Australia’s new laws: more and stronger employee and union rights – adapting to changes in ways of working
Adrian Morris
Ashurst Australia, Sydney, New South Wales
Alexandra Law
Ashurst Australia, Sydney, New South Wales
alexandra.law@ashurst.com
Introduction
Since May 2022, when it came into office in the Australian federal parliament, a Labour Party majority government has passed a swathe of new employment and industrial relations laws.
These new laws have amended Australia’s Fair Work Act 2009 (Cth) (the ‘FW Act’) in three extensive amending Acts, namely the Fair Work Legislation Amendment (Secure Jobs, Better Pay) Act 2022, the Fair Work Legislation Amendment (Closing Loopholes) Act 2023 and the Fair Work Legislation Amendment (Closing Loopholes No 2) Act 2024.
These laws can be seen, as their titles might suggest, as having two broad purposes. The first purpose is to revive and better enable the making of collective workplace agreements (in Australia called ‘enterprise agreements’) and strengthen the bargaining power of unions. A second purpose is to adjust laws to better accommodate changes in ways of working and the economic and organisational environment in which these laws must operate.
Context
First, we explain the context and the current industrial relations framework in Australia. Pay and conditions of employment in Australian federal law are found in four main sources or tiers.
The first tier, applying to all employees to whom the FW Act applies, is the ‘National Employment Standards’ (NES) contained in the FW Act. These govern such basic entitlements as standard hours of work, termination of employment, various forms of leave and public holidays.
The second tier is the 121 so-called ‘modern awards’ for specific industries and occupations. These contain minimum rates of pay for specified classifications and a wide range of standard minimum conditions of employment, overlapping with, but going beyond, the NES. Awards are made and adjusted from time to time by the Fair Work Commission (FWC). They apply to approximately 23 per cent of the Australian workforce.
The third tier is the collective enterprise agreements made between employers and their employees for a specified enterprise (or enterprises).
The fourth tier is employment contracts, which can provide pay and conditions above the three lower tiers. They will also be the source of employment terms for employees to whom neither a modern award nor an enterprise agreement applies.
Each of the six states in Australia also have employment and industrial law regimes. These cater for a relatively smaller part of the Australian workforce who are not covered by the federal system (such as civil servants, public school teachers, employees in the public health sector and the police) and who are not employed by a ‘constitutional corporation’ defined in the Australian Constitution. This article does not deal with those state laws.
Getting pay moving, reviving and better enabling collective bargaining for enterprise agreements
There is context and impetus for these amendments. Measured over the decade prior to 2022, average minimum rates of pay in the modern awards and enterprise agreements had not been increasing at a sufficient rate to offset inflation and the cost of living, and the real value of wages for much of the workforce was either static or had declined. The number of enterprise agreements being made under the FW Act has dropped since about 2015 and show little signs of increasing. There has been a broadly commensurate decline in the number of employees covered by enterprise agreements.
While there are some industries and sectors where union membership remains quite high, such as coal mining, public education, public administration and transport and utilities, there are other industries where it is negligible, such as the financial and services sectors. The most recent data indicates that overall, approximately 12.5 per cent of a workforce of approximately 12 million employees belong to a union; these are especially troubling circumstances for the Australian Labour Party to which most labour unions are affiliated and which relies on the unions to contribute substantial financial support.
Under this present heading, the relevant amendments, which are contained in the three amending Acts:
- make it easier for a labour union to initiate bargaining for a collective enterprise agreement;
- allow the FWC to ‘arbitrate’ non-agreed terms of an enterprise agreement where bargaining has been stalled or deadlocked after nine months from when bargaining was initiated;
- simplify the requirements for an employee voting to approve an agreement;
- sunset longstanding and unamended enterprise agreements that have passed their nominal expiry date (zombie agreements);
- severely limit the circumstances in which an enterprise agreement can be terminated by the FWC when its nominal expiry date has been passed, in the absence of agreement by the parties affected. Each agreement must specify a nominal expiry date, being not more than four years from when the agreement commenced. However, an agreement remains in legal force until it is replaced or terminated;
- enable a wider variety of multi-employer enterprise agreements, subject to certain tests applied by the FWC (including the existence of a common interest between the employers);
- require the FWC to attempt to conciliate between bargaining parties where industrial action (strikes and bans) are permitted to occur following an order by the FWC to authorise a ‘protected action ballot’ of employees;
- mandate recognition of representation and various other rights of union delegates, such as use of facilities in a workplace and paid time for training; and
- prohibit an employer from preventing employees from disclosing their remuneration to others.
Recognising and accommodating changing ways of working and the economic and organisational environment in which the laws operate
Under this heading, the changes in the laws are more complex, innovative and perhaps interesting:
- Casual employment has remained relatively stable at around 22 per cent of the total Australian workforce. The FW Act has been amended to simplify the rules relating to a casual employee converting to permanent employment, whether full-time or part-time. An employee can, after 12 months’ casual employment, and after at least six months of working a regular pattern of hours, request conversion to permanent employment. The employer must give reasons for a refusal to allow an employee to convert, and the FWC may arbitrate if agreement is not reached.
- There are new restrictions on the number of times an employee may be employed on a fixed-term contract and on the duration of the terms. There are exemptions to these restrictions (eg working only on a specific task that requires specialised skills, performing essential work during peak demand periods, working in emergency or temporary circumstances such as replacing another employee who is away and high income employees above the ‘high-income threshold’).
- Labour hire, where a separate employer provides its employees to work for a host employer, frequently on lower remuneration than the host employer pays its own employees, is subject to new laws. The FWC may, on application on behalf of the labour hire employees, make orders that the labour hire employees must be paid not less than the employees of the host who perform the same work. This is referred to as ‘same job, same pay’.
- There are new powers given to the FWC to set minimum standards for gig or digital platform workers and independent contractor workers in the road transport industry. The FWC can issue minimum standards orders and guidelines. It can also deal with disputes between workers and the platform operator and about unfair de-activation of ‘employee-like workers’ from a digital labour platform. A registered union will also be able to bargain to make collective agreements setting minimum standards for such workers.
- Access to flexible working arrangements is enhanced. An employer must give reasons for refusing an employee’s request. The FWC is given new powers to arbitrate disputes between an employee who requests flexible working arrangements and the employer.
- A ‘right to disconnect’ is also now provided for. Both technology and working from home or remotely have contributed to a blurring of the line between working hours and non-working hours. Employees will have the right to refuse to monitor, read or respond to contact from an employer or third party outside their ‘working hours’, unless the contact is reasonable in the circumstances. These new laws commence for employers, other than defined ‘small business employers’, from 26 August 2024, and for ‘small business employers’ from 26 August 2025. To assess whether a refusal is unreasonable, the factors to be taken into account are the reasons for the attempted contact; how the contact was made; the level of disruption caused to the employee; the extent to which the employee is remunerated for after-hours contact; the nature of the employee’s role and level of responsibility; and the employee’s personal circumstances, including family responsibilities. The FWC will have power to resolve disputes in respect of the operation of these new laws.
Conclusion
Some of the new laws dealt with in this article are essentially refinements or enhancements of pre-existing laws. Others are more novel, such as the regulation of gig workers, the ‘right to disconnect’, limits on the use of fixed-term employment, and the ‘same job, same pay’ provisions.
Their full impact will take a little time to become clear as they are relied on and applied by employees, unions, employers and the FWC.