since the introduction of the FW Act in 2009, we are on notice of more industrial relations reform to come in 2023. We will keep updating our clients on any further reforms throughout the year.

WHAT DO EMPLOYERS NEED TO KNOW?

Here are the most important changes for employers to know:

1. Prohibition on pay secrecy

Discussing wages, salary, and working conditions at work has largely always been a taboo topic. However, as of 7 December 2022, pay secrecy is now prohibited. This means that an employee has the right to disclose, or not disclose to any other person, the employee’s remuneration and any terms and conditions of the employee’s employment that are reasonably necessary to determine remuneration outcomes such as working hours. Similarly, an employee can also ask any other employee (whether employed by the same employer or a different employer) about their remuneration and terms and conditions of employment.

The above is now also considered a workplace right. This means that an employee that exercises the right is protected from adverse action by their employer taken because of that right. If an employee suspects that they have been subject to adverse action for exercising their workplace rights in respect of pay conditions, an employer is at risk of the employee making a general protections application to the Fair Work Commission.

Does your organisation have a pay secrecy term in existing employment agreements? For example, a clause that requires an employee to keep confidential their pay rates, and any incentive remuneration. If yes, once that existing employment agreement is varied or amended in any way, that pay secrecy term will have no effect. Pay secrecy clauses in any new employment agreements entered will be invalid and have no effect.

Important: From 7 June 2023, an employer who includes a pay secrecy term into their employment agreements will be deemed in breach of the new pay secrecy prohibition described above. The Fair Work Ombudsman can commence proceedings for an alleged contravention of the prohibition, and employers can face a significant penalty of $63,000 for such a contravention.

2. Limitation on use of fixed term contracts for 2 years (unless there is an available exception)

Fixed term contracts are contracts for a specified period.  From 6 December 2023, a limitation on the use of fixed term contracts for a period of two (2) years (“specified period”) will apply to employers. This means that from 6 December 2023, there will be a limitation on using fixed contracts for the same role beyond the specified period (including renewals) or two consecutive contracts (whichever is the shorter).

Whilst this limitation may sound troubling to the types of employment used in your organisation, there are several exceptions to the limitation that may apply to your workforce. Some of these exceptions include:

• the employee is engaged to perform only a distinct and identifiable task involving specialised skills; or
• the employee is engaged to undertake work during emergency circumstances or during a temporary absence of another employee; or
• in the year the contract is entered into the amount of the employee’s earnings under the contract is above the high-income threshold for that year (NB: the high income threshold is indexed annually on or around 1 July and is presently $162,000 per annum); or
• the contract relates to a position for the performance of work that:
  • is funded in whole or in part by government funding or funding of a kind prescribed by the regulations; and
  • the funding is payable for a period of more than 2 years; and
  • there are no reasonable prospects that the funding will be renewed after the end of that period. 

Prior fixed term contracts entered into prior to 6 December 2023 can be relevant factors for determining whether there is a breach of the limitation in any renewed/successive contracts.

Where a fixed term contract is made in breach of the limitation, the subject employee will be defined as a ‘permanent employee’ and the end date under the relevant contract will not have effect.

If a dispute arises in relation to the above, the Fair Work Commission has the power to conciliate, mediate or arbitrate (by consent).

Like the existing Fair Work Information Statement and Fair Work Casual Information Statement which must be provided to employees as soon as possible after commencement, a Fixed Term Contract Information Statement must be provided to any employees entering a fixed term contract. Penalties can apply to employers for a failure to do so, and for breaching the two-year limitation provisions.

WHAT DO EMPLOYERS NEED TO DO?

New year checklist

In light of the above changes regarding pay secrecy and fixed term contracts, our recommended action items for employers in 2023 are as follows:

1. Update senior management and human resources about the changes with respect to an employee’s workplace right to disclose and ask about pay rates and working conditions;
2. Review your current employment agreements for any pay secrecy clauses, and note that once an agreement is varied or amended, any pay secrecy term will have no effect;
3. Use the grace period between now and 7 June 2023 to review your template employment agreements to ensure they do not have pay secrecy clauses to avoid penalties;  and
4. Review your workforce to identify the roles that are currently and likely to be employed on fixed term contracts and consider whether any of the exceptions listed above, or other exceptions, apply to the employment.

HOW CAN WE HELP YOU?

WilliamsonBarwick can assist employers understand the impact of the changes and work through the recommended action items to ensure their workplace is compliant.

If you would like to discuss the implications of any of these changes with one of our lawyers, please let us know. We’re here to help.