How will new IR law impact employers?

'Theoretically, multi-enterprise bargaining could see wage increases'

How will new IR law impact employers?

Changes in industrial law legislation in Australia are set to change the business landscape — and not all are sure it will lead to a positive result.

The Fair Work Legislation Amendment (Secure Jobs, Better Pay) Bill 2022 was passed by the Senate last week and its main change will see multi-employer bargaining become law.

The Labor government claims it will spur wage growth while many big employers don’t believe it will do anything for productivity.

Pay rise demands?

“The prohibition of pay secrecy clauses could create potential demands for pay rises,” Stephen Roebuck, Employsure head of operations, said.

“Employers engaging employees on short-term contracts may need to transition them to other forms of employment to avoid breaching the limit on rolling fixed-term contracts. With the multi-enterprise bargaining system applying to small businesses employing at least 20 employees, many small businesses could be forced into participating in a complex, expensive and formal process to negotiate new base conditions of employment.”

If wages rise, it may put a damper on recruitment plans.

“Theoretically, multi-enterprise bargaining could see wage increases by making it easier for more employees across multiple businesses to bargain for an enterprise agreement,” Roebuck said.

“As any agreement must be better off overall than the underlying award for the Fair Work Commission to approve it, this usually means the minimum wages in the agreement are higher than the statutory minimum.

“The Fair Work Commission must consider gender equity and access to secure work when reviewing the national minimum wage and modern awards. This could result in higher wage increases for traditionally low-paid female-dominated industries, like what we have seen out of the Aged Care Work Value case.”

Be prepared

Roebuck believes it is essential for businesses to protect themselves with strong contracts and be aligned with all legislative requirements.

“It will be essential for small businesses to review and update their contracts, policies, and employment practices considering new general protections and prohibitions in the Fair Work Act,” Roebuck said. “Small business owners should seek advice from workplace relations experts before agreeing to participate in multi-enterprise bargaining. Businesses with an existing enterprise agreement are exempt from multi-enterprise bargaining, so expect to see an increase in businesses entering bargaining with their staff.”

Hiring will be fraught with new litigation risks for employers to beware of, Roebuck added.

“This not only includes claims of discrimination based on breastfeeding, gender identity, and intersex status if an employee is refused an offer of employment, but also possible prosecution for advertising a job for less than the legal minimum rate of pay. With an already overly complex Modern Award system governing rates of pay for many, it will be crucial that employers get rates of pay correct before advertising a role.”

In October, Queensland employees received enhanced parental leave entitlements as well as further protection against workplace sexual harassment following new amendments to the state's Industrial Relations law.

Wait and see

Not all companies, however, are that concerned with Australia’s new laws, preparing to adopt a wait and see approach.

“Printech is currently working through the IR changes to ensure that our organisation is prepared and responding as required,” James Leon, CEO, Printech, said.

“Our organisation prides itself on being an employer of choice where people stay and thrive because they like the culture, conditions, flexibility and commitment to supporting our people.

“The suite of industrial relations changes will bring organisations into line with many of our existing practices at Printech.  For this reason, the industrial relations changes will not significantly change how we do business and engage with our people.”

Back in October, Tony Burke, minister for employment and workplace relations, said: “We want to give workers a better deal and a brighter future.”

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